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House passes franchise liquor language, or the “liquor war” bill, as an amendment

  

JEFFERSON CITY, Mo. — The Missouri House added an amendment Wednesday to Senate Bill 114, a brewery bill. The amendment was, in short, the commonly known “liquor war” legislation that deals with the franchise liquor language in Missouri.

The amendment’s sponsor, Rep. Kevin Engler, R-Farmington, received support from the sponsor of House Bill 759, Rep. Caleb Jones, R-California, which sought to accomplish the same thing the amendment did, but never made it to the floor for debate.

Rep. Kevin Engler, R-Farmington
Rep. Kevin Engler, R-Farmington

The amendment passed 112-47, and the overall bill passed 110-48.

Those who spoke in favor of the bill came from both sides of the aisle.

“You’re just giving them a path to market until they grow to the point where they can compete,” Rep. Jeff Roorda, D-Barnhart, said during debate. “To say this is a carve out of the three-tier system is not accurate.”

The three-tier system is the relationship between wholesalers, distributors and retailers, and has governed the way the Missouri wine and spirits industry has functioned since prohibition was repealed.

The current controversy arose from Missouri Beverage Company, Inc. v. Shelton Brothers, Inc., a 2011 case that was affirmed by the U.S. Court of Appeals Eighth Circuit last year, which established new meaning for the word “franchise” that ultimately changed the standing Missouri law and three-tier system.

Since then, about nine different lawsuits have been filed between different in and out-of-state wholesalers and distributors regarding the terms on which their contracts were based, with some terminating contracts entirely.

Rep. Stanley Cox, R-Sedalia, proposed a substitute to Engler’s amendment in which he further defined “franchise,” which opponents to the change believe to be the problem from the 2011 case.

“I might not agree that this court decision really changed anything,” Cox said during debate.

Proponents of the legislation spoke out against the amendment substitute. Rep. Todd Richardson, R-Poplar Bluff, said the substitute would completely “gut” the purpose of the bill.

Ultimately, Cox’s amendment failed during a voice vote.

Rep. Don Gosen, R-Ballwin
Rep. Don Gosen, R-Ballwin

Another opponent to the amendment — who has opposed the idea since it was proposed and passed last year as Senate Bill 837 — is Rep. Don Gosen, R-Ballwin, who spoke against a carve out for small breweries (an amendment to the amendment, which passed), as well as speaking against the amendment as a whole.

“Missouri already has a very monopolistic alcohol market, especially when it comes to distribution,” Gosen told The Missouri Times. “This bill will make it even stronger.”

Gosen said he thinks this bill pits small businesses versus big businesses in Missouri, and said he thinks the fact there was a carve out required for the bill shows the “underlying bill is poorly constructed.”

Sue McCollum, chief executive officer of Major Brands — a distributor based in St. Louis, Mo., that has become an industry leader in the fight for getting this legislation passed — said she thinks the House vote showed support of “fair competition, fair prices and a level playing field.”

Sue McCollum, CEO of Major Brands — one of the two largest distributors in Missouri
Sue McCollum, CEO of Major Brands — one of the two largest distributors in Missouri

“Today was a good day for Missouri jobs,” McCollum said. “The little guy won today.”

McCollum, who was joined in the gallery during the debate with St. Louis Mayor Francis Slay, previously said the issue is a matter of in-state versus out-of-state competitors. She said she thinks the vote Wednesday was the House standing up for “Missouri law, public safety and jobs,” and she urged the Senate to do the same.

The Distilled Spirits Council of the United States — a leading group in the fight against this legislation — was one of multiple groups (including Missourians for Fair Competition, a new group) to send a release after the vote.

Ben Jenkins, vice president of DISCUS, said in the release that the legislation would create an anti-competitive environment in Missouri — a main argument point for the opponents — and urged the senate to reject the bill when it makes it to the upper chamber.

The bill also had an emergency clause, added by Jones, which passed 112-46. The emergency clause, Jones said, was to help get the bill through as quickly as possible in hopes that the litigation that is involved with this issue will cease.

The bill as a whole now heads to the Senate for an up or down vote. Currently, it is not on the calendar, but the House update was read to the Senate shortly after the bill passed the lower chamber.

Look for a more expansive update on the legislation — gauging Senate temperatures — in Monday’s Missouri Times, including comments from Mayor Francis Slay, among others.

To read an in-depth about the history of the issue, the legislation, both sides and the litigation, check out: “Inside the “liquor wars:” the legislation, the litigation and the interests.”

To contact Ashley Jost, email ashley@themissouritimes.com, or via Twitter at @ajost.