Iowa: It’s time to update Iowa’s alcohol laws

Source: Iowa ABD

Stephen Larson and Debi Durham, Iowa View contributors

April 2, 2017

For many years, Iowa’s alcohol laws have, essentially, been static. The few revisions that have occurred have been to accommodate changes in the industry such as native wineries and breweries. As the pace of change within the industry accelerated over the past decades, these somewhat ad hoc solutions continued, leaving our state with a patchwork of exceptions that have created confusion and regulatory uncertainty.

In an effort to address this condition and at the request of Gov. Branstad and Lt. Gov. Reynolds, we convened a 15-member group of stakeholders in September 2016 to study Iowa’s alcohol laws to determine what changes could be suggested for legislative consideration.

The study committee, representing virtually every sector of Iowa’s alcohol industry, was extraordinarily thorough and civil. These meetings were open to the public and always well attended. Over the course of this five-month process, we came to two major realizations. The first was that there continues to be inequity among Iowa’s alcohol manufacturers and the privileges they are allowed. The second was that the job of reforming Iowa’s alcohol laws is massive and will require considerably more time and work.

We are addressing the latter realization by laying the groundwork of a second phase of meetings with an expanded group of stakeholders that will include local authorities, law enforcement, public health officials and prevention specialists, among others. There is much to be done – so work on this phase will commence soon after the Legislature adjourns.

More immediately, the recommendations presented to the governor and lieutenant governor were centered on the disparity that continues in the alcohol manufacturing world and are part of HF 607, which has passed a vote by the House of Representatives and is heading to the Senate for consideration.

Key provisions in HF 607 include allowing native distilleries to sell their products by the glass to customers at their facilities and to sell nine bottles of their making per person (they are now limited to two bottles). The bill also eliminates the requirement for brewpubs to route the beer they pour into growlers through a wholesale distributor, saving time and hassle for both the brewpub and the wholesaler. Additionally, HF 607 allows breweries to serve wine by the glass at their tap rooms, a reciprocal privilege based on the fact that the Legislature had carved out an exception in 2009 that allowed wineries to serve beer.

These measures are big wins for Iowa entrepreneurs as well as for tourism in our state.

We do not believe that this bill threatens the three-tier system, a common thread of alcohol regulation in all 50 states. The three tiers are manufacturing, wholesaling and retailing and, by design, no individual can dwell in more than one tier. A manufacturer cannot be a retailer, a retailer cannot wholesale and so on. In reality, though, the purity of the three-tier system to which opponents of change cling exists primarily in theory and, while its intended purpose to prevent predatory behavior by manufacturers of alcohol is commendable, it is nevertheless rooted in a vision of the industry from 1934. The industry has changed considerably since then.

A much more effective tool in regulating against abuses by industry members are trade practices established at the federal level and adopted by each state. These rules specifically prohibit practices such as paying retailers for preferential placement of products or otherwise manipulating the marketplace to restrict access for competitors. In essence, the federal rules are about maintaining a fair and level playing field.

Alcohol is a dangerous drug and what may seem to be a minor adjustment to policy can evolve into a real problem. This is why a central requirement of our recommendations ensures that our communities remain safe and healthy.

Iowa is among the leading states in tackling alcohol reform. We look forward to continuing to work on modernizing our laws so that we all can be proud of a state that allows for innovation and continued success in this industry while also protecting our citizens and the neighborhoods in which they live.

Stephen Larson is administrator of the Iowa Alcoholic Beverages Division. Debi Durham is director of the Iowa Economic Development Authority.