Both sides of the so-called “Beer Bill” before the Kentucky General Assembly argued themes of competition, fairness, and jobs before a Senate committee yesterday. House Speaker Greg Stumbo (D-Prestonsburg) said his House Bill 168 creates a level playing field for beer distributors by having them abide by the same rules as wine and distilled spirits.
Under current state law, Kentucky has a three-tiered system for alcoholic beverages, which separates production, distribution, and retailing functions. But a loophole allows companies that make beer outside of Kentucky to open their own distribution centers in the state and cut out the middleman. Stumbo’s bill would, in essence, outlaw beer brewers from owning Kentucky distributorships.
Representatives of St. Louis-based Anheuser-Busch contend HB 168 would force them to close their existing distribution operations in Louisville and Owensboro, and result in 200 lost jobs. Damon Williams, director of sales and marketing for Anheuser-Busch, told the Senate Licensing, Occupations, and Administrative Regulations Committee on Tuesday that the matter is an issue of property rights.
Sen. Joe Bowen (R-Owensboro) challenged the fairness of HB168 on behalf of Anheuser-Busch. The company bought a distributorship in Bowen’s district last year.
Francis X. Smith, head of Smith Brothers Distributing Company, an independent distributor in Bardstown, urged senators to grandfather in Anheuser-Busch so they could keep their distributorships.
The committee declined Smith’s request for a grandfather amendment.
An Aversion to Vertical Monopolies
Speaker Stumbo argued that Anheuser-Busch’s distributorships in Kentucky would likely be bought by another company so no jobs would be lost. He said a truly equitable system can only be achieved through his plan to strengthen the current three-tiered system.
Daniel Harris told the Senate panel that his Lexington microbrewery has experienced phenomenal growth since opening three years ago. He said Country Boy Brewing has gone from producing 15,000 gallons of beer in 2012 to a projected 250,000 gallons this year.
Licensing and Occupations Committee Chair Sen. John Schickel (R- Union) said he supports the Beer Bill and favors equitable leveraging of the three-tiered regulatory system. He added that history offers a valuable guide in settling the matter.
Given previous vertical monopoly issues, Senate Majority Floor Leader Damon Thayer (R-Georgetown) argued the alcohol industry is not a free enterprise. He said consumer protections inform his support of the legislation.
HB 168 advanced from the Senate Licensing and Occupations Committee on an 8 – 3 vote Tuesday. Sen. Bowen joined Senators Denise Harper Angel (D-Louisville) and Jimmy Higdon (R-Lebanon) in voting against the measure.
Sen. Julie Raque Adams (R-Louisville) filed a floor amendment to HB 168 that allows brewers like Anheuser-Busch to hold up to two distribution licenses. The full Senate is slated to take action on the Beer Bill this afternoon.
Follow @ReneeKET on Twitter for updates throughout the day, and for a recap of the full day’s activities, watch Legislative Update, weeknights at 11 on KET. You can also follow the Kentucky General Assembly on KET’s Legislative Coverage app for your smartphone or tablet.