South Carolina: “At Rest” Law Would Require Unloading of Booze in S.C.
Source: Free Times
By Eva Moore
February 10, 2016
It almost sounds like a joke: Under a bill pending in the state Senate, an alcohol distributor couldn’t sell booze to a retailer unless the distributor had first unloaded the booze at a building somewhere in South Carolina. Wine and liquor would have to remain at the location for 24 hours before being loaded up again and delivered to a retailer; beer could be immediately reloaded onto a truck as soon as it had been unloaded.
“Isn’t that just make-work?” asked Sen. Brad Hutto, an Orangeburg Democrat, who expressed skepticism during a pair of recent hearings on the bill. “I guess it’d be a full employment act for at least those five guys that had to unload the truck.”
It’s known as an “at-rest law,” and many states have them. Law enforcement – and existing distributors – say it’ll combat “paper wholesalers”: alcohol distributors that have a licensed South Carolina location but actually just ship alcohol from a warehouse in another state to retailers in South Carolina.
Under South Carolina’s three-tier liquor system, South Carolina retailers have to buy their alcohol from South Carolina wholesalers/distributors, who in turn buy the alcohol from the manufacturers – breweries, wineries, liquor companies and the like. Cross-ownership is prohibited.
The at-rest bill’s supporters claim it will streamline state law on alcohol, allow the state to make sure all alcohol is being taxed, prohibit counterfeit alcohol from entering the state, allow manufacturers to more easily recall alcohol and protect the three-tier system.
The problem, they say, is that state law enforcement and the S.C. Department of Revenue can’t monitor alcohol in other states.
Tom Collins, executive vice president of Southern Wine and Spirits and a board member of the Wine and Spirits Wholesalers Association, told senators at a Jan. 27 hearing that an at-rest law would help the state enforce liquor laws.
“It would give our regulators an opportunity to visit the location to see what is being received,” Collins said.
But those opposed to the bill say existing wholesalers just don’t like competition.
“It smacks of organized labor,” said Baylen Moore, a lobbyist representing Total Wine, at Feb. 3 hearing. “It’s government injecting itself into a business decision. [This bill] has nothing to do with protecting the three-tier system but simply with protecting the market share of the big three wholesalers.”
Alcohol distributing is a massive industry. The Wine and Spirits Wholesalers Association of South Carolina estimates its members generate $38 million in state excise tax and $103 million in state business tax each year, and directly employ about 1,000 people. The association’s board is made up of just three members, representing Republic National Distributing Company of South Carolina, Ben Arnold-Sunbelt Beverage Company of South Carolina and Southern Wine and Spirits of South Carolina.
Beer wholesalers, meanwhile, employ some 1,900 people, according to the South Carolina Beer Wholesalers Association.
The entire liquor industry doesn’t speak with one voice on the at-rest bill. The South Carolina Retail Association calls it “intrusive legislation.” Many retailers oppose the three-tier system, which prevents them from shopping around for alcohol, as any given brand is available from only one distributor. Some newer, smaller wholesalers also oppose the bill.
On the other side are the Department of Revenue, the State Law Enforcement Division and the big wholesalers.
“We have the three-tier system, so we need to make sure it works,” said Lauren Acquaviva, an attorney for the South Carolina Department of Revenue, which taxes and regulates alcohol sales. She thinks the bill would help DOR and law enforcement track what she calls “sham wholesalers.”
The bill passed the House 88-11 last year; it faces a tougher path in the Senate, given the inertia on the Senate floor.
Senators on a judiciary subcommittee have said they need more time to consider the proposal.