Kentucky

Facebook Continues to Ban All Alcohol Sales

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Legendary whiskey writer Chuck Cowdery recently posted about Facebook’s ongoing policy to clarify its ban on alcohol sales through its site:

Yesterday, all or most of the myriad whiskey pages on Facebook received a letter stating, in part, "While we allow people to talk about alcohol products we will not allow people to sell or purchase these regulated products on our site. This has always been true in places like Marketplace and Commerce posts in groups, but we will now extend this to organic content…

None of this is new. Except in Kentucky and a few other places, the secondary market for alcohol is illegal, and in those few places where it is legal it is restricted.

The state beverage alcohol agencies that are supposed to enforce these laws rarely do, but they will lean on companies such as Facebook, eBay and Craig's List to get them to clamp down on the peer-to-peer commerce that takes place on their platforms…

(Read Cowdery’s full post here).

As Cowdery mentions, some states, like Kentucky, have recently made moves to liberalize their policies on secondary sales, but otherwise these types of sales are illegal across the country. Both Cowdery and R Street’s Kevin Kosar have written previously about why legalizing the secondary booze market could be beneficial.

Bourbon Left Out of Kentucky Alcohol Delivery Bill

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Kentucky may be known for bourbon, but its lawmakers may leave the state’s flagship spirit out of their latest round of alcohol reform efforts. Last year, Kentucky made news by passing legislation that allows visitors to visit Kentucky distilleries and then have booze shipped to their homes. This year, a bill allowing consumers to purchase alcohol online and have it delivered may exclude bourbon altogether, according to WAVE 3 News:

Those at the Kentucky Distillers’ Association would probably tell you a lot of things are better with bourbon, but it’s not just barbecue sauce and bourbon balls. Now, they want to see a shot of the spirit included in Senate Bill 99.

Distillers said they feel left out of a bill that would allow wineries to ship online and electronic orders straight to your door.

KDA leadership said current language doesn't allow bourbon producers to do the same thing.

President Eric Gregory said HB 400, passed last year, does allow distillers to ship if people buy on site, but if they go home and want more bourbon he said they're out of luck.

Right now, SB 99 would allow for each person to receive up to 24 cases of wine from a seller annually. Bourbon is excluded…

Read the rest here.

Ohio Cracks Down on Secondary Alcohol Sales

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Secondary market booze sales (i.e., sales of alcohol that was previously purchased, even if still unopened) is mostly illegal in the United States. R Street’s Kevin Kosar has written about why this market should be legalized and brought out of the shadows. While states like Kentucky have recently made modest moves toward liberalizing their secondary alcohol markets, Ohio has escalated a crackdown of such sales according to the Freemont News Messenger:

In December, agents with the Ohio Investigative Unit (OIU) teamed up with Ohio Liquor Control (OHLQ), charging five people throughout Ohio after an investigation into secondary market liquor sales.

Secondary market liquor sales often take place on web sites, such as Craigslist and Facebook groups and Marketplace. An example of secondary sales is when sellers go to other states, purchase bottles of liquor not found or difficult to find in Ohio and turn around to resell them. In Ohio, consumers may only purchase spirituous liquor from authorized sources such as an OHLQ location, which are private businesses that sell the product on behalf of the state of Ohio or permitted retail establishments, such as bars and restaurants…

Read more here.

Will Direct-to-Consumer Shipping Expand for Distilled Spirits?

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As R Street’s Jarrett Dieterle has previously discussed, it’s very difficult for the alcohol industry—especially distilled spirits and beer—to participate in the direct-to-consumer (DtC) shipping boom. Most states restrict the ability of brewers and distillers to ship their products directly to customers, although Kentucky recently passed a DtC law that could spread to other states. An article for RaboResearch lays out the current state of play:

In a world where consumers can get anything they want, however they want, the spirits industry is at a real disadvantage. Direct-to-consumer (DtC) shipments and e-commerce have driven growth in the wine category, but spirits face restrictive rules around shipping and retail that limit distillers’ ability to operate online. As we approach the holiday season – the most important time of year for wine and spirits sales – we want to highlight the structural challenges facing spirits in a world increasingly defined by e-commerce.

In 2018, wine shipped DtC will represent 7 percent of the total US wine market – more than USD 3 bn. About 95 percent of US consumers can go online to buy and ship wine DtC across state lines. The laws for shipping spirits DtC are, however, much more restrictive: Only five states allow DtC spirits shipments, with 5 percent of the US population having access to the channel. In fact, shipping laws are so complex and the market so small that common carriers won’t even ship spirits in states that do permit distilleries to ship DtC.

If the spirits industry had the same access to consumers as wine, they could build a market worth billions of dollars. Recognizing the opportunity, distillers are pushing state legislatures to change their shipping laws, and believe it or not, they are making progress. Kentucky, perhaps aspiring to its state slogan 'unbridled spirit', passed a law to legalize DtC spirit shipping in 2018. Other states will likely follow. As Eric Gregory, president of the Kentucky Distiller’s Association, told Insider Louisville “... once other states realize Kentucky has broken the ice... we’re going to see a lot of movement with other states coming on board.”…

Read the rest here.

Kentucky to Allow Direct to Consumer Shipments from Distilleries

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Kentucky lawmakers appear to be on the cusp of legalizing direct to consumer sales from distilleries in the Bluegrass State. Shanken Daily News has the story:

A Kentucky bill allowing limited direct-to-consumer spirits and wine shipments is expected to be signed into law this week. Fueled by rising Bourbon tourism, HB 400 would permit visitors to the state’s distilleries and wineries to purchase bottles and have them shipped home, as well as join subscription clubs. The measure was approved by the state’s House last month and passed by the Senate on April 2. Kentucky Governor Matt Bevin has until Friday to either veto or sign the bill, at which time the legislation will automatically become law if no action is taken.

Under HB 400, visitors to Kentucky distilleries would be able to purchase 4.5 liters—or six 750-ml. bottles—per person per day for shipment, as well as receive shipments of up to one 9-liter case of spirits annually as part of a club membership...

Even if HB 400 becomes law, however, Kentucky distilleries would still have a limited shipping reach, with just eight reciprocal markets—Arizona, Washington D.C., Hawaii, Nebraska, Nevada, New Hampshire, North Dakota, and Rhode Island—allowing for interstate spirits shipments. In an effort to push for more direct-shipping freedom, the KDA has launched a “Bourbon Without Borders” campaign, which Gregory likens to the wine industry’s “Free The Grapes” platform. Interstate winery shipments are permitted in 44 states..."

Read more here.

DrinksReform.org recently interviewed Bevv.co CEO Travis Benoit about the legal restrictions against interstate alcohol shipments.

 

Kentucky Close to Allowing More On-Premise Sales for Breweries

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It's no secret that bourbon is king in Kentucky, so perhaps it's also not a surprise that beer often gets second billing in the Bluegrass State. But there's signs that state lawmakers may be starting to level the playing field for brewers. According to WFPL.org, legislators are close to passing a bill that would allow Kentucky breweries to sell more beer from their taprooms (although the bill still maintains a cap on such on-premise sales):

"A bill raising the cap on how much packaged beer can be bought from Kentucky microbreweries is nearing final passage from the state legislature.

The measure would allow customers to take home up to 31 gallons of beer — the equivalent of two kegs — from microbreweries. Currently the limit is two dozen 12-ounce beers, or a little over two gallons.

Adam Watson, co-owner of Against the Grain Brewery in Louisville, said the measure would help boost sales out of their breweries and beyond...

Since Prohibition, Kentucky’s (and most other states’) laws require alcohol brewers, distributors and retailers to be independent entities to prevent monopolies — the so-called 'three-tiered system'

The original version of the bill would have totally eliminated the cap for how much packaged beer microbreweries can sell on site — but was scaled back after pushback from distributors and retailers, who said brewers shouldn’t be allowed to “skip” the other tiers..."

Read the rest here.

 

 

The Legislature Strikes Back: KY Lawmakers Resist Uncapping State Liquor Licenses

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As previously noted, Kentucky liquor regulators recently proposed scrapping the state's quota system for liquor licenses (which limits licenses based on population). According to the Lexington Herald-Leader, some state legislators are resistant to the idea and a key Senate committee has now approved a bill that would block regulators from changing the quota:

Retail liquor dealers won their first fight Tuesday in the Kentucky legislature against state alcohol officials, who have proposed scrapping limits on the number of liquor stores in the state.

On an 8-3 vote, a Senate committee signed off on Senate Bill 110, a measure sponsored by Senate President Pro Tempore Jimmy Higdon, that would stop Gov. Matt Bevin’s administration from eliminating the state’s liquor license quota system...

Higdon, R-Lebanon, said his bill would write into law existing state regulations that limit the number of licenses available for retail package liquor stores and by-the-drink sales of liquor... Higdon argued that ending the quota system would hurt existing liquor businesses and betray voters who approved alcohol sales with the understanding that the number of stores would be limited..."

Read more here.

Kentucky May Scrap Liquor License Quotas

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Like many states, Kentucky currently limits the number of liquor licenses available in the state based on population. According to WCPO Cincinnati, however, state alcohol regulators have now proposed eliminating this licensing quota:

Alcohol regulators in Kentucky have filed a proposal that would repeal rules limiting the number of licenses available for retail package liquor stores and by-the-drink liquor sales.

The proposed administrative regulations are stirring opposition, the Lexington Herald-Leader reports. The Kentucky Alcoholic Beverage Control Board filed the proposal last month.

Retired Southern Baptist minister Donald R. Cole of Webster County says he fears “a bar or liquor store on every other corner” if the new regulations take effect...

The number of licenses is limited based on a community’s population -- one license per 2,300 people for package stores and one license per 2,500 people for drink sales...

The board, in an impact and analysis statement, said “eliminating quotas may encourage entrepreneurship, foster creativity for new business models and create jobs.”

“The board believes that market forces rather than arbitrary quota limits should determine the number of businesses competing in a community,” the analysis stated..."

Read the whole article here.

UPDATE: Some GOP lawmakers in Kentucky are planning to fight the plan to eliminate the quotas, arguing that it will lead to too many bars in the state.

 

 

Kentucky Moves to (Slightly) Liberalize the Secondary Booze Market

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As DrinksReform.org has covered in the past, the secondary market for alcohol remains heavily restricted in the United States. In fact, R Street has previously advocated for freeing up this market as a way of preventing sellers from turning to the black market. According to renown whiskey writer Chuck Cowdery, Kentucky recently enacted a Vintage Spirits Law that will at least slightly liberalize the secondary market for booze in the Bluegrass State:

"On January 1, Kentucky’s new ‘Vintage Spirits Law’ took effect. The new law (actually, revisions to the commonwealth’s existing alcoholic beverage statute) says, “A person holding a license to sell distilled spirits by the drink or by the package at retail may sell vintage distilled spirits purchased from a nonlicensed person upon written notice to the department in accordance with administrative regulations promulgated by the department.”

It further defines ‘vintage distilled spirit’ as “a package or packages of distilled spirits that are in their original manufacturer's unopened container; are not owned by a distillery; and are not otherwise available for purchase from a licensed wholesaler within the Commonwealth.”

As of the January 1 start date, ‘the department’ (i.e., the Kentucky Alcoholic Beverage Control Department [KABC]) had issued no administrative regulations or guidelines. As of now, what you see above is all the guidance there is. Retail license holders who want to take advantage of it will have to interpret the new law for themselves, with advice of counsel, of course...

Kentucky's new law is revolutionary in terms of bringing at least the ‘vintage’ part of the whiskey secondary market out of shadows. It could be a significant boon to tourism..."

Read the rest of the post here.

Kentucky lawmaker charged with breaking liquor law he tried to change

From the Lexington Herald Leader comes news that a Kentucky state representative has been charged with violating a state law that requires alcohol being delivered to retail outlets to only be transported in state-approved vehicles. The lawmaker, who owns a chain of liquor retail stores in the state, was transporting liquor between his stores when he was caught. He now could face a fine or even jail time:

"State Rep. C. Wesley Morgan, R-Richmond, has been charged with breaking one of the half-dozen liquor laws he attempted to change during the 2017 General Assembly.

Morgan, 66, who owns a chain of Liquor World retail stores in south-central Kentucky, was charged April 26 with illegally transporting alcoholic beverages through dry or moist territory.

A Barbourville police officer said he caught Morgan illegally carrying “a large amount of assorted liquor” in the back of a 2012 Chevrolet Silverado pickup truck, according to the police citation. Morgan told the officer he was moving the liquor between his stores.

Under Kentucky law, alcohol can be delivered to retail outlets or bars only by vehicles that have a state-approved transporter’s license. The crime with which Morgan is charged is a Class B misdemeanor that can bring up to 90 days in jail, a $250 fine or both..."

Read more here: http://www.kentucky.com/news/politics-government/article148571134.html