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Four states watching Oklahoma closely as lawmakers push liquor law overhaul

  • 11 min to read

Only five states have 3.2 percent beer. Oklahoma has been on that list since 1959, but that could change with SB 383. That’s something a lot of consumers can get behind, but what began as a simple measure to allow strong beer refrigeration has morphed into an effort to totally rehab Oklahoma’s liquor laws.

The bill, co-authored by Sen. Stephanie Bice and Rep. Glen Mulready, will address the big picture, but it’s a picture made up of hundreds of puzzle pieces.

While many have tried to push alcohol reform laws in Oklahoma, none have been successful, so far.

THE PLAN

The seeds of Sen. Stephanie Bice’s push were planted about a decade ago when she became a self-described “craft beer connoisseur.” She likes beers like Hoegaarden and Leffe, and she doesn’t like them at room temperature.

“I was a little taken back that we can’t buy cold full-strength beer in a package store,” she said. “So, when I was elected, I thought that should be a very simple, easy thing to change to give package stores the ability to refrigerate their product.”

It starts with repealing Article 28, which was written into the Oklahoma Constitution to repeal state prohibition in 1959 — 26 years after the federal government nixed prohibition on the national level.

“There have been some initiatives in the past to try to remove the 3.2 limitation. The problem was, when you looked at how to do that, it would require a referendum, or a vote of the people, but it would require probably three different state questions on one ballot to remove 3.2 altogether,” Bice said.

So, instead of altering the language of Article 28, Bice is pushing SB 383 as its replacement. While the measure would simplify the process, the issue is anything but simple. So, Bice and Mulready are trying to get everyone at the table.

“It’s a very broad topic and there are a lot of things to figure out … Oklahomans really want this. It’s very evident. They want to see change, but there are so many moving parts to it,” Bice said.

“What I’m trying to do is bring everyone to the table who has a vested interest, and I do mean everyone. From enforcement, to mental health and substance abuse, brewers, retail package stores, I want everyone to have a say.”

While Bice is seeking input, she knows not everyone can get everything they want. She said it will have to be a compromise, but it’s one she believes will result in a move from archaic rules to modernization, more choices for consumers and consistency for retailers.

“It’s definitely not fair to require liquor stores to do one thing and grocery stores do another,” Bice said. “So, that’s something we’re looking at very closely. There has to be some consistency across the board.”

At the same time, Bice believes the system’s 55-year existence isn’t justification for its continuation.

“What’s the alternative? Should we continue under a system that was created in 1959? That’s when this was all set up. We really need to get with the new age,” she said.

She said that means asking questions: Why can’t you purchase beer at a brewery? If you can buy a mixed drink at a bar at 1:30 a.m., why can’t you buy liquor?

No matter what direction the state votes, Bice said local municipalities will still have a good measure of local control. If a city or county is against alcohol sales all together, she said that’s their prerogative.

“I think it has been coming for a long time,” she said. “There have been many people before me who have tried to go down this path. I think the timing wasn’t right.

“Honestly, a lot of it has to do with timing. I think we’re in a day and age now where alcohol doesn’t have as much stigma as it used to.

“You see these food and wine festivals all over the country. You see beer tastings, and people realize that if you’re educated and thoughtful of protecting people who could get on the substance abuse path but still open it up to free market and are able to do some of the things we haven’t been able to do, it’s a good thing for everyone.”

At this point, Bice said she has a wish list from most of the involved parties. Over the next three months, she’ll be working on the language in SB 383 and preparing for session.

HOW IT BEGAN

Before federal highway dollars were tied to the drinking age, 18-year-olds were allowed to buy 3.2 beer. It was classified as a “non-intoxicating” alcohol. Once the law changed across the board to a 21-and-up drinking age, 3.2 beer was left in limbo. It ultimately found shelter on shelves of a handful of states that are now moving toward a world without it.

If SB 383 removes any incentive for major beer companies to make the niche 3.2 product, it might leave Oklahoma shelves permanently. If it leaves Oklahoma, the highest low-point beer consuming state, the remaining low-point states might be forced to follow suit.

For that reason, Kansas, Colorado, Minnesota and Utah are watching the issue closely.

“What’s happening in Oklahoma really makes it critically important for Kansas legislators to pass legislation in 2016,” Uncork Kansas initiative spokesperson Jessica Lucas said. “Because once Oklahoma passes this, and I believe it will pass in Oklahoma in November, and 3.2 beer goes away … Kansas needs to make sure that we are not in a situation where if manufacturers decide to stop making 3.2 beer, Kansans aren’t left without beer in grocery or C-stores.”

“This is also happening in Colorado, as well. So, if Colorado passes, too and you take two states out of the mix, then why would (manufacturers) keep making 3.2 beer? 3.2 beer is inferior. What beers do people want to drink? It’s craft beers,” Lucas said. “3.2 is a shrinking market share.

“The reality of manufacturers saying ‘We’re not going to make 3.2 beer anymore’ is very real. It doesn’t make good business sense to ship 3.2 beer to Utah, Kansas and Minnesota … The market is collapsing and will collapse with the vote in Oklahoma.”

Much like Bice, Lucas said she believes consumers suffer under the current circumstances in regard to choice.

“Consumers should have decisions where they make purchases,” Lucas said. “I think any time a government is protecting a business, it’s detrimental to the free-market system, and that’s what this is ultimately about.

“While it will be a transition for liquor stores, businesses face competition every day. They’re not protected by the government. So, yes, they’ll have to change and adapt.”

SMALL BUSINESS IMPACT

Spirit Shop owner Matt Sterr’s family has been in the business for 40 years.

“It’s kind of tough to get a read on what the legislation’s going to say. Previously, when Sen. Bice wanted to do liquor law reform, she had billed it as a beer refrigeration law.”

That’s something Sterr said he can get behind. That’s something his customers want.

“I’d love to see cold refrigeration. I’d love to see the more than 600 independent, locally-owned retailers that have been operating under these rules for my entire lifetime, I’d love to see their market share preserved,” Sterr said. “We’re talking about hundreds of small businesses owned by Oklahomans.

“When you spend money with Oklahoma retailers, that money stays in the Oklahoma economy. It doesn’t go back to Wal-Mart or Target …”

While he said he’s on board with some of the simple changes, the complete overhaul proposal came as an unwelcome surprise.

“What came out at the last second was actually a bill to basically change the constitution, which includes every liquor law we operate under.

“From that perspective, I was a little wary of her intentions,” he said. “We were told one thing and then they did something completely different … It’s hard to really know what’s going on.”

 CONSUMER CHOICES

Retail Liquor Association of Oklahoma president Bryan Kerr said Oklahoma’s liquor store owners aren’t afraid of competition, but he wants it to be a fair transition, to retailers and consumers.

Kerr believes throwing open doors to box stores will actually result in fewer choices for customers.

Sterr carries about 1,500 different beers in store, everything from Pabst to wildly esoteric deep cuts. He believes if Oklahoma follows Texas’ model, the top 100 brands will kill that kind of selection.

“That’s been a big part of misinformation coming out of Sen. Bice’s office. She’s been saying that increased competition with stores like Wal-Mart or Costco will mean better selection for consumers … This is the opposite of the truth,” Sterr said. “Look at Texas. They have about eight times the market Oklahoma has and they have less than two-thirds of the wine selection we get here in Oklahoma.

“We’re operating with around 15,000 wine SKUs (Stock Keeping Unit) available in Oklahoma. In Texas, it’s more like 9,000. I would say to the consumer, why does a market with over 20 million people have less selection?”

“I’m all for common-sense reform, but I would say buyer beware. The grass is not always greener on the other side. We’ve got a lot of positive things going on in our market that other markets don’t have. To me, to turn it over to national corporations is a move in the wrong direction,” Sterr said.

CONSISTENCY AND FAIRNESS

 Another discrepancy the RLAO wants to address is hours of operation.

Under the current law, liquor stores close up shop at 9 p.m. and aren’t allowed to do business on Sundays.

According to Corkscrew Wine & Spirits owner Kathy Green, even cleaning crews have to be licensed to work on Sundays. Convenience stores, local grocers and box retailer chains are not hampered by those kinds of restrictions.

“It’s unfair. That’s a problem,” Kerr said.

On top of that, liquor stores currently face other restrictions that Kerr believes would place them at an unfair advantage if everything changed overnight. A restriction that prohibits owning more than one location, for instance, is a limitation that isn’t imposed on chain retailers. He said he’s all for a free market approach, but not when chain stores have such a massive head start, based on former rules.

“Study after study, and there are literally dozens upon dozens of studies that have been done about alcohol problems in the United States and other countries, and what those studies show are the two major contributing factors to alcohol-related social issues, rather that be drunk driving, underage access, domestic violence … those ills are caused primarily by two factors,” he said. “One is density of outlets within an area. Two is hours of operation.

“As liquor store owners, as much as we would like to say, ‘Hey, we should be open until 2 a.m. and be open on Sunday to compete against the 7-11 that’s in the same strip mall as us or the Wal-Mart that’s right across the street from us,’ well, we know there are issues.”

Green believes the proposed changes will mean the death of small businesses across the state.

“I think when it happens, you’ll see a lot of liquor stores in Oklahoma go out of business, because they rely on the profit they make on wine and a lot of people will buy their wine at grocery stores and box stores,” Green said. “They won’t have the huge selection that liquor stores do, so the consumers will lose a lot of choices, too.”

After nearly 16 years in business, Green said she fears being thrown into the same boat with big chains that haven’t had to play by the same rules.

“We’ve played by the rules and all the liquor stores have played by the rules,” she said. “We’re 100 percent personally liable. You can’t be a corporation or an LLC. You have to take personal responsibility for everything.

“You have to be an Oklahoma resident for more than seven years before you can even apply for a license. Will Wal-Mart have to play by those same rules? They’re a giant corporation. We’re Oklahoma small businesses … There are a lot of these things to work out. That’s not to say they won’t be worked out, but it’s not as simple as people think.”

SAFETY CONCERNS

The safety element is one Kerr’s organization is trumpeting as another reason for thoughtful action. Part of his organization’s proposal would limit grocery stores and gas stations to a cap of 6 percent alcohol by volume (ABV).

Currently, Oklahoma law requires all liquor store employees to have a liquor license and be over 21. The same rules don’t apply to other interested retailers. He said he doesn’t want to see 18-year old clerks selling anything over 6 percent at all hours of the night and he doesn’t want them to face the temptation to “hook up” underage drinkers.

“We have a mechanism in our proposal where grocery stores could be in the wine business if they played by certain rules. If a grocery store wants to jump through the necessary hoops to sell wine, then that’s fine with us. We’ll compete,” Kerr said.

With more than 4,000 convenience stores, 800-plus grocery stores and 670 liquor stores, Kerr believes the state will experience a huge increase in the amount of readily-available strong alcohol.

While he said he’s not worried about people buying wine at a grocery store to go with dinner, what he doesn’t want to see is 12 percent Mad Dog 20-20 and 40 oz. malt liquor bottles at every corner store.

“What we could end up with is a lot more problems like Tulsa has now, because there are too many liquor stores and outlets in certain areas of Tulsa. They’ve basically got drunks (urinating) in the streets. So, you have to worry about density and hours of operation. That’s something we’d really like to see taken into account.”

It’s Kerr’s assertion that new outlets will get 90 percent of what they want to sell, anyway, under the RLAO proposal. The rest, he said, is better left to the liquor stores for the sake of the public.

“We took a poll in June and we crafted the entire proposal knowing that Sen. Bice had already put SB 383 out there and it had already exploded into a push to repeal Article 28 and replace it. We got the poll results and it confirmed that people want to purchase strong beer and wine at grocery stores,” he said. “They were not so hot on the wine in (convenience) stores, and numbers really started to flip-flop when we asked about hard liquor.

“Nobody in Oklahoma wants Wal-Mart and 7-11 to sell Jack Daniels and Crown Royal.”

“In Mississippi for instance, it’s actually legal to drink alcohol while driving down the road. Then, again, you’ve got places like Arkansas where half the counties are completely dry.

“So, Oklahoma does have some silly laws. The big elephant is strong beer and wine. Those can be redone, but they need to be done responsibly.”

Those are concerns that resonate with Rep. Bobby Cleveland, who voted against proposal earlier this year.

“Personally, I’m a non-alcoholic guy,” Cleveland said. “So, I wasn’t in favor of (SB 383). I think the main thing is that it would just make alcohol more readily available. We’ve got enough alcoholics in this state … I don’t drink and I’m not for anything that advocates drinking.”

PUBLIC PERSPECTIVE

Many consumers don’t understand the law and, frankly, don’t care.

Consumer Kelly Lynn, who has lived in Oklahoma most of his life, said the current rules are “ridiculous.”

“I don’t know anybody, or very few people, who actually agree with it,” Lynn said. “People should be able to drink cold beer. I’m not sure I understand the reasoning behind it. There might have been a time and a place for it. I think we’ve outgrown that time … It makes no sense.

“The 3.2 laws are just inconsistent and hectic. Why not make it easy? And we’re kind of a laughing stock. I’m in the military and I have friends who come here and say, ‘What are you talking about? This is insanity.’ We’re, like, ‘We know.’”

While some consumers are clamoring for change, others like having the low-point option.

“I would choose to drink lower point beer and drink beer all day at a tailgate than to just get trashed,” Brian Beggs said. “Who wants the feeling of not being able to control themselves? I just like the taste of beer and want to be able to drink some beers and have a good time with it. Nobody wants to be passed out sitting in a chair somewhere.”

  

THE FUTURE

While some lawmakers and consumers are pushing back, or not getting in line to back the measure, Beer Distributors of Oklahoma spokesperson John Cox said change feels inevitable.

“I think that most states that are still selling 3.2 beer can just look at the demographics of it and say, ‘How much longer are those brewers going to continue to make 3.2 beer? There are only five of us still buying it.’ Oklahoma’s kind of getting out in front of the ball on this deal. We’re potentially writing our own future.”

What that future entails is still up for debate.

“Our laws are going to change in the very near future. I’d rather have it be a well-thought out comprehensive approach,” SB 383 co-author Rep. Glen Mulready said.

Mulready said that because there’s so much money involved and many interested parties, it can be a difficult discussion, but he believes it’s one that has to happen and is hopeful a compromise will be reached.

In November 2016, Oklahomans will likely get their chance to vote on whether to repeal Article 28. A “yes” vote would swap Article 28 for the finalized language in SB 383. Those changes could go into effect as early as January 2017.

What the language might entail is up in the air, but all of the interested parties seem to agree on one thing: Change is coming.

Mack Burke

mburke@normantranscript.com

follow me @TranscriptNTown

Mack Burke is an investigative reporter and award-winning feature writer and columnist for The Norman Transcript. An OU alumnus, he has lived in Norman since 2003.

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