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22nd Annual Administrators Conference October 17, 2016 NABCA’s 22nd Administrator’s Conference wrapped up with close to 260 conference attendees choosing from the 12 remaining sessions of the day. To follow are summaries of some of them. Who Owns It? Moderator Nicholas Capezza of NABCA opened the morning session on the second day of the conference noting that the session title, “Who Owns It?”, is “one of the most important questions that state regulators are faced with today.” Michael Madigan, managing partner at Madigan, Dahl & Harlan, provided an overview of ownership issues in relation to the three-tier system, licensing, and tied house rules. The three-tier system, supported by tied house restrictions, prohibits integration between alcohol manufacturers, suppliers, and distributors. This prohibition becomes complicated with corporate mergers and changes in ownership. Two recent court cases in Texas where retailer licenses were denied due to ownership in other tiers by the applicant’s parent company demonstrate the complexity of this issue. Mr. Madigan concluded the session by noting that continued issues of cross ownership among tiers, the craft product boom, and crowd sourcing are some of the major areas that state regulators should continue to monitor. “Brain Drain: “Alcohol’s Impact on the Adolescent Brain” Luther Snyder, North Carolina Alcoholic Beverage Control moderated this session with Wilkie Wilson, PhD as the speaker. Dr. Wilson is a neuroscientist and co-author of the book, “Buzzed: The Straight Facts About the Most Used and Abused Drugs from Alcohol to Ecstasy”. He opened the discussion with two videos showing how alcohol can affect teens, the choices they make and the consequences that can follow. Dr. Wilson discussed the scientific makeup of an adolescent’s brain, their process of thinking and the various factors that may affect their brain such as stress, hormonal changes and peer pressure. He said external influences can affect alcohol consumption by adolescents because of availability, use by peers, parent behavior and messages, and the media. Dr. Wilson discussed the importance of parental involvement in a child’s behavior when it comes to alcohol (and drugs). Alcohol can be a way to cope with issues, and because the adolescent’s brain is not fully developed, poor choices and illogical reasoning can cause long term effects. Parents should make sure their child receives the proper amount of sleep, eat nutritional food and exercise. Dr. Wilson also stated that parents can be influential in delaying or decreasing alcohol consumption by doing the following: [if !supportLists]· [endif]Don’t give them alcohol [if !supportLists]· [endif]Parent communication [if !supportLists]· [endif]Disapproval of adolescent drinking [if !supportLists]· [endif]Rules about alcohol [if !supportLists]· [endif]Parental monitoring [if !supportLists]· [endif]Parent-child relationship quality [if !supportLists]· [endif]Limiting alcohol availability The Public Health Impact of Deregulation Diane Riibe from the U.S. Alcohol Policy Alliance, Pam Erickson from Public Action Management (PAM) and Bill Kerr from the Alcohol Research Group (ARG) presented on “The Public Health Impact of Deregulation”. Ms. Riibe moderated the session. She cited how deregulation of alcohol distribution in various states is a growing trend. She also pointed out that any movement toward alcohol deregulation “ultimately has a law enforcement impact and that it is important for alcohol regulators to connect with law enforcement officials” while these efforts are happening. Dr. Kerr, a senior scientist at ARG, reviewed the various harms alcohol misuse can cause and effective policies for reducing these harms. These policies include price regulations, availability controls, minimum drinking age, BAC limits and government control of alcohol sales. Dr. Kerr added “greater alcohol outlet density creates greater risk of alcohol problems” as it affects the more problematic and problem drinkers, and is an issue that may arise from alcohol deregulation, which continues to be a hot topic in many states. Dr. Kerr added how “privatization is tough to reverse” once implemented, and cited his research that showed a portion of Washington State voters regret their vote to privatize the state’s control system. Ms. Erickson, who serves as president and CEO PAM, described how deregulation impacts public health and safety outcomes. Citing alcohol control systems in the U.S. were created out of Prohibition, Ms. Erickson noted government alcohol regulations were formed to address the level of alcohol abuse that occurred before Prohibition, and how important it is for alcohol regulators to recognize this as a value of why their agencies were formed. Ms. Erickson continued explaining how alcohol regulation was set up and how it works today. Using the “4 P’s, price, promotion, product, and place”, she summarized the importance of price regulation, curtailing alcohol promotion, controlling dangerous alcohol products and limiting availability as important purposes these alcohol regulations have in our society. She cited examples from the United Kingdom’s deregulation experience which had dangerous results. Ms. Erickson concluded by highlighting the current deregulation issues being dealt with around the world today, one of which is alcohol sales in grocery stores. She noted that supermarkets sell alcohol on very small profit margins leading to “high volume sales which is counter to idea of alcohol regulation”. 20/20 Vision Presenters Stephen Larson from the Iowa ABD, Cade Meier from the Utah DABC and Steve Shebuski with Blue Horseshoe Solutions, Inc., discussed planning and growth of alcohol regulation and future distribution. Rob Southworth, program specialist with the Utah DABC, moderated the session. Mr. Shebuski, the Solutions Engineering Director with Blue Horseshoe Solutions, Inc., spoke about this “20/20” vision, citing how it is reality that states must advance with the times and use data and mobile technology to be effective in today’s alcohol market. Using millennials as an example, he said “the leading trends driving service innovation” and the importance of recognizing consumption of data and the explosion of social and mobile technology are significant trends to recognize. He said new technology has enabled citizens to expect their information from their government in new and different ways. This recognition of new advances in technology is also important in supply chain and inventory operations. Alcohol distribution systems need to acquire the necessary mobile resources and tools to have an efficient system that delivers for their company and their consumers. Mr. Larson, Administrator of the Iowa ABD, spoke about the systems Iowa developed that were used to deliver product to customers over the years. He spoke about the need to learn how to connect all of these systems, and to bring them into the 21st century, leading to a new Warehouse Management System (WMS). The Iowa ABD recognized the need to be more efficient as they moved toward the E-Commerce world. Mr. Meier, who is the Director of Operations for the Utah DABC, also described what went into the decision to invest in a new WMS system for Utah. The old warehouse was 19 years old, and the Utah DABC decided to outsource its warehousing with the new WMS system to help improve operations for the agency and Utah consumers. Craft Q&A NABCA General Counsel Neal Insley welcomed attendees and introduced the panel for a “Craft Q & A” session. He noted there are many challenges coming as the craft alcohol industry continues to grow. Leo Gibson of Whistlepig Distillery provided information on the growth of craft spirits noting there were less than 50 craft distilleries in the country about a decade ago to now having more than 1000 craft distilleries in 2015. Craft spirits represent 5-6% of the total spirits market and forecasters believe this will go up to 10% by the year 2020. North Carolina Alcoholic Beverage Control Commission Administrator Robert Hamilton noted that his state has had an “explosion” of new distilleries. Future plans include looking for continued ways to keep a level playing field for all in-state distillers. Sazerac’s Mary Tortorice commented on the perspective of an established company working in the boom of craft products. She emphasized that states should be mindful of providing assistance to in-state manufacturers in a manner inconsistent with the Supreme Court’s Granholm decision. The panel agreed that there will be continuing regulatory and legal issues as craft manufacturing grows across the country. Science Speaks In this afternoon session, Bill Kerr, Tom Greenfield and Meenakshi Subbaraman from the Alcohol Research Group (ARG) presented on the topic of “Science Speaks”. Dr. Kerr, a senior scientist with ARG, moderated the session which reviewed new findings from Washington State’s liquor privatization experience. Dr. Kerr summarized the ballot initiative that took effect in June 2012, eliminated Washington State’s wholesale and retail monopoly on liquor. Due to increases in prices from this implementation, Dr. Kerr and the Alcohol Research Group studied the impacts of cross border sales, and found an “increase in liquor sales of 10.1% in Oregon and 8.2% in Idaho” after Washington’s privatization. Additionally, there was flat or slightly declining spirits consumption per capita for Washington residents. Dr. Greenfield, who serves as the scientific director at ARG, offered a national perspective on the harms an alcohol “drinker may be inflicting on others”. He termed it “Externalities” or “Second-Hand Effects”. He said there are obvious second-hand effects such as assault by an intoxicated person and automobile accidents. He also cited statistics about problems within the workplace with coworkers who deal with alcohol abuse, including data on working extra hours, added levels of responsibility for employees covering for co-workers dealing with alcohol issues, and reductions in workplace productivity. Dr. Greenfield circled back to the Washington State experience, citing research he did that “studied purchase satisfaction pre to post privatization”. It revealed the purchase satisfaction with consumers after privatization was a mixed bag. Positive improvements post-privatization with consumers included operating hours and convenient locations. However, the two areas where purchase satisfaction decreased was level of staff knowledge and number of staff to help within liquor outlets. Finally, Dr. Subbaraman, a biostatistician with the Alcohol Research Group, reviewed research that surveyed voters. They asked participants if they would still support liquor privatization in Washington, knowing what they know now about the state’s experience. Dr. Subbaraman’s research found “20% of those who voted yes would change to no, while 4% of those who voted no would change to yes”. This research also found the primary reason voters would switch to “no” was the increase in availability of spirits throughout the state. Dr. Subbaraman concluded her presentation by reviewing various media reports of some unintended consequences of Washington’s privatization experience. Good Business Ethics Neal Insley of NABCA introduced the Good Business Ethics session by explaining how the panel will cover ethics from industry and government perspectives. Jerry Dinallo of Diageo provided information from an industry’s perspective of business ethics acquired through Diageo. He noted that compliance and strong governance are good business, and compliance creates a level playing field with honest relationships. George Griffin of Terlato Artisan Spirits discussed his perspectives on business ethics for both industry and government. Mr. Griffin said it is important to remember that just as control states are not all the same, companies are not either. He recommended being proactive whether in a private or public sector. Jeffrey Painter of the Virginia ABC explained how ethics have changed at the Virginia ABC throughout the years. Marijuana: What’s Next? The closing session at the 2016 NABCA Administrators Conference, titled “Marijuana: What’s Next?”, dealt with this growing issue. As states begin to legalize and decriminalize use of the product, alcohol agency officials are put into a position of facing regulatory challenges. Kevin Sabet, PhD, of Smart Approaches to Marijuana (SAM) and the Drug Policy Institute at the University of Florida, discussed the current landscape of marijuana policy and where things may be headed. Marijuana legalization groups have said that it is safer than alcohol and have used this statement as a major talking point. Dr. Sabet said that is misleading as there are far more alcohol users than marijuana. Scientific data has been able to show a more accurate comparison between alcohol and marijuana use. Dr. Sabet noted that private companies and venture capital groups are financing many of the marijuana legalization initiatives because of the potential revenue. A private equity firm recently launched the first global cannabis brand, Marley Natural. A major public health and safety issue relates to how potent marijuana is today versus 50 years ago. There are also more edibles and other products that contain large percentages of THC, the active ingredient in marijuana. In concluding the session, Dr. Sabet reminded attendees that there is no clarity by the federal government about the product and that it still remains illegal, even though there has not been enforcement of those laws and even as some states move to allow recreational use. The 23rd NABCA Annual Administrator’s Conference will be held in Grand Rapids, Michigan from October 22 – 25, 2017. |