Iowa: Proponents want to update laws governing alcohol production, sales

 

Source: The Gazette

Mitchell Schmidt

Mar 6, 2016

 

It’s become an annual trend – lobbyists and lawmakers each year propose legislative updates to keep up with a growing and changing industry and clean up language in Iowa’s alcohol rules.

 

Some of those rules have remained unchanged since Prohibition.

 

Robert Bailey, Iowa Alcoholic Beverages Division communications director, said it’s a delicate balancing act. Amendments to Iowa Code 123, the Iowa Alcoholic Beverage Control Act, must carefully weigh what’s best for both the industry and overall public safety.

 

“The bottom line is we’re still dealing with a substance that’s dangerous. Alcohol is alcohol, it’s at the root of about every social problem that exists today,” Bailey said. “It’s not like we’re promoting shoes or corn.

 

“There is a tourism factor and there is an economic factor, but again we’re talking about liquor, so those are things to keep in mind.”

 

Technology and production

 

More than a year ago, Iowa City business owner George Etre installed one of only a handful of self-pouring alcohol systems in the state in his restaurant, Iowa Chop House.

 

The system provides customers with direct access to select beer tappers – individuals make a specific payment, which is loaded onto a wristband. Customers then scan their wristband and pour the beer of their choosing.

 

“As much as you pour, it just keeps track of it,” Etre said.

 

State law prohibits alcoholic vending machines, so Etre had to acquire a waiver from state code from the Alcoholic Beverages Division, as well as maintain compliance with city regulations.

 

“It was very time-consuming working with the state, a lot of it had to do with the technology,” Etre said.

 

Meanwhile, lawmakers are exploring a bill that would legalize self-tapping devices for beer, wine and liquor. It’s the latest example of proposed amendments to state code to keep up with a constantly changing alcohol industry.

 

“It’s nice that the state has realized times are changing and things are getting more computerized, technology now is moving at a fast beat and we have to keep up,” Etre said.

 

A second bill working through the statehouse is focused on increased production – another major driving force behind alcohol legislation.

 

That bill, which in the House Ways and Means committee, would increase the annual production allowed for micro distilleries from 50,000 gallons a year to 100,000 gallons and permit distilleries to sell more than two bottles of alcohol for off-premises consumption and serve by the drink.

 

In previous years, only one or two of the handful of alcohol bills proposed actually become law.

 

For some, such as J. Wilson, Iowa Brewers Guild executive director in Des Moines, Iowa’s alcohol laws are outdated, especially in regard to craft breweries, an industry that has been growing exponentially in recent years.

 

“Our industry is totally outpacing where the laws are,” Wilson said. “We’re operating under laws that were created for an industry that didn’t exist in Iowa.

 

“There wasn’t an Iowa brewing industry when these laws where created. We’re just trying to get those laws caught up with what’s happening in Iowa and nationwide.”

 

A three-tier system

 

The framework of Iowa’s alcohol rules and regulations stems back to 1933, when the 14-year-long Prohibition was repealed.

 

It was that year the federal government enacted the three-tier system to control any corruption or social problems that were prevalent before the 18th Amendment. The national system provides a separation between the production, distribution and retail of alcohol, with state governments allowed to regulate their own terms.

 

Michael Lashbrook, executive director of the Alexandria, Va.-based Center for Alcohol Policy, said the three-tier system was created to regulate the industry for public safety and health and to prevent companies from building vertical monopolies. Checks and balances in such a system means companies can only be licensed to operate within a single tier, so a company cannot manufacture and sell their own product at a bar, for example.

 

Iowa is one of 17 states in the country in which the state operates as the sole wholesaler for spirits.

 

Lashbrook said the tier system has been credited with another benefit, which has been more noticeable in just recent years in Iowa: As a means of regulating alcohol, the system facilitates state and local control of alcoholic beverages, which in turn has created a market that is competitive, but accessible to small businesses.

 

“It tries to localize the business of alcohol, so the people that are involved are part of a local community and reflect the local norms,” Lashbrook said. “Although it may not have been a vision in the 1930s when it was created, but it fosters competition … It’s really been a boon to this craft phenomenon that you see today.”

 

Changes must be appropriate

 

If the Iowa Legislature has discussed an alcohol-related bill in the past decade, there’s a good chance State Sen. Jeff Danielson, D-Waterloo, has had a part in it.

 

“I’ve been here 12 years and I’ve brought an alcohol bill every year,” said Danielson, chairman of the Iowa Senate’s State Government committee, which covers alcohol regulation.

 

One of the biggest changes to the industry came in 2010, when state law was changed to let Iowa breweries produce beer above 5 percent alcohol by volume for the first time since Prohibition. Danielson said many of those changes have been driven by the state’s rapidly expanding market – the number of Iowa breweries alone have nearly tripled since 2009 to around 60.

 

“We know there is an emerging market here in Iowa for microbreweries and micro distilleries. Within the limits of three-tier, we want to encourage them to grow,” he said. “In this sense, the way in which consumers are demanding more local craft beers and locally made spirits is driving the push to change some of those laws.”

 

But rather than take on one or two bills every year, Danielson is pushing for an interim study committee of the entire Iowa Code 123, to be conducted after the current legislative session. If approved, that study would take a complete analysis of the state’s alcoholic beverages laws.

 

” … We do it so more people can learn about the current law, why it is important and, through the context of that, see what changes we would consider,” he said.

 

Iowa Alcoholic Beverages Division’s Bailey said the division also has expressed interest in taking a step back to review the state’s alcohol rules to identify necessary updates to rules or language.

 

As with previous alcohol bills and amendments, change needs to be appropriate, Bailey added.

 

“I think it’s up to us to remind people – advocates of change – that while change is necessary, there’s no need to rush and we need to weigh these things to make sure that the overall community is safe and healthy.”