Beer Blotter: Seattle based. World focused.

The initiative train is rolling again. This time, Costco and a number of associations jump out of the gate with a limited measure that mostly focuses on liquor. The proposal aims to limit the number and type of liquor vendors, set stringent safety requirements and assure the concerned public that underage sales will not increase.

The initial press release does mention that the new proposal includes volume discounts for sales of wine – but there is no mention of beer. I am curious as to whether the hefty pressure applied by local beer producers led to an exclusion of changes to beer regulation. But, lets wait to read the initiative before I make any assumptions about how it will regulate beer.

Taking a look at the Secretary of State’s website, you can see that Tim Eyman and folk has filed three separate liquor initiatives, two on 5/3/2011 and one on 5/23/11 (this one is called “son of 1100″). As of right now, I am unsure which of these three is supported by Costco. Perhaps, they are throwing out several to get feedback before backing one for signatures this summer.

It also appears that Stefan Sharkansky has withdrawn his earlier initiative, presumably in favor of one or more of the new initiatives. The Secretary of State website shows that it was withdrawnon May 24, 2011.

Below is the press release issued collectively by Costco, the Washington Restaurant Association and the Northwest Grocery Association:

FOR IMMEDIATE RELEASE
May 20, 2011
OLYMPIA, Wash. – A group of local retailers and restaurants, whose members include Costco, the Northwest Grocery Association and the Washington Restaurant Association, today filed a ballot initiative that will privatize the distribution and sale of liquor in Washington state and provide hundreds of millions of dollars in additional revenues to state and local governments.

“This initiative will modernize the wholesale distribution and retail sales of liquor in a way that increases consumer choice and convenience, and increases state and local revenues while continuing to protect public safety and strictly regulate the distribution and sale of liquor,” said Joe Gilliam, president of the Northwest Grocery Association.

Under the initiative, a limited number of retail stores would be allowed to sell liquor if they meet certain requirements. Eligible stores would be required to have 10,000 square feet or more of fully enclosed retail space within a single structure or, in areas where larger stores are absent, meet other requirements set by the Liquor Control Board.

“Under the initiative, an estimated 1,500 grocery and retail stores would be eligible to apply for a license to sell liquor. The initiative would prohibit liquor from being sold at gas stations and small convenience stores,” said Gilliam. “In addition, the initiative requires a retail store to demonstrate to state regulators that it can effectively prevent sales of alcohol to underage minors in order to get a license to sell liquor. It also ensures that local communities have input before a liquor license can be issued to a local retailer and maintains all local zoning requirements and authority related to the location of liquor stores.”

Stores that are approved for licenses to sell liquor will pay 17 percent of their gross revenues from liquor sales to the state. Businesses that get licenses to distribute liquor would pay 10 percent of their gross revenues to the state the first two years and five percent thereafter.

Together, these license fees will provide state and local governments with tens of millions more per year in revenues than the current state liquor store system. This is in addition to the millions in cost reductions and profits from closing and selling the state’s liquor facilities and assets.

Under the proposed initiative, the state government would auction off its existing state-owned liquor distribution and liquor store facilities as well as the associated equipment.

Private distributors of alcohol would be allowed to obtain licenses to distribute liquor if they are approved by the Washington State Liquor Control Board.

License revenues from distributors and retailers would go into state and local budgets using the same formula applied to state liquor taxes, which would remain in place.

The initiative would also dedicate a portion of the new revenues raised from liquor license fees to increase funding for local public safety programs, including police, fire and emergency services in communities throughout the state.

In addition, under the initiative, fines and license suspension penalties for selling liquor to minors would be twice as strong as the existing fines and penalties for selling beer or wine to minors.

Provisions within the measure also update current laws on wine distribution, allowing wine distributors and wineries to give volume discounts on wholesale prices of wine to retail stores and restaurants and allowing retailers to distribute wine to their own stores from a central warehouse.

“By allowing competition in the distribution and sale of any product, including liquor, you bring about efficiencies, better product availability and more choices for customers,” said Anthony Anton, president and CEO of the Washington Restaurant Association. “We think this initiative improves upon previous liquor privatization proposals, and we are confident that we have developed a measure that most voters will support.”

Now that the initiative has been filed, it must go through the state process to establish an official ballot title before petitions can be printed. Supporters say they expect signature gathering to begin in roughly a month and they are confident the initiative will qualify for submission to the voters on the November state ballot.

***This post was originally published on Brewery Law Blog, an alcoholic beverage law blog from Reiser Legal LLC. It is posted here by permission from the author.****

Well, this ought to put a bad taste in some people’s mouths. One of the best and brightest in US microbrew has been sold to Anheuser-Busch (A-B). The world leader in beer will take over the brewing operations, but the two Chicago micropubs will remain held by the brand’s original owners.

A-B purchased a 58% majority share of stock from Goose Island’s original owners and investors for a total of roughly 22.5 Million. Goose Island’s founder, John Hall, will finally reep a major reward for his 23 years in brewing at Chicago’s award-winning brewery.

A-B snatched up the remainder of stock (42%) from the Craft Brewers Alliance (CBA), a collective of Widmer Brothers, Redhook and Kona Brewing.  The CBA grabbed the stake back in 2006, when it forged a deal with Goose Island to help it distribute on the West Coast.  This deal was the precursor for Goose Island’s immediate sale to A-B.

This deal is one of the biggest in craft beer history. But, it did not happen overnight. CBA is partially owned by A-B, who provides a vast distribution market that most craft brewers dream of entering. In 2006, Goose Island entered a distribution agreement with A-B, which inevitably resulted in CBA grabbing a minority share. Now, 5 years later, A-B is sweeping back in to collect the company that it helped expand exponentially.

In the end, it sounds like this deal was built out of a need for additional capitol to expand. BrewmasterGreg Hall stated that they had to “kill” three of their popular brands last year because they simply could not keep up with demand. A-B has pledged to invest $1.3 Million this year, to expand the brewing operation.

At the end of the day – the Halls just realized the American dream. They started small and built something great. After 23 years of grinding, they are finally able to see a significant return on their investment. In that light, you can hardly blame them for the sale.

But, considering Goose Island’s notoriety, many in the craft industry will be fuming. Brewmaster Greg Hall recently did an interview to try and shed some light on the deal. You can read it here.

***This post was originally published on the Brewery Law Blog, an alcoholic beverage law blog administered by Reiser Legal LLC. The office’s Doug Reiser provides Beer Blotter with regular legal and legislative commentary.***

Last week, I discussed the federal BEER Act. Today, it looks a bit more promising for the tax cut legislation that would put millions back in brewery pockets.

A fairly wide-spreading marketing effort took over this past week. You can now see an out-pouring of support from Senators across all parts of the U.S. With each passing day, it appears more likely that this bi-partisan effort will pass through the Senate.

As of today, both Sen. Maria Cantwell and Sen. Patty Murray have stepped up to provide assurance that they will back the BEER Act.  In total, The Wall Street Journal counts 17 senators as co-sponsors. But, reports last week showed that there are closer to thirty that have expressed support for the bill.

If you want to learn more about the BEER Act, read our earlier post. In that post, you can find summary information, as well as links to the language, courtesy of the Brewers Association. The Act itself is incredibly brief.

We will continue to track progress of the bill, here at Brewery Law Blog.