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Alcohol Regulation Roundup: December 28

Much a like a family that you don't get to choose, let's make a quick holiday visit to the states around the nation and their bizarre, antiquated, questionable, and sometimes encouraging changes in alcohol regulation (and then get the hell out):

California: According to Assemblyman Jerry Hill (D-San Mateo), party buses in California are unregulated, operating in a legal loophole, and a danger to the state's youngsters. Proposed legislation, AB 45, would change that by imposing fines, criminal charges, and revoking business licenses for operators that fail to prevent minors from consuming alcohol while in their vehicles. Because buses don't usually serve alcohol, the drivers aren't required to check the I.D. of passengers to ensure that they are of legal age. However, in the state of California, providing alcohol to a minor is a crime -- so I assume the alcohol is provided by whomever hires the bus. That means that AB 45, which will be called the "Brett Studebaker" law (after the underage boy who died in an an alcohol-related car crash after a party bus experience), would make the driver of the bus, and perhaps other vehicles like limousines and taxis, liable for the behavior of their passengers. Under the bill, charter bus operators will be required to read a statement to passengers that drinking under the age of 21 is against state law and force underage passengers to sign a statement.

Massachusetts: Good news for folks in the Bay State: as of January 1, 2011, shoppers will no longer be forced to pay the state's 6.25 percent sales tax on alcohol. In November, voters approved a measure to eliminate the tax.

Montana: In Montana, taprooms are only allowed to operate between 10 a.m. and 8 p.m., but a bill sponsored by state Senator Ryan Zinke would shift the hours the hours from noon to 10 p.m. While Montana has relatively liberal sales laws compared to other states, (beer and wine under 16 percent abv can be sold in grocery stores and bars stay open until 2 a.m.), the laws regarding brewpubs in the state are quite restrictive. Beyond the requirement that taps shut down at 8pm, brewpubs are also only allowed to serve 48 ounces of alcohol to each customer in a business day. One way to get around or at least cope with that restriction is to make higher-proof beer. Additionally, most breweries are prohibited from selling food on their premises and as a way around that peculiar law some breweries have opened separate, but attached restaurants to their brewery.

New Jersey: That 3rd Circuit Court ruling that I wrote about last week confirms that parts of New Jersey's liquor law is in violation of the constitution's dormant commerce clause -- in that it unfairly discriminates against out-of-state wineries. While the control board, represented by industry interests tried to have the case dismissed, the court found that the plaintiffs, self-described "wine lovers," had just cause to challenge certain provisions of the ABC law, such as the fact that New Jersey--licensed wineries can sell their products to consumers at retail prices, while wineries without the license must funnel their products through middlemen distributors. The other challenges related to the one-gallon cap on importing wine into New Jersey, and ban on importing wine from states that ban New Jersey wine.

North Carolina: According to some, Governor Beverly Perdue doesn't have much support for her plan to privatize the state's control of liquor sales, but she continues to forge ahead anyway, contracting a Chicago firm to assess the value of state's liquor enterprise and how privatization might occur. Earlier this month, Perdue highlighted her proposals for sweeping changes in the state, including privatization of liquor sales and legalization of video poker.

Oklahoma: The state may soon have wine and "strong" beer in grocery stores. Currently, low-point beer-that is beer under 4 percent abv may be sold in grocery stores. Other types of alcohol and higher gravity beer can only be sold warm in licensed liquor stores. Oklahoma City Chamber President Roy Williams, in talks with legislators, called the state's laws "archaic" and "inconvenient." Reform proponents' best bet would be to show how lightening the alcohol laws could provide a competitive advantage over neighboring state, Kansas, whose laws are similarly restrictive,  and a more equal footing with its neighbor to the east, Arkansas, which has much more lax laws.

Pennsylvania: Good news from the Keystone State: House Majority Leader Mike Turzai is pushing legislation to license private companies to sell wine and spirits -- just as most other states have done. While past attempts failed to rid the state of the pestilence that is the Pennsylvania liquor control overlord, the timing seems right for a change. Incoming Governor Tom Corbett is an avid supporter of privatizing liquor sales, and a recent poll conducted by Quinnipiac University in Connecticut found that a majority of residents (66 percent) favored privatizing liquor sales and that 9 out of 10 Pennsylvanians thought the fiscal situation in the state is serious.

Under Rep. Turzai's proposal, the state would auction off inventories of state stores, as well as 750 retail stores licenses and 100 wholesale distribution licenses to private companies -- estimated to bring in almost $2 billion. With another $500 million expected annually by requiring biennial license renewal fees, state alcohol taxes and in new taxes not paid by government entities, such as corporate income taxes and property taxes -- and an end to border bleed -- this proposal would likely generate more state revenue than is produced by the current system

In other Pennsylvania news, the grocery store wine kiosks, which have received plenty of criticism, went off-line on December 21.  The kiosks were shut down as a result of "technical" problems and aren't expected to be up and running until after the new year. The kiosks, which dispense a limited selection of wines, were meant as a way to stave off calls to privatize liquor sales and increase availability for Pennsylvania drinkers.  That the breakdown occurred at the height of the booze-buying season has some wondering what good the kiosks do, which are operated by the liquor control board, and State Auditor Jack Wagner is planning a "special performance audit" of the kiosks. For many Pennsylvanians, it wasn't too much of a problem because New Jersey, Delaware, New York, Maryland, West Virginia, and Ohio are just a drive away, but for those in the middle of the state, it could have cause a worse headache than a Christmas morning hangover. The kiosk catastrophe (note that the kiosks are owned by outgoing Governor Ed Rendell's "friends") are a good example of why government bodies should never get into the business of business.

Luckily, incoming Governor-elect Tom Corbett has made privatization of PA's archaic control system a top agenda item.

Virginia: The unintended consequences of prohibiting the sales of an in-demand product are, as we free-marketeers always say, usually worse than the effects of the product in question. For example, earlier this year many states banned the sales of Four Loko, an alcoholic energy drink, due to fears that minors were consuming the high proof beverage and young, but of age drinkers, were drinking the product to excess. As a result of the ban, some enterprising folks have begun to sell their stocks of Four Loko on the black market -- where they are less likely to check I.D., charge more money, and could be selling adulterated versions of the product.

Washington: Proponents of privatizing the state control of liquor sales and distribution are down, but not out for the count. Last month they received a "thumping" at the poles last month when two bills, 1100 and 1105 (measures that both Angela Logomasini and I have written about) which would have allowed grocery store sales of alcohol, were rejected by voters (measure 1100 was voted down by just 53 percent of voters). Apparently, the close call has prompted lawmakers to look closer at the idea of privatization. Both state Rep. Gary Alexander and state Sen. Tim Sheldon are reportedly going to introduce measures that would in some way privatize liquor sales, while Governor Chris Gregoire said she's "open to ideas" on improving the current system.