ABL Files Amicus Brief with U.S. Supreme Court in Tennessee Wine & Spirits Retailers Association v. Byrd
American Beverage Licensees (ABL) submitted an amicus brief on November 20, 2018 with the U.S. Supreme Court in the case of Tennessee Wine and Spirits Retailers Association v. Byrd. As the petitioner in the case, the Tennessee Wine and Spirits Retailers Association is asking the Court to hold that Tennessee’s durational-residency requirement for granting retail and wholesale alcohol licenses is protected under the Twenty-first Amendment, and to reverse the Sixth Circuit Court of Appeals’ contrary ruling.
As ABL’s brief explains, the state’s residency requirements are lawful under the Twenty-first Amendment and further the State’s legitimate interests as part of its multi-step and comprehensive three-tier regulatory system. The ABL brief states, “By requiring distribution to occur through entities with sufficient connections to a State, that State can best enforce its own alcohol regulations.” The brief further notes that the physical presence of in-state wholesalers and retailers allows for states to more easily inspect those entities and facilitates enforcement of “laws designed for orderly market conditions and public safety.”
ABL’s brief also points out that the Court has long recognized that the dormant Commerce Clause applies differently in the unique context of state alcohol regulation under the Twenty-first Amendment, and is not intended to eviscerate the core Section 2 power of the Twenty-first Amendment, which explicitly gives a state the right to “regulate the sale or use of liquor within its borders.”
The ruling of the Sixth Circuit, if left to stand, could wrongly expand the express holding in Granholm v. Heald (2005), where the U.S. Supreme Court ruled on when state alcohol laws can treat in-state and out-of-state entities differently. Granholm reaffirmed that the three-tier system is “unquestionably legitimate” and recognized that case dealt with just the first tier of alcohol production – not wholesale or retail tiers.
“Independent beverage retailers support the strong authority of the Twenty-first Amendment, which has been recognized by courts and Congress for decades,” said ABL Executive Director John Bodnovich. “The Twenty-first Amendment and the three-tier system it has fostered have given rise to individual state retail alcohol markets that provide unprecedented choice and value to meet customer needs, while also accounting for those same consumers’ demands for public safety, product safety and accountability by those who produce, distribute and sell beverage alcohol products.”
2019 ABL Annual Meeting Registration Now Open
Registration is now open for the 2019 ABL Annual Meeting, being held March 24-26, 2019 at Bally’s Las Vegas Hotel & Casino in Las Vegas, Nevada. ABL’s signature annual event brings together on- and off-premise beverage licensees to celebrate their important role within the Three-Tier beverage alcohol industry. Registration is available online for $299, which includes access to all general sessions and ABL hospitality events + a COMPLIMENTARY 2-day pass to the Nightclub & Bar Show 2019 Expo Hall & Sessions (Valued at $499).
General Sessions at the ABL Annual Meeting will provide attendees with the latest updates on the beverage alcohol industry from on- and off-premise industry experts. Presentations, interactive panel discussions and briefings will address strategies for beverage retailers to improve their businesses, product trends, and the alcohol policy environment. Additional information regarding speakers will be announced in the coming weeks.
“The meeting’s theme, The Challenge of Change, underscores that the beverage alcohol industry is changing faster than ever, which presents opportunities but also requires vigilance,” said ABL Executive Director John Bodnovich. “We’re eager to examine the issues facing beer, wine and spirits retailers as they evolve to meet their customers’ needs while still operating in a regulated and orderly beverage alcohol market.”
America’s Beer, Wine & Spirits Retailers Create 2.03 Million Jobs & $122.63 Billion in Direct Economic Impact
As the American economy continues to grow, a new economic impact report released today details the significant impact that America’s beer, wine and spirits retailers have on their local, state and national economies through job creation, direct economic impact and the generation of tax revenues.
The 2018 Economic Impact Study of America’s Beer, Wine & Spirits Retailers provides an in-depth look at the important role that beverage licensees play by creating more than 2.03 million jobs from direct retail alcohol sales and paying more than $47.9 billion in local, state and federal taxes. The direct economic impact of America’s beer, wine and spirits retail industry is more than $122.63 billion annually; the total economic impact of the industry is $363.33 billion annually; and the industry is responsible for 1.65 percent of the U.S. economy based on total GDP.
“Now in its fourth iteration, this independent economic impact report confirms the value licensed beverage retailers provide to their communities and adds an economic chapter to the success story of a beverage alcohol marketplace that delivers more choice to consumers than ever before,” said ABL Executive Director John Bodnovich. “As grassroots advocates for the thriving hospitality industry, independent beverage licensees frequently share the stories of their Main Street businesses and how they are part of the civic fabric of their hometowns. This report underscores their remarkable impact as employers, taxpayers and economic engines at the local, state and national levels.”
The biennial report – which updates the 2016 Economic Impact Study of America’s Beer, Wine & Spirits Retailers – was conducted by economic research firm John Dunham & Associates. All alcohol-related jobs in on-premise full-service restaurants and drinking places, as well as all alcohol-related jobs in off-premise package stores, are included as these businesses depend on the sale of alcohol for a substantial portion of their revenues and profits. In all other locations, this analysis examines on- and off- premise retail alcohol beverage sales accounting for full time and equivalent jobs related solely to the sale of alcohol.
“The beverage alcohol industry is one of the most dynamic sectors of the economy today. Licensed on- and off-premise establishments, be they taverns, restaurants, hotels, package stores, or local grocers, are an important part of nearly every community in the country,” said John Dunham, Managing Partner of John Dunham & Associates. “Not only do they provide important jobs and services, but they also generate millions of dollars in tax revenues for the federal, state and local governments.” Dunham added, “Our research shows how this growing industry creates more than 9 million full-time equivalent jobs, real jobs held by real people in a variety of fields including manufacturing, agriculture and hospitality.”
A Tool for ABL Members: ABL members have access to state-specific breakdowns of the 2018 Economic Impact Study of America’s Beer, Wine & Spirits Retailers via the ABL website (www.ablusa.org). These reports, talking points and data sets can be created and downloaded to reflect the impact of retail beverage alcohol sales at the national, state, congressional district, and state legislative district levels. This provides ABL members with a means to demonstrate the significant contributions they make to their local communities. ABL members can obtain a password to download reports by contacting their state licensed beverage association.
“ABL supports its members as they advocate for their businesses and industry in their state legislatures, and support commonsense alcohol laws and regulations,” noted Bodnovich. “This report and its findings will aid them in these efforts.”
2018 Election Recap
OUTLOOK: Beer, wine and spirits know no political affiliation and it is with that in mind that beverage retailers will get to work with the newly elected 116th Congress, governors and state legislators in 2019. In Washington, the Democratic party has won control of the House of Representatives for the first time in 8 years, while Republicans took advantage of a favorable election map to expand their majority in the Senate. With divided government returning to Washington, the outlook for the new Congress is muddled. House Democrats have expressed their interest in working on a bipartisan infrastructure bill, lowering prescription drug prices, strengthening data security and privacy, and working together on less partisan issues. However, House Democrats will also be driven by a sense of professional oversight duty and the politics that comes with it. The test of expected Speaker of the House Nancy Pelosi (D-CA) will be to balance the impulse to resist the Administration at all turns while demonstrating an ability to govern and get results.
The Senate, meanwhile, is likely to further embark on remolding the federal judiciary by approving federal judicial appointments while operating at its traditionally slower pace than the House. So-called “must-pass” legislation will likely provide the few opportunities for major legislative action with the lens of the 2020 Presidential election already coloring the debate. Nonetheless, there will be plenty to work on for beverage licensees and their industry counterparts in the 116th Congress.
U.S. SENATE: Republicans will add to their majority in the Senate, but by just how many seats is in question thanks to one race headed for a recount (Florida) and a run-off in another (Mississippi). With those two races outstanding, Republicans currently hold a 51-47 advantage in the Senate thanks to a net gain of one seat. GOP candidates unseated Democratic incumbents in Indiana, Missouri and North Dakota, and held off challenges in Tennessee and Texas. Democrats picked up a Republican seat in Nevada, and successfully defended seats in Michigan, Minnesota, Montana, New Jersey, West Virginia and Wisconsin.
U.S. HOUSE OF REPRESENTATIVES: At the time of this writing, Democrats hold a 227 to 198 majority in the House of Representatives with races still not called. What is currently a 32-seat net gain is comparable to Democrats’ 2006 “blue wave” election in the House, when they picked up a net of 32 seats. Democratic candidates were broadly successful in suburban districts, and districts that went for Hillary Clinton in 2016 in otherwise red states.
Increasingly a bipartisan issue and one in which the public may be ahead of the politics, cannabis will likely be a point of focus in the 116th Congress. Already in the current Congress, there are more than 40 bills that have been introduced that deal with cannabis in some capacity. As more states legalize recreational cannabis, and with Canada dropping its federal prohibition on October 17 of this year, the ripeness of the issue will only grow, especially with a Democratically-controlled House. Still, legalization faces headwinds from the anticipated GOP Senate leadership. ABL members are experts when it comes to operating in a primarily state-regulated system for an age-restricted consumer product and are natural resources for those legislators who wish to regulate cannabis like alcohol.
Since the passage of the last surface transportation bill in 2015, there has been limited activity on impaired driving in Congress. A growing amount of attention has been paid to impaired driving to include distracted, drowsy and drugged driving, which has seen an uptick thanks in part to the proliferation of recreational cannabis laws and the opioid epidemic. Now, with the possibility that an infrastructure bill could be gaining momentum as a bipartisan “compromise” issue, and with some impaired driving prevention champions returning to positions of power on committees of jurisdiction, it will be important for those who are committed to stopping drunk driving to meaningfully engage the issue once again.
Music creators have received a boost with the elevation of Senator-Elect Marsha Blackburn (R-TN) and likely House Judiciary Committee Chairman Jerry Nadler (D-NY), two staunch advocates for songwriters and publishers. In 2015 they jointly introduced the Fair Play Fair Pay Act, which would have required terrestrial radio stations to pay artists and labels for their use of recordings. They have also been key supporters of the Music Modernization Act, which was signed into law earlier this year. Rep. Jim Sensenbrenner (R-WI), sponsor of the Transparency in Music Licensing and Ownership Act (H.R. 3350), was reelected in 2018, as he has been since 1978.
With Rep. Richard Neal (D-MA) set to take the gavel of the House Ways and Means Committee, House Democrats are poised to scrutinize and propose changes to the GOP’s Tax Cuts and Jobs Act, which is not even one year old. Passed last year, the bill permanently cut corporate tax rates to 21 percent, and lowered the top rate for individuals to 37 percent. Democrats have attacked the laws as a corporate giveaway and may be less inclined to extend or make permanent expiring tax provisions from the law. Among those provisions are reductions in excise taxes paid by brewers, distillers and winemakers, which end after 2019. Neal may also look at the $10,000 cap on state and local taxes (SALT).
Three of four states passed cannabis ballot initiatives on November 6, growing the roster of states that have created markets for recreational cannabis to 10 (+DC) and medicinal cannabis to 33.
Michigan (Proposition 1) – With 55.9 percent support, voters passed a measure to legalize adult use cannabis for those 21 and older. Eligible individuals can purchase, possess and use marijuana and marijuana-infused edibles; grow up to 12 plants for personal consumption, and maintain a 10-ounce limit for marijuana kept at residences. The measure creates a state licensing system for marijuana businesses to include growers, processors, transporters and retailers. Municipalities will have local control to ban or restrict marijuana businesses, and commercial sales through licensed retailers will include a 10 percent excise sales tax (in addition to the existing 6 percent sales tax) to go to schools, roads and municipalities where cannabis businesses are located. Michigan is the first midwestern state to legalize recreational cannabis, though the state legalized medicinal cannabis in 2008.
North Dakota (Measure 3) – With 59.5 percent of voters opposing, “Measure 3” failed to bring recreational cannabis legalization to a “red” state. The initiative would have allowed people 21 and older to possess, use, grow, buy, and sell cannabis for recreational purposes. It also would have created penalties for people under 21 possessing or attempting to distribute marijuana, and for distributing marijuana to those under 21. It would also have expunged previous marijuana convictions from criminal records. However, the referendum language was silent on regulations and taxes, which may have contributed to its demise.
Utah (Proposition 2) – “Proposition 2” has received 53.15 percent of voters’ support with 76 percent of the ballots counted. The measure would legalize the medical use of marijuana for individuals with qualifying medical illnesses but prohibits smoking marijuana, instead allowing vaping, edibles, and other means of consuming cannabis. The referendum creates a state system that will license and regulate medical marijuana businesses, including growers and dispensaries.
Missouri (Amendment 2) – An initiative which allows doctors to prescribe medical cannabis for a slate of 10 medical conditions, levies a 4 percent sales tax on cannabis, and adds patient use provisions for home growth and easier access, received 65.5 percent support in the Show Me State. The sales tax is expected to generate $24 million in revenue a year.
Montana (I-185) – Voters struck down a measure that would have increased the state tax on cigarettes by $2.00/pack (to $3.70).
South Dakota (Measure 25) – An initiative to increase the state tax on cigarettes by $1.00/pack (to $2.53) failed.
ODDS & ENDS
National Divide…In a stark display of the nation’s divide, the lower and upper chamber of every legislature but one — Minnesota — will be controlled by the same party following Tuesday’s midterm elections. It will be the first time in 104 years that only one state will have a divided legislature. Three states were divided, and Nebraska has a unicameral, nonpartisan legislature. With the election results, the Republican Party will control both houses in 30 states, while Democrats will hold complete control in 18 states. Democrats will control 23 governorships, compared with 26 for Republicans. One contest — in Georgia, between Brian Kemp, a Republican, and Stacey Abrams, a Democrat — has not been called. Twelve states will have a governor of one party and a legislature representing the other party. (Source: New York Times)
Good Batting Average…In the 2018 Elections, the Tavern League of Wisconsin made endorsements in 90 races. TLW endorsed candidates won in 86 (95%) of those races, including 2 targeted Congressional seats and 15 targeted Legislative seats.