Tuesday, February 07, 2006

Legislative update: Two Indiana House bills that restrict consumer choice by targeting small breweries and wineries.

I’m tracking legislation in the Indiana House and Senate with potentially adverse commercial consequences for the state's small-scale, artisanal beer and wine producers.

To express the reasons for this situation in a nutshell, the recent US Supreme Court ruling on wine shipments is being construed (probably correctly) by the wholesale alcoholic beverage lobby nationwide as potentially injurious to its protected status within the "three-tier" distribution system maintained as a bulwark against genuine free trade since the repeal of Prohibition.

Combine the weight of the skittish wholesaler lobby with relentless efforts by various groups working toward occasionally worthy matters like reducing teenage drinking, and it's not surprising to see legislators in most states scrambling to tighten regulations on alcohol distribution and to preserve the sacred status of the three-tier system -- not because the system is particularly Constitutional in nature or ever really was from the beginning, but because a considerable bureaucracy exists to perpetuate the three tiers, and as we know all to well, bureaucracies ranging from Communism to apartheid seldom put themselves out of business without a stake driven directly into the heart.

Here are summaries of what is objectionable about these bills. Bear in mind that both incorporate measures to deprive legal consumers of alcoholic beverages of choice, and to further reduce free trade in business that enjoys precious little of it from the start.

House Bill 1190: Farm winery sales to retailers.

See this article in the Indiana Law Blog.

The bill originally was authored by Rep. Marlin Stutzman, and later Rep. Eric Koch was added as co-author. Rep. Koch, a friend of small wineries, was dismayed with the final form of the bill, eventually speaking and voting against it.

Nevertheless, it passed and moves on to the Senate. Happily, local Representatives Bill Cochrane, Carlene Bottorff and Paul Robertson voted against the bill.

If HB 1190 emerges from the Senate in its present form and becomes law, Indiana's small wineries would not be able to ship wine to customers or to sell to retailers without the wine first passing through the hands of a wholesaler. It should suffice to say that these existing conditions of business have prefaced the business plans of Indiana's small wineries, with the inevitable conclusion that they would be affected deeply by such a change.

As the prescient folks at the Indiana Law Blog point out, the bill offers a bizarre plan to discontinue a system that currently works as intended and to substitute for it a convoluted compromise that does nothing except add layers of profit to middlemen.


House Bill 1250: Alcoholic Beverage Matters

The major impetus of HB 1250 appears to be placating concerns that grocery stores and pharmacies are not as tightly regulated as package liquor stores with respect to alcohol sales. There are a number of seemingly minor changes and alterations, but one that stands out for small brewers:

This is the section of the current law that allows dock sales and growler sales at Indiana’s small breweries, which may …

(7) Sell and deliver beer to a consumer at the plant of the brewer or at the residence of the consumer. The delivery to a consumer shall be made only in a quantity at any one (1) time of not more than one-half (1/2) barrel, but the beer may be contained in bottles or other permissible containers.

This passage is deleted in the current version of HB 1250, which appears to be heading to the Senate in this form, although I’m not certain if the final vote has yet been taken.

Oddly, HB 1250 preserves the legal right of small breweries to sell directly to retailers, which HB 1190 proposes to take AWAY from small wineries. It isn’t clear whether a retailer with package sales amendment and a brewery (for example, NABC) could continue selling bottles of beer it doesn’t make, but be restricted from selling growlers of beer brewed on site.

Rep. Stutzman, whose district borders Michigan north of Ft. Wayne, is a chief mover behind both the preceding bills. He has not answered e-mails asking him to explain his position.


Here is contact information for Southern Indiana's Senators. If you’re a resident of Indiana, please drop all three a line to let them know your feelings on the matter, and don’t hesitate to use the URL of this posting as a reference.

Connie Sipes
Senate District 46 (Floyd and part of Clark)
1825 Ekin Avenue
New Albany, IN 47150
(812) 948-9445
E-mail: S46@in.gov

James Lewis
Senate District 45 (Clark and points east)
774 Level Street
Charlestown, IN 47111
(812) 256-3585
E-mail: S45@in.gov

Richard D. Young, Jr.
Senate District 47 (Harrison & Crawford, points west)
10347 E. Daugherty Lane
Milltown, IN 47145
(812) 633-4946
E-mail: S47@in.gov

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