Iowa: Iowa Legislature serves up flight of alcohol bills
Distilleries have to go through a convoluted regulatory process to get their liquor into your hands. Here’s a look at how it works.
Source: Des Moines Register
Brianne Pfannenstiel
February 16, 2016
Growlers from brewpubs. Self-serve alcohol. Cocktail lounges at Iowa distilleries.
A host of bills moving through the Iowa House would address those issues, which brewers and distillers say could help expand their businesses.
“I think it’s good for the economy of Iowa,” said Rep. Guy Vander Linden, R-Oskaloosa, who sponsored a number of alcohol-related bills, including one that reduces restrictions on liquor distillers. “You know we’ve got kind of a burgeoning industry and we need to help it.”
But some lawmakers have been reluctant to move forward with any broad changes, and the Iowa Wholesale Beer Distributors Association has opposed many of the bills. Friday marks a legislative deadline known as funnel week, which requires most bills to be approved by a committee in order to be eligible for continued debate.
“Beer distributors work to ensure a safe and enjoyable product to all consumers in a legal and socially responsible way,” Nathan Cooper, executive director of the wholesale association, said in a statement. “Every session new proposals come forward that propose changes to the system and possibly threaten consumer safety.”
He pointed to the self-serve alcohol bill as one he believes has the potential for abuse.
“Because of issues like this, we take our role very seriously, and want to carefully examine any changes to current law that may affect Iowans,” he said.
Iowa, like many states, uses a three-tier system to regulate the alcohol industry. Manufacturers, distributors and retailers make up those three tiers, and each tier must retain some degree of separation. The structure was put in place following the repeal of Prohibition in an effort to prevent the overselling of alcohol and other issues that had previously ravaged the country.
Robert Bailey, public information officer with the state’s Alcoholic Beverages Division, acknowledged change needs to happen to make sure laws keeps pace with changing social and business dynamics.
“When you’re dealing with a section of Iowa code that’s 80 years old, obviously changes need to be made,” he said. “But we’re very cautious about making changes just because they’re convenient or create technology. We want to make sure they’re rooted in sound public policy – that includes public safety and security.”
Here’s a look at some of the bills being discussed this session.
‘Growler freedom’ bill: House File 2156
Iowa law makes it difficult for brewpubs – restaurants that make and sell their own beer – to sell large to-go containers known as growlers to their customers.
“There are a lot of unnecessary logistics and expenses involved, and we’d like to make the process easier for all involved and create parity between the two brewery licenses,” J. Wilson, a representative for the Iowa Brewer’s Guild, said in an email. “Right now, brewpubs are functioning at a disadvantage.”
In order to comply with the three-tier system, brewpubs are required to first sell the growler to a distributor and buy it back before selling it to customers. They can’t self-distribute those growlers directly to customers, though regular breweries can.
Rep. Robert Bacon, R-Slater, who chaired a state government subcommittee that took up the bill, said he has some concerns the proposal would violate the three-tier system.
The bill has not yet advanced beyond a subcommittee, though Bacon said it may still move forward. The Iowa Wholesale Beer Distributors Association opposes the legislation.
Alcohol vending: House Study Bill 594
The bill, which passed a full committee Monday, would allow restaurants and bars to use self-serve alcohol machines.
The machines don’t distribute a bottle or can like a vending machine. More like a soda fountain, the machines let patrons use a pre-paid card to choose between different types of wine. Patrons can choose a pre-set pour size, ranging from just a taste to a full glass.
They’re already in use at some area restaurants and bars, such as Della Viti in the East Village of Des Moines.
Bailey, of the ABD, said restaurants can get a special permit allowing them to use this equipment. They’re required to have certain safety measures in place to prevent underage drinkers and overserving. The bill would allow all permit-holders to have that privilege without a special waiver process.
Iowa Wholesale Beer Distributors Association and Anheuser-Busch opposes the legislation.
Microdistilleries: House Study Bill 574
Liquor distilleries face a number of restrictions that Iowa breweries and wineries do not. This bill, sponsored by Rep. Vander Linden, would lift a number of those restrictions.
Distilleries currently can sell only two bottles of liquor to each customer per day. The bill lifts that cap to 12 bottles per person per day.
It also allows distillers to pour their own liquor by the glass, opening up the possibility for tasting rooms and cocktail lounges onsite at Iowa distilleries.
The bill is opposed by the Iowa Wholesale Beer Distributors Association, MillerCoors LLC and Anheuser-Busch, whose representatives argue it violates the three-tier system.
Vander Linden disagreed. If passed, the bill would require distilleries go through the same process restaurants use. Distillers would send their product to an ABD warehouse in Ankeny, then it would go to a wholesaler. Distillers would buy it back from the wholesaler and then pour it onsite, creating separation between the tiers.
“We think it’s fair within the system,” said Garrett Burchett, owner of Mississippi River Distilling in Le Claire and a vocal advocate for distilleries. “We don’t want to bypass anything that already exists. We’re playing within the rules. We’re not asking for any special treatment.”
A House committee passed the bill unanimously Tuesday, and it is eligible for debate in the full House.
Repealing dram liability insurance: House Study Bill 505
Iowa bars and restaurants that sell alcohol by the glass are required to carry a form of liability insurance known as dramshop coverage.
Under Iowa law, any bar or restaurant that serves a patron to the level of intoxication is liable for that person’s behavior after he or she leaves the establishment. That gives victims of drunken driving and other crimes a place to claim damages.
And although many restaurant owners agree that victims of these types of crimes should have some recourse, they say current laws ignore the need for personal responsibility. Some have advocated for a victim’s compensation fund that all alcohol retailers would pay into – including grocery and convenience stores that currently do not have to purchase dramshop coverage.
Rep. Ken Rizer, R-Cedar Rapids, sat on a subcommittee that heard the bill. He said he worries that current law unreasonably requires restaurant servers to recognize when a patron who they may have never met has reached the level of intoxication.
The Iowa Defense Counsel Association, numerous insurance groups, the Iowa Grocery Industry Association and others have opposed the legislation. It has passed a House subcommittee, but has not appeared before a full committee.