Wisconsin Brewers, Wholesalers At Odds Over Proposed Changes to Alcohol Laws

Craft beer manufacturers are attacking Wisconsin wholesalers over a legislative push to draw stricter boundaries among the three tiers of the state’s alcohol industry.

Last week, the Capital Times reported that the Wisconsin Tavern League, Wisconsin Beer Distributors Association and the Wisconsin Wine and Spirits Institute were circulating a proposal that would eliminate crossover among the tiers.

Under the proposal, a permit or license holder in one tier would be barred from holding an interest or ownership in another tier “regardless of the subchapter and type of alcohol beverage product sold.”

Additionally, the legislation would create a government agency, the Office of Alcohol Beverages Enforcement, to police the industry. Currently, the Department of Revenue enforces the alcoholic beverage laws within Chapter 125.

Beer companies believe the creation of a “hard definition” of the intent of the law could strip away rights currently granted to brewers.

“That’s the biggest and scariest part of this,” Wisconsin Brewers Guild president William Glass told Brewbound. “They’re laying the groundwork for a slippery slope that works to their advantage.”

Meanwhile, a source close to the wholesalers told Brewbound that the changes aren’t meant to strip away rights, but rather to establish a point of contact for alcohol-related issues. The source also said the proposed legislation had nothing to do with taprooms, brewpubs or retail rights, which are allowed through a separate section of Wisconsin code.

According to the drafted proposal, the director of the Office of Alcohol Beverage Enforcement would be appointed by the governor and confirmed by the state senate for a six-year term. The director would then appoint 15 additional employees to permit, audit and enforce liquor licenses statewide. The formation of the office would cost $2 million, and would be funded via fees collected by the DOR. However, it’s unclear how the office would remain funded.

The leak of the measure comes as Wisconsin lawmakers attempt to reach an agreement this month on the state’s budget.

Glass told Brewbound that the guild, the Wisconsin Winery Association and the Wisconsin Distillers Guild were never consulted about the plan and fear the legislation will be pushed through via a 999 motion, which have been historically used to move forward special interest legislation.

“They have got to come to us and talk to us if they’re going to change our industry,” said Glass, who is also the president of The Brewing Projekt brewery in Eau Claire. “It’s inequitable and dishonest for them to speak on our behalf, and we have asked to be at the table.”

New Glarus founder and president Deb Carey told Brewbound that she believes the wholesalers are leading the push for the measure.

“The reason we’re concerned about it is that every time we get ‘help’ from another tier without any input from the breweries, it ends up being something that harms us,” she said. “We would really like to have a seat at the table and have some input into what’s going on.”

Carey added that she has a hard time believing that the Tavern League of Wisconsin is supporting legislation that would impose “long list of fines on tavern owners.” She believes “someone is trying to stir up mud and make it the brewers against the taverns.”

“This was written by the liquor wholesalers,” she said, specifically naming lobbyist Eric Peterson. “It’s the fourth time that I’ve seen it floating around.”

Carey continued: “They would like it if the brewers were in an argument with the Tavern League. We love the Tavern League. We have no qualms with anything they would want.”

The idea of a “pure” separation in the three-tier system is “a new development over the last five years” in Wisconsin, Carey said.

“It never has been pure,” she said. “When I started my brewery, you were required to have a wholesaler license. A lot of restaurants invested in breweries, and wholesalers invested in breweries and restaurants.”

Calls to Tavern League of Wisconsin lobbyist Scott Stenger were not returned.

Meanwhile, MillerCoors director of state government affairs, Paul Lucas, had initially signaled the company’s support for the proposal during an early drafting of the legislation.

However, in an email dated May 3 and obtained by Brewbound, Lucas backtracked on his initial support for the “creation of a new division of alcohol enforcement,” while simultaneously calling for “clarification of legislative intent” on cross-tier ownership.

“For MillerCoors, this change in state law is the clear priority,” Lucas wrote. “Without such a change, the industry runs the risk of cross-tier ownership expanding at a significant level and places others restrictions central to our system at risk. Again, this is our number one priority.

“Simply put, we are unwilling to accept the increased scrutiny into our marketing and trade practices that a stand-alone enforcement agency will invite,” he continued. “We have the experience of 49 other states, many with similar type structures, as a reminder of why we don’t wish to create such an environment for ourselves. We do see the need to force upon Revenue the creation of a senior level person dedicated to alcohol issues and enforcement.”

In a letter to Gov. Scott Walker and the Wisconsin Legislature, dated May 31, Glass wrote that the proposed changes are “a solution in search of a problem.”

“As Wisconsin’s independent craft brewers, we are not three-tier abolitionists; rather we are simply looking for an equitable relationship and an even playing field within our industry,” Glass wrote.

Wisconsin law currently permits breweries to self-distribute up to 300,000 barrels of beer annually, and suppliers can also operate up to two retail locations within the state.

“Despite our ability to cross the tiers and effectively operate as manufacturer, wholesaler and retailer, our commitment to the responsible trade practices and adherence to Chapter 125 has never wavered,” Glass wrote.

Glass has also called on lawmakers to modernize the laws within Chapter 125.

The proposed legislation has also run into opposition from Americans for Prosperity Wisconsin.

“At a time when we should be looking to modernize the system and have some flexibility to reflect what consumers want and instead the distributors want to go in the opposite direction and really tighten things up,” Americans for Prosperity Wisconsin state director Eric Bott told the Capital Times.

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