Battle over booze: What a South Carolina decision could mean for Missouri

  

JEFFERSON CITY, Mo. – A recent ruling from a state on the eastern seaboard has raised questions about a piece of liquor legislation currently being whipped in the Missouri House.

The South Carolina Supreme Court last week delivered a rather sobering decision, striking down a decades-old statute on the premise that a law limiting liquor licenses in the state was unconstitutional.

The ruling released last week reversed the lower court decision, as four of the five Supreme Court judges found that the previous ruling from 2014 was flawed, saying it “justified the three-license restrictions on corporations as ‘preserving the right of small, independent liquor dealers to do business.”

“The licensing limits do not promote the health, safety, or morals of the state, but merely provide economic protection for existing retail liquor store owners,” acting Justice Jean Toal wrote. The ruling went on to say that “economic protectionism for a certain class of retailers is not a constitutionally sound basis for regulating liquor sales.”

Rep. Robert Cornejo
Rep. Robert Cornejo

But why does this matter in Missouri? The answer is that the exact same issue debated by the courts is currently the subject matter of HB 433, a bill sponsored by Rep. Robert Cornejo, R-St. Peters, the chairman of the House Committee.

The legislation would allow alcohol retailers to offer to advertise the price of their products using coupons for discount booze and drink specials to be clipped from newspapers or broadcast on television —  if it becomes law.

Currently, Missouri statutes do not allow grocery stores, bars, and liquor stores cannot advertise their product prices, deals, or coupons outside of the store – namely in TV, radio, or print.

While opponents argue this bill works against public health and safety, their strongest opposition comes from the stance that is an attack on the mom-and-pop stores, seeking to hurt small retailers by allowing larger retailers to undercut their competition. One name in particular that keeps appearing is Total Wine, a large Maryland-based chain with three St. Louis locations, also a player in the South Carolina case.

One question on the minds of many following this ruling is how this might affect the state’s three-tiered system, which outlines the roles of brewers, distributors, and retailers.

Missouri’s system was put in place following the repeal of Prohibition in 1933, and it requires brewers to contract with distributors, who then sell to retailers, in essence requiring a middleman.

Some opponents have called Cornejo’s bill a direct challenge to the three-tiered system, an assertion that Cornejo and other supporters of the bill strongly dispute.

“When Prohibition ended, the federal government came in and said that each state is responsible for the rules and regulations and laws regarding alcohol and so we set up this three-tier system and in that three-tier system, we basically said that this is the current policy that we think is good public policy, but, to me, it’s a little absurd that you are telling somebody, ‘I can’t tell you what the price is publicly, you have to actually come into the store to find out what that price is,’ where it makes it that much easier just to grab it off the shelf and pick it up, so to me, it’s kind of counterintuitive there,” Cornejo said in an interview with KMOX in late March.

Ed Cooper, the vice president for Public Affairs and Community Relations, Total Wine & More, says that Cornejo’s legislation doesn’t affect the three-tier system, but instead upholds their rights to free speech in the marketplace.

“Total Wine & More fully embraces, supports and abides by the three-tier system,” he said. “Missouri’s three-tier system has been the law for decades and HB 433 does not change that system – the bill helps consumers by allowing them to receive truthful information about prices through advertising, which upholds free speech in the free marketplace.”

While praising the South Carolina ruling as a victory for consumers, Cooper said it has no bearing on Missouri.

“HB 433, which has been voted do pass by the House General Laws and Rules committees would allow retailers of alcohol to truthfully advertise their actual prices to consumers,” David Overfelt, the president of the Missouri Retailers Association, said. “Why would anyone oppose this? Fear of free marketplace competition. But they are fine with pocketing more money from consumers who cannot compare prices through public advertising.”

While HB 433 did indeed pass the House committee with a 9-3 vote, it did not do so without some controversy.

The debate over some of the language did result in the removal of the “below-cost advertising” portion of the bill, prohibiting the advertising below cost, an item that was a major concern during the previous hearing.

But the most strong opposition came from Rep. Jean Evans, who had requested a task force to be created in an effort to investigate and determine all of the consequences of passing legislation with such an enormous scope. Her request was denied.

House committee passes alcohol advertising bill, despite protests

Another interesting thing to note is that, in that same hearing, Cornejo said all of the liquor bills would be filed together as a committee bill, one of the new rule changes the House is trying this year, however, that did not come to fruition, as the bill will continue through the legislative process as it stands.

But the real question here is how Missouri’s voters will react to the legislation. A recent research poll by the Remington Research Group, commissioned by the Missouri Values Project, asked people several weighted questions in regards to Total Wine and the effects of Cornejo’s legislation to test opposition arguments. 

The results of the poll show that roughly 74 percent of people polled oppose allowing large retailers, such as Total Wine, to get special discounting to sell alcohol at lower prices than their smaller counterparts.

When asked if they would support changing Missouri’s laws to “benefit out of state retailers like Total Wine,” 63 percent said no, with another 20 percent being undecided.

The poll also brought up a number of violations and suspensions involving Total Wine stores, asking if the people would support Total Wine expanding across the Show-Me State. Each time, more than two-thirds of people questioned responded with opposition.

Proponents of the bill, including the Missouri Retailers Association, were quick to gawk at the poll.

“Those who are opposed to a free marketplace and fair competition in Missouri are trying to mislead the media and consumers by putting out a push poll replete with distorted and slanted questions designed to elicit a particular biased view,” Overfelt said. “This is not an objective, unbiased survey. It is instead the biased views of a few, masquerading as something else. I believe Missourians can easily see through this charade. House Bill 433 furthers a free marketplace. Advertising truthful prices helps consumers. But the opponents of House Bill 433 would rather have government keep censoring truthful information and keep Missouri consumers in the dark about sale prices. Transparency in pricing is a good thing for Missouri consumers. It’s why statewide organizations including the Missouri Retailers Association, the Missouri Grocers Association, the Missouri Broadcasters Association and the Missouri Press Association strongly support HB433 for truth in consumer advertising.”

Currently, Cornejo’s HB 433 awaits approval from the Missouri House, but the question as to when exactly it might come up on the calendar is uncertain.