The Governor signed HB 2223 April 18.  

HB 2223 began in the House of Representatives as the Homebrewer’s Bill, and was amended by the Senate Federal and State Affairs Committee on March 20 to become the 2014 “micro-mega liquor bill”.  This bill includes the few Liquor Control Act items that have been headed for passage this session.  The bill legalizes sharing homemade beer with personal guests and judges at a competition - as long as there are no sales of the home brewed product.

The bill includes the contents of SB 346, a bill requested by Kansas Microbreweries to raise their annual production cap from 15,000 barrels to 30,000 barrels.

Additionally, a clause to amend the citizenship requirement for liquor licenses was added.  The House Federal and State Affairs Committee held hearings on this issue and adopted the change in HB 2196 and added it to SB 346 as well.  Current law requires applicants for all forms of liquor licenses to be a U.S. citizen for ten years.  Applicants may now qualify if they are currently a U.S. citizen.

Finally, the Senate Federal and State Affairs added a section to clarify that Kansas farm wineries are permitted to participate in consumer tastings at liquor stores as a supplier.

Because HB 2223 has passed the House and the Senate, it is now eligible for conference committee between representatives of the House and Senate Federal and State Affairs committees. The House could also choose to simply concur with the Senate amendment to HB 2223 and the bill would be adopted.

With its passage, it is no longer necessary for the full House of Representatives to debate SB 346 or HB 2196.  Members may remember that House Federal and State Affairs adopted a bill February 14 (HB 2196) that reduces the current 10 year citizenship rule for licensing to simply being a U.S. citizen.  2196 also includes the amendment to open up retailer licenses to unlimited numbers.

Yeah, yeah, we know what you're thinking: This can't possibly be real, right?

Wrong.

This week, the U.S. Alcohol and Tobacco Tax and Trade Bureau approved Palcohol, an alcoholic powder that comes in four highly questionable flavors: Cosmopolitan, Powderita (it "tastes just like a Margarita") Lemon Drop and Mojito (in case you really hate muddling mint that much).

Why, you ask? Well, as Palcohol's website states, this super-handy new product is "a great convenience for the person on the go. One package weighs about an ounce and is small enough to fit into any pocket."

So if your bottle of single malt Scotch or fancy gin proves to be too much of an inconvenience to you, all you have to do is add a packet of Powderita to your water bottle, shake and you've got a cocktailundefinedno bulky bottle of tequila necessary.

And our personal favorite use of Palcohol isn't the easy drink on-the-go philosophy; it's the possibility of adding a kick to our favorite foods. The company suggests "adding Powderita powder to guacamole, Cosmopolitan powder on a salad, V in a vodka sauce, etc." The possibilities are endless.

Of course, many concerns have been raised about the snort-ability of alcohol in powdered form, which is a disturbing thought indeedundefinedespecially considering most of Palcohol's products are about 55 to 65 percent ABV. But the company claims to have added enough volume to the powder that it would "take more than a half of a cup of powder to get the equivalent of one drink up your nose."

So there you have it. Read more about the powdered drink, which is expected to hit liquor store shelves later this year, at Palcohol.com.

2014 may claim the shortest conference committee on a liquor bill.  Today, the Federal and State Affairs conference committee met and discussed the Senate's additions to HB 2223 - originally the House bill to assist Kansas home brewers.  

After going over the contents of the bill, House Chairman Steve Brunk asked two questions - When a farm winery hosts a tasting in a liquor store, does the product have to be sold by the liquor store?  Yes.  When the Senate amended the citizenship provision of the Liquor Control Act, did you make any changes to residency?  No.  The House committee members - Brunk, Couture-Lovelady, and Ruiz - conferred for a few seconds and then agreed to the changes.

The House will vote on a motion to concur on Sub for HB 2223 to accept the bill as amended by the Senate Committee of the Whole.  

The bill is described at http://kansasretailer.org.  Don't hesitate to contact us if you have any questions.

The House Commerce Committee Chair, Rep. Marvin Kleeb, has indicated that his committee is likely to finish its debate on HB 2556 on Tuesday, March 25.  The Committee typically meets at 1:30 p.m.  The Legislature has now passed the deadline for committees to work bills - but HB 2556 is an exempt bill.

Read the substitute proposal for HB 2556 here.

(March 19)  The Commerce Committee received copies of the new substitute bill as proposed by Chairman Marvin Kleeb - March 6.  The Committee debated the substitute proposal on Wednesday, March 19, then ran out of time before considering other amendments.  Click here for the notes of the full discussion.

It is a very different bill, with some interesting new elements - including wine licenses, strong beer licenses, a temporary cap on full liquor sales licenses and license perimeter restrictions.  Amy Campbell, KABR lobbyist, was asked to speak briefly to the committee - commending the new proposal for attempting to create a ten year transition and a true effort to create some value for the current Kansas retailers' investments.   None of the original Uncork bills have included these measures as advertised.  She also expressed concern about where the proposal comes up short.  The committee discussion highlighted a great deal of confusion.  

Tom Palace, Petroleum Marketers and Convenience Stores Association, spoke for the Uncork Coalition.

The debate was nearly sidetracked when the Vice Chair made a motion to adopt the proposed substitute language.  It nearly failed, with a tie vote at 7-7.  The Chairman had to break the tie, voting yes. 

(NOTE:  This is typically just a procedural vote to allow for debate, but committee members seemed to see this as a chance to avoid further work on this bill and attempted to deny the motion.  One committee member had left the room at that point.)

The Committee skipped its announced hearing on SB 203 from 2013. (Link to SB 203) That bill includes provisions that were passed in 2013, and also has a citizenship section.   As a senate bill, it is an attractive vehicle for anything the House might like to pass and potentially bypass Senate committee consideration.

H2556 – Big Box Liquor Bill Hearing Notes – February 19, 2014

Good turnout today from retailers.  Much smaller turnout for the Big Box / grocery / convenience store group.  Thanks to all who came.  As we know from experience, the next week or so will be key - the Committee could vote on the bill as early as next Monday.  But the Committee appears to have a full schedule that day. 

On the other hand, some legislators suggest that there may not be an appetite to work this bill – it is an election year after all. But there are a couple of legislators on this committee who genuinely favor the concept and may push it forward. 

Communicate with your legislators immediately – you can share some of the information put forward today.  For instance – the2013 Public Survey indicating that Kansans do not support the deregulation of liquor/sale in grocery and convenience stores. Communicate with the Commerce Committee.  Remember – always be professional and courteous.  And let us know if you need assistance.  Take advantage of the hotline – 1-866-519-2200 during office hours.

We know from experience that one-on-one conversations of citizens and their legislators are the most effective way to continue to defeat these bad bills.   Read More...  

Today, the House Federal and State Affairs committee radically altered HB 2196 and passed it.  The intention of the underlying bill was to reduce citizenship requirements for distributors.  This morning, committee members adopted an amendment to allow retailers to own an unlimited number of retail liquor stores.

Rep. J.R. Claeys (R-Salina) called his amendment pro-America and pro-jobs.  The amendment was not made public prior to the committee meeting this morning, and there was no public hearing on the issue. 

Since this was a new issue and had not been a part of the public hearing on HB 2196, the Chairman Steve Brunk (R-Wichita) said he was interested in hearing from people in the audience who wanted to comment.  Amy Campbell, lobbyist for the Kansas Association of Beverage Retailers, was present and offered comments.

The issue of single licenses for retailers is not about commercial enterprise, it is about regulation.  One of the strongest lessons from prohibition was that control of the marketplace for alcoholic liquor by one or a few interests results in regulatory problems.  It is detrimental to public health and safety.  So, an effective and efficient method of regulating alcoholic liquor is to require single ownership – single outlets.  There are many states besides Kansas who use this system.  In fact, many of the states that actually allow corporate / grocery sales of alcohol only allow a single license.  Colorado is an example of that.

This amendment is a major restructuring / major policy change for the liquor control act.  It is significant and should have its own bill and its own public hearing.  There a many policy questions that should be reviewed – would it allow mingling inventory? Joint warehousing? Single point of delivery and payment? Could the locations share employees?  What does it mean for volume discounting?

It has been said that we are using an artificial method of multiple licensing by allowing individuals’ spouses or adult children to own liquor stores.  I want to point out that it would be illegal to just put someone’s name on the license.  The individual must be engaged in the business, pay for the product, etc.  Kansas has cited cases in the past where the ownership was artificial.  This assures that the State has someone who is directly responsible for the license, for the sale of alcoholic liquor.

This requires a different level of enforcement and regulation.  Investigators have to be able to review invoices and trace transactions, etc.

Said that a letter had been sent to all of the retailers in the state last week saying that the retail liquor lobbyists in Topeka didn’t care about small stores and only cared about the biggest liquor stores.  Wanted to state clearly that this bill will have a definite impact on the smallest stores, and they should have an opportunity to weigh in on this bill through a public hearing and testimony.

Stated that KABR does not have a position on this issue – it was just dropped in this meeting with no opportunity for review or input.  Stated that there would be some retailer who would appreciate owning multiple stores and some who would definitely oppose the change because of the changes it would make in the marketplace.

There were a lot of questions.  Mostly about whether or not the inventory questions could be resolved in rule and regulation.

Rep. Claeys stated that he had no intention of affecting any other rules of how the stores were operated and would not suggest changing the inventory or other rules.

ABC Director Dean Reynoldson also took questions.  When asked if they knew this amendment was coming, he said they had heard about it.  When asked if they could handle the details through rules and regs, he said that the more direction they could receive from the Legislature, the better it would be.  Trying to develop rules and regulations when intent isn’t clear creates debates within the industry about how the rules were supposed to be written.  He said that he didn’t expect the change to cost the state any additional money and didn’t expect it would gain any additional money although there might be some additional licenses.

Tom Palace, lobbyist for the Petroleum Marketers and Convenience Stores Association, stood up and asked to comment.  He said that he is a liquor store owner himself and he would support the change to bring Kansas into the 21^st century.  Also said that he would support allowing corporations to own the licenses as well.

Rep. Houser (R-Columbus) stated that he wanted to support the underlying bill, because it was simple and addressed citizenship, but could not support the amendment when it was such a major change and no one had the chance to testify on it.

Rep. Ruiz (D-Kansas City) agreed and said he would also vote against it.

The amendment passed 14-8 – Campbell, Claeys, Concannon, Couture-Lovelady, Erin Davis, Dove, Estes, Ghandi, Hildebrand, Perry, Petty, Read, Rothlisberg, Waymaster.

No votes – Esau, Ewy, Henderson, Houser, Ruiz, Tietze, Victors, Winn  

After the amendment was adopted, Rep. Couture-Lovelady made the motion to pass the bill as amended favorably – it passed 15-7.

There are many unintended consequences from this proposal that we haven’t had time to research, although there are some opportunities as well.  Obviously, it would increase the buying power and market presence of some retailers.  It could attract chain liquor stores from other states who would simply need to create a Kansas LLC to jump into the market here – along with jumping through a few other hoops.

Please thank the following Representatives for not voting to pass major legislation without public input.  Simply click on their names to link with their contact information.

• Rep. Keith Esau
• Rep. John Ewy
• Rep. Broderick Henderson
• Rep. Michael Houser
• Rep. Louis Ruiz  (ranking minority member)
• Rep. Annie Tietze
• Rep. Ponka-We Victors
• Rep. Troy Waymaster
• Rep. Valdenia Winn

You could also thank Chairman Steve Brunk who gave us a chance to at least comment.  As Chairman, he does not vote unless there is a tie.

Steve.Brunk@house.ks.gov

Uncork Kansas is advertising their new bill as one that accommodates the needs of liquor store owners by stretching expansion of strong beer, wine and spirits into the grocery stores and convenience store shelves over a ten year period of time.  The bill caps class C licenses, but that is a FAKE CAP.   There is no limit on the number of new STRONG BEER licenses and BEER AND WINE licenses in the bill.  Retailers have received two misleading letters.

Uncork Kansas tells liquor store owners they are doing a better job of trying to help small liquor stores than the liquor lobbyists in Topeka – and they ask store owners to join their effort.  We know that the bill written by the big box stores does not create fair competition for Kansas owned liquor stores.  But their letter sounds like a good deal.  Don’t buy it.   

Are they serious? 

Uncork Kansas says their effort to change liquor laws in Kansas has “created for some the faulty perception that we don’t care about you, the liquor store owner.”  According to their letter, they care so much that they are advocating a license freeze.   Their “freeze” only affects beer, wine and spirits licenses, allowing hundreds or thousands of new strong beer licenses in three years and the same number of strong beer/wine licenses in six years.  Plus, it allows corporate big box stores – and everyone else – to sell strong beer, wine and spirits by purchasing a license in one year.   You, however, won’t be allowed to put other products in your store until much later (2020).

They argue that the liquor lobbyists are “actually more vested in the best interests of only a select few, not the entire body of Kansas liquor store owners.”  What is their evidence?  They attach a list of members of the Kansas Association for Responsible Liquor laws – and print in bold across the top:  Who does the liquor lobby represent?  Only the most profitable liquor stores in the most populated areas of KS.   They got one thing right - KARLL IS a small association recently created to link some of the larger stores in Kansas.

They conveniently ignore – or completely dismiss - the KANSAS ASSOCIATION OF BEVERAGE RETAILERS – the statewide association created BY liquor store owners FOR liquor store owners 65 years ago.  That is odd, since our lobbyist met with the Kroger/Dillons president and lobbyist a couple of days before this letter appeared in retailers mailboxes.   KABR has been successfully fighting this kind of le gislation for decades. 

Even more insulting – the letter claims that “Liquor store owners are ready to sell their business.  Yet they’re stuck because no one is interested in buying a liquor store when question loom over how the Kansas legislature will respond to continued efforts to modernize liquor laws.”  It is the looming threat of Uncork legislation that discourages some people from buying a liquor store…. So, their answer is to pass the very legislation that threatens the profitability of an independent liquor store?  Are we really supposed to believe that a grocery store will offer us more money to get out of the business than an entrepreneur who wants to buy a healthy retail store now?   They talk about expansion - are we supposed to believe that a bank is more likely to loan money to a small store for expansion AFTER the Big Box Liquor Bill is passed? 

KABR represents approximately 200 - 225 liquor stores from across the state.  This number goes up and down year by year, but it always includes some of the smallest liquor stores from some of the smallest towns in Kansas, as well as many of the largest stores.   KABR is not giving up on the current Kansas retail liquor marketplace.  It is already privatized, already competitive, and provides a good balance of free enterprise and regulation of an adult-only product.  This is what is best for Kansas and for Kansans.

Wichita area legislators will be participating in a public forum Wednesday evening. Please attend if you can. KABR has two issues of concern – (1) our continuing concern about the Big Box Liquor bills, we hear there will be new proposals introduced this session and we hope legislators will consult with their local licensed retailers about the impact on the community and loss of jobs before they vote on them. And (2) we are concerned about the reduced manpower and budget at the Division of ABC. It has affected their ability to effectively enforce the liquor laws and respond to licensee needs and concerns. Short and sweet! Retailers who attend should be sure to hang around and say hello to their legislators – or get there early enough to catch them in the halls ahead of time. Every time your legislators see that you are engaged, it makes an impression.

Town Hall Legislative Event
Wednesday, January 8, 2014
7:30 PM***, generally last 1 hour
at the Sedgwick County Courthouse, corner of Main and Central.

*** Arrive early to sign in to speak and get a seat. If you want to speak-- sign up early as they only allow so many and the list fills quickly.