Indiana: Battle over cold beer comes to a head
State lawmakers will belly up to the conference table in alcohol sales debate
Source: The Republic
By Kirk Johannesen
6/24/17
Competing opinions about economic freedom and fair play have turned Indiana’s regulations for selling cold beer into a hot political topic.
Jay Ricker, co-owner of the Anderson-based Ricker’s convenience store chain, wants the ability to sell cold beer for carryout at his stores. He is doing that at two locations, including one in Columbus, after adhering to a particular type of restaurant liquor license. But a change in the law, approved by Indiana lawmakers to take effect July 1, is likely to prevent Ricker’s business model from continuing after his license expires in April, he said.
Ricker said he believes state laws, as currently written, provide unfair advantages to certain groups.
“I think they (package liquor stores) have a legal monopoly, and they have lobbied for years and successfully from anyone (else) getting (to sell) cold beer,” Ricker said.
Others, like Warren Scheidt, co-owner of Columbus-based Cork Liquors, believe the current state regulations of alcohol sales serve a beneficial purpose. He looks at the issue from a competitive standpoint between heavily regulated package liquor stores and large retailers.
“We compete against businesses that sell everything, like big-box stores, and they want the one thing we have that they don’t, which is having cold beer,” Scheidt said.
Seven of Scheidt’s 12 Cork stores are located in Columbus.
“The cold beer thing is a big thing for us,” Scheidt said.
The issue of alcohol sales came to a head earlier this year because two Ricker’s convenience stores – one in Columbus at 1711 25th St. and the other in Sheridan – found a way to sell cold beer for carryout. Traditionally only package liquor stores have been allowed to sell cold beer for carryout.
That prompted action during this year’s Indiana General Assembly, when state lawmakers changed the law in question, which effectively puts Ricker’s out of the cold-beer-carryout business.
State lawmakers will attempt to resolve the issue starting later this year. A study commission will begin the two-year process of reviewing Indiana’s alcohol laws to determine if changes are needed.
House and Senate leadership will pick the 17 members of the study committee, which will include lawmakers but also laypeople who don’t have ties to the alcohol industry – including the committee’s chairman.
Whether to expand a limited scope of Sunday sales and the types of retailers that can sell cold beer for carryout are two topics likely to generate significant debate.
Those topics will be of interest to consumers, the majority of whom support allowing all licensed retailers to sell cold beer and the carryout sale of alcohol on Sundays, according to a recent survey by the Indiana Petroleum Marketers and Convenience Store Association.
However, the primary issue at stake is competition, said Paul Helmke, director of the Civics Leader Center at Indiana University’s School of Public and Environmental Affairs, and a former mayor of Fort Wayne.
Package liquor, grocery and convenience stores are the primary competitors, and the battle for what types of alcohol, how they can sell it and when has existed for decades, Helmke said.
“It’s both an economic issue and a fairness issue,” Helmke said.
Competing philosophies
After Prohibition ended in the United States in 1933, each state was allowed to control its alcohol laws, which resulted in states taking different approaches and instituting different restrictions, Helmke said.
Scheidt noted that it was the Indiana Legislature that created its regulated package liquor store industry, and did so with the intent of establishing parameters for the sale of a product that can harm or kill people if misused.
“For the most part since Prohibition, the laws of Indiana have protected and served the state very well,” said Scheidt, past president of American Beverage Licensees and a former president of the Indiana Association of Beverage retailers.
Scheidt said two basic philosophies are at odds in the issue about alcohol sales:
Anyone should be allowed to sell alcohol at any time and any place.
It’s a product whose nature requires some restrictions and regulations.
Most people, he said, would probably say some restrictions are needed.
For example, state lawmakers never intended for cold beer to be an impulse-buy item at a convenience store – a place where people younger than 21 can enter, Scheidt said.
However, the general opinion of about 50 people who attended a two-hour Drink-In for Liberty event June 11 at the 25th Street Ricker’s store was that the state needs to loosen its laws regarding the sale of alcohol.
“I would like to see any store – convenience store, grocery store, liquor store – be allowed to sell liquor in any form any day of the week,” said Michael Housefield of Columbus, who attended the drink-in event. “And, I would like to see unlimited (alcohol) permits. That would create competition. Competition is good for the economy.”
Jacob Kennedy, also of Columbus, said he attended to support Ricker and because of his belief in small business, individual liberty, smaller government and less regulation.
The Ricker’s event, organized by the Libertarian parties of Bartholomew and Jackson counties, was intended as a protest of House Bill 1496 and other state alcohol laws, such as restrictions on Sunday sales.
HB 1496, which passed in the House and Senate this spring and was signed into law by the governor, changed a law that permitted two Ricker’s stores to sell cold beer for carryout. The stores have restaurant areas with tables and chairs, which allowed them to obtain a license to sell alcohol normally granted to traditional full-service restaurants.
The bill becomes law July 1, meaning Ricker’s will be allowed to sell cold beer for carryout only until its license expires 10 months from now – unless it meets the requirement that at least 60 percent of its gross retail income is derived from sales of alcoholic beverages consumed on the premises.
Drink-in attendees showed their support for Ricker by ordering cold beers and drinking them at the convenience store, and by displaying signs such as “Legalize Sunday” and “Competition not cronyism.”
“I think the Indiana Legislature pulled the rug out from under them. They did everything OK legally,” said Jon Broughs, Columbus, who attended the drink-in with his fiancee, Samantha Parker, also of Columbus.
Ricker said remodeling the 25th Street Ricker’s to include the restaurant area so it could sell cold beer was a $250,000 investment, the same as it was for his Sheridan store.
He had planned to follow that model at other Ricker’s stores. Sixteen in Indianapolis had been remodeled with that intent, as all new stores would be.
Ricker said he’s received support for this model from some women who have told him they find going into a liquor store intimidating.
However, the change in the law has put Ricker’s plans on hold.
“Right now we can’t get a license (for alcohol). They (the Alcohol and Tobacco Commission) asked if we would hold off until the legislature works on changes,” Ricker said.
Scheidt and several state lawmakers said changing the law with HB 1496 was the right decision.
Changes to debate
The model Ricker had created at the Columbus and Sheridan stores didn’t pass the character-of-business test, Scheidt said, adding that the model didn’t follow the intent of the law.
“Ricker’s by selling liquor, beer and wine for carryout . would be operating without the restrictions other liquor stores have,” said state Rep. Milo Smith, R-Columbus.
Smith was one of five state lawmakers that represent Bartholomew County who voted in favor of HB 1496. The others were Sens. Greg Walker, R-Columbus, Eric Koch, R-Bedford, Chip Perfect, R-Lawrenceburg, and Rep. Jim Lucas, R-Seymour.
Walker said HB 1496 was a necessary stopgap measure to give lawmakers a chance to review the laws in place.
Among local legislators, only Rep. Sean Eberhart, R-Shelbyville, voted against HB 1496.
“They (Ricker’s) didn’t do anything wrong. They went through the proper channels to get the permit and followed the rules, and we shouldn’t be punishing someone who followed proper procedure,” Eberhart said.
However, Eberhart and other state lawmakers agree that a thorough review of the state’s alcohol laws is needed.
What changes, if any, should be made elicits a variety of opinions – even within the religious community.
Others weigh in
“I don’t think the laws should be changed at all,” said the Rev. Bill Bailey, pastor of Parkside Baptist Church in Columbus.
The church belongs to the Southern Baptist Convention, which opposes consumption of alcohol, Bailey said.
The pastor said he grew up in a household with an abusive, alcoholic father. Bailey said Scripture warns about the negative effect alcohol consumption can have on a person.
Bailey also said he is opposed to Sunday sales because it’s a holy day.
Currently, alcohol can be sold in Indiana on Sundays by restaurants, wineries and craft breweries, but not other retail stores.
The Rev. Clem Davis of St. Bartholomew Catholic Church in Columbus said opinion is more the opposite with his congregation.
“We don’t have any religion-driven opposition to the sale or consumption of alcohol, as long as it is done in moderation,” Davis said.
Steve Leach, owner of the Garage Pub & Grill in downtown Columbus, said he’s fine with the status quo and doesn’t think the laws need a lot of tweaks and changes.
“We’re making a mountain out of a molehill,” Leach said.
However, he said he thinks Ricker’s is being punished even though it followed the requirements of the law.
Columbus Bowling Center co-owner Brent Phillips said he doesn’t think any changes would affect his business and that he would fall on the side of the entrepreneur. If expanding Sunday sales is beneficial, then the law should change, he said.
“If an extra day of sales means growth, then I’m all for it,” Phillips said.
Eberhart said he supports Sunday carryout sales.
“We need to get in the right century here and start doing things the way the public wants,” he said.
Eberhart added that the government shouldn’t be dictating who is allowed to sell cold or warm beer.
“Liquor stores don’t want to compete with big-box retailers. They want the government to pick them as winners. The public doesn’t want that,” Eberhart said.
Smith said he wants to see what suggestions the study committee proposes before weighing in further on possible changes. He said that whatever changes are made, the rules need to be fairly applied.
Scheidt agrees that laws need to apply evenly. He said the package liquor industry supported a bill in 2015 that would have allowed Sunday retail carryout sales as long as everyone played by the same rules. For example, sales clerks must be 21 years old, licensed and trained by the state in the package liquor industry.
The proposed bill was unsuccessful, Scheidt said.
Walker said he would support compromises between the various competitors so they all could get something they want with changes to the state’s alcohol laws. Ricker supports that idea, too.
“I think liquor stores should be able to sell whatever they want to sell in their stores,” Ricker said.
Liquor stores are prohibited from selling cold water or cold soft drinks, for example, Scheidt said. And while he would like to be allowed to sell growlers of beer, and the idea of being able to sell cold soda pop or cold water sounds good in theory, Scheidt said it’s a losing business model.
Alcohol producers rely on package liquor stores to get their products to the market for consumers, Scheidt said.
“We try to have as many different products for our consumers as possible,” he added.
Most liquor stores are probably about 2,000 to 3,500 square feet, and replacing a portion of alcohol stock with chilled soft drinks or cold water would hurt revenue, Scheidt said.
“What we would have to lose by the loss of cold beer cannot be made up by small, nebulous items,” Scheidt said.