POSTED ON MARCH 9, 2011:
Glass Half Full
Efforts to modernize Oklahoma's liquor laws move forward with measure to form task force
Clark Jolley, a Republican state senator from the fast-growing Oklahoma City suburb of Edmond, is a conservative Southern Baptist. As such, he acknowledges he's an unlikely candidate to be carrying the flag for the forces intent on what they call "modernizing" the state's liquor laws.
And yet here he is, doing exactly that. His motivation? Jolley describes himself as a strong supporter of free markets and believes the time has come to eliminate some of the "protectionist" regulations that benefit some segments of the alcohol market under the current system.
Drinking Developments. State Sen. Clark Jolley, R-Edmond has coauthored a measure with state Rep. Ron Peters, R-Tulsa, that would create a task force to examine some of those proposed changes to the state’s liquor laws, including a centerpiece provision that would allow for the sale of strong beer and wine in the state’s grocery stores and convenience stores.
Rep. Ron Peters
With that in mind, he has co-authored a measure with state Rep. Ron Peters, R-Tulsa, that would create a task force to examine some of those proposed changes to the state's liquor laws, including a centerpiece provision that would allow for the sale of strong beer and wine in the state's grocery stores and convenience stores. The bill calls for the creation of a 12-member group that would include representatives of all those who have an interest in the issue -- the Legislature, liquor store owners, grocery store owners, distributors and wholesalers, grape growers and wine makers, the chamber of commerce community and citizens. The task force would begin meeting when the session is over and explore the ramifications of the proposed changes, issuing a report to lawmakers sometime before the start of the 2012 session.
That means the earliest any legislation taking all those factors into account could emerge is next year. But, as Jolley pointed out, that won't delay the possible approval of any proposed changes. Since Oklahoma's alcohol laws are wrapped up in its Constitution, any change to those laws must be approved by voters in the form of a state question. And the next general election won't be held until November 2012 anyway, he said.
The possible creation of the task force is a compromise between those on various sides of the issue. Several bills proposing changes to the state's alcohol laws were proposed by a variety of lawmakers earlier this session, but they were tabled in favor of the bill authorizing the creation of the task force.
All those proposals essentially have been narrowed to one to simplify things, Jolley said.
"There was just a lot of confusion," he said.
J.P. Richard, owner of Cache Road Discount Liquor and Wine in Lawton and president of the Retail Liquor Association of Oklahoma, echoed Jolley's assessment.
"The things that have been proposed are just a hodge-podge," he said. "I don't think there was any coherent thought by the authors. There was not any real coordination in that process because some of these things sort of dovetailed with Sen. Jolley's three or four bills, and some are a different approach."
Supporters hope the proposed task force can eliminate some of that and pave the way for measures in 2012 that are acceptable to a greater number of lawmakers.
"We're looking at a very complex issue," Jolley said. "Hopefully, we can come back with some new legislation with the next session."
Gwendolyn Caldwell, the vice president for government affairs for the Tulsa Metro Chamber, said her organization has played a supporting role, along with the Greater Oklahoma City Chamber, in trying to bring all the interested parties together on the issue. She said reform of the state's alcohol laws is one of the Tulsa chamber's legislative priorities, particularly a measure that would allow grocery stores to sell strong beer and wine.
The chamber views that as an economic development issue, she said, given its support for efforts to bring a smaller, specialty grocery store like Costco or Trader Joe's to downtown Tulsa. Those chains rely on beer and wine sales for a significant percentage of their income, and the inability of those chains to include those products in their profit margin is thought to be the biggest hurdle in attracting one of them to downtown Tulsa or Oklahoma City.
Yet, Caldwell acknowledged it's not a simple matter of just rushing through a bill that permits grocery stores to begin selling those products. The conditions under which they are distributed and sold now are tightly regulated by the state's Alcoholic Beverage Laws Enforcement Commission, and lawmakers must determine whether some or all of those conditions would apply under a new scenario.
"To get this passed, and ultimately to a vote of the people, you're looking at 75 to 80 statutes that are going to have to change," she said. "That's a huge elephant we're going to have to eat. So we're going to have to take it one bite at a time."
Caldwell said the creation of the task force is a great idea, allowing those with an interest in the issue to express their concerns out of the public eye.
"We're going to be able to look at everybody's concerns in a proactive manner instead of in the middle of a (legislative) session with everything else going on," she said.
Richard said he favors the task force approach, as well.
"Having a study group look at this is smart and weeds out all the unnecessary and duplicative proposals," he said. "I'm glad it's happened this way. I don't think the (legislative) leadership wants to go in and change something that's not broken."
Defending His Particular Way of Life
Attempts to alter the state's liquor laws are nothing new, particularly in recent years as Oklahoma's nascent wine industry has evolved and begun to flex its muscle. The fiery Richard -- an outspoken advocate of liquor store owners across the state -- has watched most of those proposals fall by the wayside at the Capitol.
But he's seen those efforts be ramped up lately, mostly because of the intervention of the Oklahoma City and Tulsa chambers and the work being done to bring a specialty grocery chain store to those cities' downtowns. Just last year, Senate Joint Resolution 62 by Sen. Andrew Rice, D-Oklahoma City -- which would have allowed specialty grocers to sell strong beer and wine -- was defeated in committee, despite attracting the support of many business leaders across the state, as well as Oklahoma's two largest newspapers.
So Richard -- whose Lawton store attracts a statewide clientele to its extensive selection of quality wines -- isn't taking anything for granted and plans a vigorous defense of the state's package stores. He begins with questioning why the issue is even being addressed at the Capitol.
"I think they're all kind of appalled anyone's trying to do this in light of the fact we have a huge budget problem," Richard said of the state's legislative leaders. "Getting our state's finances in order should be the priority. These bills that have gone through the Legislature would not have created revenue for the state. They would have shifted things around and created problems for the state."
There's nothing wrong with the way his industry operates, Richard said, despite the views of many consumers who complain about the state's "antiquated" liquor laws that keep them from buying a chilled bottle of wine in a grocery store.
"We're the beverage alcohol industry," he said. "We are not all touchy-feely like Victoria's Secret. We sell alcohol. This stuff can kill you, and the parameters of control that have been established by the lawmakers and people of Oklahoma have worked very well for our industry."
Those who sell strong beer, wine and spirits in Oklahoma have become very creative over the years, Richard said, compared to their counterparts in other states who operate under perhaps a more streamlined system.
"The public doesn't perceive that because the people screaming the loudest about this are consumers, and consumers want to be convenienced," he said. "The real loud noises and the letters to the editor all say, 'Why can't I buy my wine in a grocery store like I did in California or Las Vegas?' Well, there are reasons for that, and that has to do with the control aspect that prevent this product being sold to minors and drunks."
Package store owners are likely the most responsible alcohol vendors in the state, Richard said, pointing to an ABLE Commission study ordered in the 1990s by then-Gov. Frank Keating. According to Richard, that three-year study revealed that more than three-quarters of all alcohol-related incidents -- minors in possession of alcohol, public intoxication, drunk driving, etc. -- were the result of the sale and consumption of 3.2 percent beer, which is sold by grocery and convenience stores. Most of the rest of the incidents involved people who had overindulged in a tavern or restaurant, he said, while only a small percentage -- less than 2 percent -- involved those who had obtained their alcohol through a liquor store.
"In the 37 years I've been here, we've had two employees who have sold (alcohol) to a minor," Richard said of his store. "Both of them were dismissed, and both were charged (with a felony). We police ourselves because the penalties are onerous and noncompliance means you could be out of business."
Richard said any measure allowing the sale of strong beer and wine in grocery and convenience stores would present a grave threat to the ability of package stores to survive. The approximately 620 liquor stores that operate across the state suddenly would find themselves competing against 6,000 more outlets, he said.
Whose Interests Here?
The economic hardship those package store owners would lead many of them to go out of business, according to Richard and J.B. Jarboe, a partner at Tulsa's Jarboe Sales Company, a wholesale liquor and wine distributor. And that's likely to have a profound effect on the pricing and variety of products Oklahoma consumers will find on the shelves, Jarboe said.
While many of those advocating for change point to the system in Texas -- where strong beer and wine are available in grocery stores -- as a model Oklahoma should emulate, Jarboe said consumers north of the Red River can choose from approximately 40 percent more alcohol products than those in Texas. That's because Oklahoma package store owners and distributors work hard to make new products available to consumers, he said, expressing doubt that grocery and convenience stores would duplicate that effort.
Richard estimated 150 package stores in Oklahoma would be unable to compete under a new system and would close their doors. Most of those would be in Tulsa and Oklahoma City, he said, and serve primarily as wine stores.
For consumers, Richard said, the convenience of being able to buy a chilled bottle of wine while they do their grocery shopping would be more than offset by the lack of variety he anticipates they would find at grocery stores. Only the major suppliers -- Gallo, Kendall Jackson, etc. -- would be available, he warns, leaving out dozens, if not hundreds, of lesser-known but still worthy wines.
"You can go to any grocery store across the country, and you won't see a 10 percent difference in (wine) variety," he said. "The nation that variety increases is just a bunch of hooey."
The current Oklahoma system presents a number of benefits that most consumers don't take into account, according to Richard. And those who work within that system deserve credit for the lengths they go to in order to make new products available, he said.
"Everybody's trying to have a better widget," he said. "So variety really is the spice of our industry. There's more variety in Oklahoma than there is in Texas, Kansas, Missouri, Arkansas, New Mexico and Colorado. The public doesn't really understand that.
"You've got great places in Tulsa -- Ranch Acres (Wine & Spirits), Parkhill (Liquor and Wines)," he said. "You can walk in there and find things you would never find in the Dallas-Fort Worth area because you've got creative people who go out and look for this stuff."
Jarboe also claims spirit prices are 10 to 30 percent higher in Texas than they are in Oklahoma, a difference that is driven by the fact that package stores there must make up for the loss of strong beer and wine sales to grocery stores.
Under a new system, Richard said, he fears most alcohol-related revenue would leave the state. Oklahoma's package stores are independently owned, he said, and represent the epitome of small businesses, while grocery stores tend to be operated by chains and are based elsewhere.
Clark Lipotich, manager of Ranch Acres, said it would be hard to say how a new law allowing grocery and convenience stores to sell strong beer and wine would affect his business.
"We would certainly feel it, to some degree," he said, adding he had no estimate for the percentage of sales his stores would miss.
But he believes the impact would be much greater on smaller stores.
"It would affect them to the point where they would probably close their doors," he said. "People can only drink so much wine."
Guns or Rose's
Representatives of other segments of the industry are taking more of a wait-and-see approach to the proposed changes. The current system may be complicated, they say, but it's one they're familiar with.
"My big concern with what was proposed was what would happen to the craft beer industry in the state," said Tim Scholen of the Mustang, Okla.-based Mustang Brewing Company. "I would hate to see something happen in that industry because of legislative change."
Eric Marshall, founder of Tulsa's Marshall Brewing Company, said he has taken a neutral stance on the issue.
"The way I look at it, we grew 45 percent last year," he said. "We've still got a lot of growth going on. We're going to work with the system the way it is. We're not going to work to change anything. The liquor stores and smaller guys are all good advocates of craft beers. That's not to say the bigger guys wouldn't be, but there's a definite niche (with liquor stores). Our approach is, we're happy with the way the system is right now. If the system changes, we'll change."
Scholen also lauded the support package store owners provide to the state's craft brewers, with staff members often recommending Oklahoma beers to their customers. He fears that wouldn't happen in larger retail outlets.
“We’re the beverage alcohol industry. We are not all touchy-feely like Victoria’s Secret. We sell alcohol. This stuff can kill you, and the parameters of control that have been established by the lawmakers and people of Oklahoma have worked very well for our industry.” – J.P. Richard, owner of Cache Road Discount Liquor and Wine in Lawton and president of the Retail Liquor Association of Oklahoma.
"When the last time you went into a grocery store and said, 'Tell me about this box of macaroni and cheese?' " he said. Liquor stores are very service oriented and very customer friendly. I don't think you're going to get that same kind of service at a grocery store."
The availability of strong beer in a grocery or convenience store likely would mean it could be sold cold, something that currently is prohibited in the state's liquor stores. While that would help keep those beers fresh, Marshalls said that hasn't been much of an issue for his brewery so far.
"Honestly, we are in the position where our beer is being consumed relatively quickly," he said, though he noted that for brewers who ship their products across the country, the issue of cold storage and freshness is much more important, particularly in the summer. "Would cold be nice? Absolutely. But if you look at other states, people are always complaining you can't get a Fat Tire here. Well, if you go to Kansas and get Fat Tire (at a liquor store), nine out of 10 times, you're going to buy it off the floor like you would here."
Attempts by Urban Tulsa Weekly to reach Andrew Snyder, president of the Oklahoma Grape Growers and Wine Makers Association, were unsuccessful.
Ron Edgmon, president and CEO of the Oklahoma Grocers Association, said his organization hasn't taken a position on the issue.
"We really don't have one yet because there are no rules set up yet," he said. "If the consumer wants it, that's fine, and we'll find out as time goes along."
What his organization doesn't want to happen, Edgmon said, is for the Legislature to do anything that would make it more difficult for Oklahoma grocers to sell the low-point beer that is permitted under current law. His organization will have a representative on the task force, he said, and will follow the issue closely as it evolves.
Mike Griffeth, the manager at Petty's Fine Foods at Tulsa's Utica Square, believes it's only a matter of time before stores like his are allowed to sell strong beer and alcohol. The market is definitely there, he said, as he often hears from his customers that they wish they could buy those products while doing their food shopping at Petty's.
"It's coming," he said. "As far as how it is dealt with, what's allowed and what not, and the time periods it's allowed, I don't know."
Water into Wine
There's no question many Oklahomans are eager for the kind of change to the state's alcohol laws Jolley has proposed in his legislation, the Edmond Republican said. While he acknowledged he has heard from constituents on both sides of the issue, he believes the current system plays favorites, benefitting only a small number of businesses at the expense of others.
He said he never expected to find himself in a position where he would play a leading role in an effort to change the state's alcohol laws, but he believes the time is right.
"People have a right to buy real bear, not the watered-down stuff, like the people in Texas and elsewhere without having to go to a liquor store and buy it," he said. "That's modernization. Buying wine in a grocery store, that's modernization."
The world in which we live now is very different from the one in which many of the state's liquor laws were adopted, he said.
"I don't see why we should keep the status quo just to keep the status quo," he said.
Caldwell said that while there has been some debate among Tulsa Metro Chamber members over the issue, the organization's official support of the modernization of alcohol laws has not resulted in a huge split. Most members of the business community recognize the benefits of what the chamber and others are trying to do, she said, especially in regard to what it could mean to downtown Tulsa.
"I think it would make it attractive to young people who would want to move to a vibrant downtown," she said. "It would be a real benefit. With the downtown revival, part of the problem is getting a residents downtown there. So this would be a real benefit long term."
Caldwell has no doubts about the link between the proposed alcohol law changes and the willingness of a specialty grocer to open a location downtown.
"Absolutely," she said. "We feel that a lot of companies and grocery stores would locate here if we had this ability."
Richard doesn't necessarily share that optimism, and he rejects the notion that chamber officials in Oklahoma City are trying to reach a compromise on the issue.
"The Oklahoma City chamber has made numerous statements about how they have reached out to the industry," he said. "That's hooey. They haven't been reaching out to anybody. They're only reaching for the phone to call the author of the bill representing them."
He's anticipating a pitched battle over the issue as it progresses, possibly in the form of state constitutional amendments that would go before voters in November 2012.
"I just hope we can all come to a conclusion we can all live with because everybody's drawing out their Colt .45s," he said.
Jolley said voters who want the laws changed need to make a serious effort to make their voices heard.
"If people want more modernized laws, they need to call their senator and representative and tell them," he said. "Absent an outcry, a lot of folks love the status quo. They love that protectionist model that we have. I'm more of a free-market guy."
URL for this story: http://www.urbantulsa.comhttp://www.urbantulsa.com/gyrobase/Content?oid=oid%3A36810