I recently called an op-ed published in the Missouri Times on HCS, HB 433, a bill being promoted by Maryland based liquor store giant Total Wines & More, “a crock” on social media, and here’s why.
HCS, HB 433 isn’t about freedom or transparency. In fact it has little or nothing to do with either and everything to do with facilitating a cosmic sales shift of alcohol sales from small to medium sized Missouri based retailers to the Maryland based retail giant that is promoting its passage.
If this sounds familiar, it’s similar to the sales shift tobacco giants Altria and RJ Reynolds have attempted for over a decade in Missouri under the guise of “closing a loophole” that just happens to shift millions in cigarette sales annually from their small competitors to their bottom line.[1] The arguments are different, but the tactics are the same… “Change the law to benefit your bottom-line by exploiting a perceived legal crisis”.
The sponsor of HCS, HB 433 promotes the bill as freedom and transparency. He say’s it’s needed as a solution for a lawsuit filed in the 8th federal circuit in 2013 that challenged the states right to regulate advertising, specifically advertising liquor below cost. The lawsuit was dismissed by the trial court and appealed in 2016. The federal appeals court reinstated and remanded the lawsuit back to the trial court for hearing in January 2017.
The federal trial court has yet to hold a hearing upon remand and Missouri’s new Attorney General hasn’t opined publically on the merits of the case. So, the normal-prudent course of action, wait until the trial court makes a ruling, then change the law accordingly if need be, has been thrown out the window in favor of using the “perceived legal crisis” created by the federal lawsuit to liberalize the advertising and sale of liquor in Missouri.
The final version passed by the House hamstrings the current below cost advertising law by tying the restriction to an ambiguous state regulation that can be withdrawn or changed by administrative or legal action at any time. Normally, rules and regulations are anchored in statute, not the other way around. So if Governor Greitens executive order requiring the review of all state rules and regulations results in a determination that the below cost advertising regulation needs to be revoked, the current restrictions on below cost advertising of liquor will cease to exist.
In addition to the advertising issues, the bill authorizes the use of point of sale coupons, rebates, prizes and promotions, a practice that’s currently prohibited under Missouri law, and used in other states to make booze the ultimate retail loss-leader. The bill also authorizes manufacturer mail-in coupons for beer and wine, another promotional move that will disadvantage small craft brewers and Missouri vineyards and benefit the major brewers and one large west-coast wine producer in particular.
So, rather than strengthen Missouri law to keep the playing field level for all Missouri alcohol retailers, HCS, HB 433 turns these simple, common sense advertising and sales restrictions on their ear under the guise of “freedom” and “transparency”.
There are multiple examples of the potential pitfalls associated with the bad public policy being promoted by HCS, HB 433. One such example is that these changes will also allow on-premise below cost advertising of drink specials in the media such as “Nickel Shot Night”, where $1 can get you extremely intoxicated; “Half-price Beer Pitcher Night”, another great way to get hammered; or, buy one bottle get one free. It seems there are endless ways to recklessly promote over-consumption contained in HCS, HB 433 under the guise of freedom and transparency…
I have great respect for the bills sponsor as he has always agreed to meet with my client and me on this matter. But, as we agree to disagreed without being disagreeable on the merits of HCS, HB 433, I remind him that all politics are local and the local guys, the Missouri based companies that have been here for generations creating jobs and being active in the communities they serve, don’t like the changes he’s proposing primarily because HCS, HB 433 favors Maryland based Total Wines & More’s business model to the detriment of local businesses.
If Missouri’s liquor laws need to be changed, the legislature should establish a joint House and Senate committee to study the issues, packaged sales, on-premise sales, interstate shipments, inducements, merchandise, etc. in the same manner in which the criminal code was recently reviewed and changed a couple of years ago. A methodical review that protects the interests of Missouri based manufacturers, wholesalers, retailers and consumers is the only fair way to insure a level playing field for all.
Missouri legislators need to stop the race to the bottom by saying “NO” to the rank cocktail being served up in HCS, HB 433.
Charles Andy Arnold is a consultant and registered lobbyist at Arnold & Associates representing Randall’s Wines & Spirits in opposition to HCS, HB 433.
[1] The Missouri legislature passed legislation in 1999 (sections 196.1000 to 196.1003), at the behest of the major cigarette makers as a condition to participate in the tobacco master settlement agreement. The statute is designed to impose the same financial burdens on small cigarette makers, who make annual escrow payments to cover the settlement costs of a future lawsuit, in lieu of payments under the settlement. The statute contains a release provision that allows the small cigarette makers to get a release of amounts put into escrow that exceed the states allocable share percentage of the national settlement. The major manufactures have characterized this release provision as a “loophole”, and have promoted legislation for over a decade to eliminate it. The elimination of the release provision would cause the price of the small cigarette manufacturers brands to increase dramatically, thus shifting sales to the major cigarette manufacturers.
