Supporters of a measure that would change the way alcohol is sold and distributed in Indiana admit changes will have to be made to the legislation amidst growing opposition from a number of places.
Currently, the bill requires an alcohol wholesaler to be reimbursed if they lose a contract with a supplier to another wholesaler. The subsequent wholesaler would have to pay the previous entity the fair market value of any revenue loss to the previous distributor.
Bill sponsor, Scott Pelath says the bill was necessary to provide “stability” to Indiana’s alcohol market and that it is not uncommon for Indiana to provide some protection for franchises which it heavily regulates, like gambling. However, critics say the measure would have been the equivalent of forcing one casino to pay another every time it lost a customer to another casino.
In Indiana National Wine and Spirits controls between 60-70 percent of the market; a virtual monopoly. The Governor’s office has no official position on the measure, however sources tell me when the bill was first brought to his attention he reportedly said he did not want to see anything that would stifle economic development in the state. In addition House Speaker Pat Bauer, I’m told, got an earful from a number of groups who oppose the legislation, including labor unions a key Democratic constituency.
Despite the growing uproar, the only amendment introduced to alter the legislation does not remove the monopoly language. Similar measures were either held to be unconstitutional in other states or lawmakers repealed the bills after alcohol prices soared and there was an outcry from the public.
When a candidate for the U.S. Senate talks about polishing his gun and taking up arms (offensively) against the Government (at 1:40) it’s time to be concerned.
Editor’s Note: If you haven’t read Sunday’s post, Bar Wars, you may want to do that first before going through this one.
As I wrote Sunday, there is legislation pending in the Indiana General Assembly that could potentially give a virtual monopoly on alcohol distribution to one Indiana company, thus leading to potential higher prices and a serious court challenge on Constitutional grounds.
The company, National Wine and Spirits, sent an e-mail out to its customers asking them to support HB 1191, which would force an alcohol wholesaler who gets a contract from a supplier to reimburse the previous holder of that contract for any lost business. I obtained a copy of the e-mail. Here is it…
What YOU can do to help keep Southern Wine & Spirits out of Indiana
Friends,
Over the past 37 years, National Wine & Spirits has earned successes that I could never have imagined – all at the hands of a terrific and committed team. Some of you have been with us from the very beginning, others have just recently joined. All of you are important members of the National family.
As you are probably aware, Southern Wine & Spirits is actively trying to enter the Indiana market, steal our suppliers, and put us out of business. We are doing everything possible to fight them off. Currently, we are driving legislation (Senate Bill #244 & House Bill #1191) that will help level the playing field in wine & spirits wholesaling, making it much more difficult for Southern to lure our suppliers away.
To help in this effort, we are asking you to sign and provide some supporting comments that a Representative or Senator might be interested in knowing through an online petition http://www.PetitionOnline.com/244y1191/petition.html.
We hope everyone will “click” their support, and pass on the link to friends, family, and customers. We will use this (the votes and the comments) with the legislature at different times during the session – starting as soon as next week, so please take a moment to rally for the cause, sign the petition and spread the word. Names of those who sign on will not be made public.
Nothing is more important to us than the well-being of our people. We must show the state legislature that Indiana citizens want to keep this business headquartered and continuing to serve Indiana like no other.
As I mentioned in my previous post, it’s one thing if an alcohol supplier and retalier put a provision in a contract that if it’s terminated, one party must reimburse the other. It’s another thing to make that a government mandate by etching that provision into state law.
Is the Indiana General Assembly attempting to pass a bill that would create an illegal and possible unconstitutional monopoly when it comes to alcohol sales in the state? It depends on who you ask. A coalition of alcohol-related businesses say “yes” others say it’s a way to protect Hoosier jobs.
Under current Indiana law, alcohol is sold and distributed through a three-tier system of suppliers, wholesalers and retailers. Suppliers are companies like Jack Daniels or Anheuser-Busch InBev. Wholesalers are companies like National Wine and Spirits. Retailers are your local bar or liquor store. Because of laws dating back to the end of prohibition, a supplier can’t sell directly to a retailer; they can only sell to a wholesaler who then sells to a retailer.
The largest wholesale distributor in the state is National Wine and Spirits which controls between 60-70% of the wholesale market. However there are other companies that want to get in on the action and have been talking to suppliers about picking up their business and distributing their product. And that’s where the controversy starts.
This week lawmakers are slated to hear in committee HB 1191. The legislation would, among other things, require a wholesaler who gets a contract with a supplier to pay the previous holder of that contract “fair market value” for the rights to distribute alcohol within the state. In other words if a supplier has an agreement with one wholesaler, another wholesaler comes along and offers a better deal, the second wholesaler must reimburse the first wholesaler for any money it will lose because of the new contract.
Critics say not only does the legislation prohibit a supplier from contracting with a second wholesaler, but it could also create a virtual monopoly for a wholesaler. Unless a second wholesaler can meet their price for breaking the contract, the first wholesaler is guaranteed the supplier’s business and that would lead to higher prices for the consumer because now the wholesaler can raise prices with no fear of repercussion. Supporters of the measure will argue that such a bill is needed to protect jobs. They say if a wholesaler has invested the time and money in building a business, they should not have to suffer a loss simply because a supplier wants a better deal.
This is all very similar to what happened in my home state of Illinois more than 10 years ago. Illinois has a similar alcohol distribution system to Indiana. Back then lawmakers passed a bill prohibiting a supplier from canceling, failing to renew or terminating an alcohol agreement with a wholesaler without “good cause”. The legislation led to a more than 20% increase in the price of alcohol and things got so bad a federal judge put an injunction on the law saying it violated both the Commerce and Contract Clauses of the U.S. Constitution. Illinois lawmakers eventually had to repeal the law. Similar laws have been repealed, vetoed or declared unconstitutional in Arizona, Texas, Massachusetts and Nebraska.
There has been a fierce battle taking place behind the scenes at the General Assembly with thousands of dollars being spent and virtually every lobbyist who is available being gobbled up for this fight. It’s unclear what the outcome of the measure will be. I frankly have a hard time seeing how it would stand up to Constitutional muster if it passes. It is one thing for two parties to have a clause in a contract where if one commits a breech, the breeching party pays damages. It’s an entirely different matter when the government steps in and mandates the winner of an agreement reimburse the loser.
HB 1191 is scheduled to be heard on Wednesday in the House Policy Committee.
I’ve got some work to do today so I’ll just throw out a few issues for you to discuss amongst yourselves, hopefully in an intelligent manner.
Schools say it would cost millions of extra dollars to do remedial education for 3rd graders who don’t know how to read. Correct me if I’m wrong, but isn’t it the schools job to teach children how to read, so why should it cost extra for them to do their jobs?
Every Indiana politico and his mother is hoping for an Evan Bayh/Mike Pence match up, but has anyone asked when is the last time either candidate had to face a real, serious, credible challenger?
The U.S. Supreme Court has lifted restrictions on corporations and unions and their abilities to spend money on political campaigns. Has everyone forgotten that while money helps win elections, it’s candidates who usually rise and fall on their own abilities?
Indiana lawmakers are moving forward with legislation that would allow employees to take guns to work as long the weapon remains locked in the vehicle. Whatever happened to private property rights?
It’s amazing what you come across when you’re playing on the Internet and scanning through local campaign finance reports. For the record, I do have a life, I was just killing time before meeting up with friends for cocktails.
You come across the usual things; Greg Ballard raised more than $1.3 million in 2009, with about half the donations being between $250 and $750. John Layton, Democratic candidate for Sheriff had $108,000 in cash on hand, etc. etc. But there were also some other interesting tidbits. For example…
Up until December 2008 it looked like County Auditor Billie Breaux was raising money for a run for Treasurer.
Former City-County Councilman Ike Randolph still has City-County Council political action committee.
Up until he got out of the race for Sheriff Kerry Forestal raised $88,000.
Frank Anderson’s “exploratory committee” for something raised about $13,000.
The fund raising arm of the Marion County Republican Party pulled in about $33,000 last year. The Marion County Democrats fund raising arm didn’t do anything in 2009.
And believe it or not, former Indy Mayoral candidate Jocelyn Adande still has a Mayor political action committee. It’s empty, but still there. Insert your own joke here.
Two big items from Tuesday, the Massachusetts Senate Race and Governor Mitch Daniels State of the State Address. We’ll knock out Massachusetts first.
Massachusetts Miracle
Although it “sent shock waves” through political world, anyone who was paying attention to the dynamics of the race between Republican State Senator Scott Brown and Democrat Attorney General Martha Coakley saw brown’s victory coming. Although Coakley originally had a 30-point lead, she lost by 5 points.
Frankly, I’m surprised she didn’t lose by more. She ran a campaign that made Jill Long Thompson look like Karl Rove. Between going on vacation after the primary, calling Boston Red Sox pitcher Curt Schilling a Yankee fan, saying their are no terrorists in Afghanistan, taking the voters for granted and just being plain annoying were all factors. Throw in an anxious electorate that’s concerned about their jobs. And most importantly, a state that already has universal health coverage and its citizens don’t want to pay for another plan and this is what you get.
Who’s surpised?
State of the State
Times are tough, but they’ll get better and things are a lot worse next door. That was the underlying message of Governor Mitch Daniels’ State of the State address. Daniels spelled out the challenges the state has gone through, but also talked about how Indiana’s moves today were laying the foundation for a stronger recovery tomorrow.
The Governor did touch on jobs, saying he was working to create a climate that is attracting jobs as companies look to downsize and consolidate their operations. He also praised lawmakers for passing tax caps, pushed for them to pass more government reform, and urged them to end social promotion for third graders who can’t read.
Overall, the Governor struck a tone of optimism, but he did not deny the serious of the state’s situation. It will be interesting to watch how the year pans out for his agenda.
The Indiana Senate today by a vote of 35-15 passed a measure giving Hoosiers the change to vote on tax caps in November. The House approved the same measure last week. If passed into the Constitution, property taxes would be capped at 1-percent of a home’s value for residential property, 2 percent for rental and 3 percent for residential. Below is my afternoon interview with Sen. Luke Kenley, one of the authors of the measure.
I’m at the Statehouse this morning waiting on the Senate to do a vote on tax caps. Here’s some good political news I’ve managed to pick up so far.
The Indiana State Teacher’s Association unveiled a plan this morning they say will make state budget cuts to education unnecessary. It calls on school districts to spend their cash balances down to eight percent in excess of their funds. Spend up to 50 percent of their rainy day funds. Eliminate funding for virtual charter schools and tax credits for private schools. It allows up to 5 percent of a school district’s Capital Projects fund levy to be transferred to the operations levy; current law allows about 3.5 percent. And it requires schools to transfer up to 5 percent of non-education overhead to classroom instruction. A spokesman for Superintendent of Public Instruction Dr. Tony Bennett says they welcome ISTA to the discussion, but Indiana should not be doing anything to limit choice amongst students.
Indianapolis Mayoral candidate Brian Williams disclosed today his campaign ended 2009 with $100,000 in cash on hand.
Hamilton County Democrats put out a news release today announcing that Dr. Nasser Hanna, a cancer physician, will be declaring his candidacy for Congress in the 5th Congressional District next Wednesday.
With a hours to go before Indiana Governor Mitch Daniels delivers his State of the State address, a new poll shows that he and property tax caps are getting high marks from Hoosiers.
The poll commissioned by the Indiana Association of Realtors shows Daniels total approval rating at 65 percent, while only 29 percent disapprove of his performance. The Indiana General Assembly had a 47 percent approval rating and 38 percent disapproval.
His strongest approval (70-71%) was in Indianapolis and Southern Indiana, while his lowest approval (41%) was in the Lake County Region. In South Bend and Ft. Wayne he averaged 62-63% approval. His approval ratings amongst urban voters was 66%, 63% in the suburbs and 69% in rural areas.
When it comes to property tax caps, there is broad support across the state and across party lines. Statewide 73% of Hoosiers support tax caps. And about 70% of Republicans, Democrats and Independents support the caps. And 75% of Indianapolis residents support the caps. That number is 69% of all statewide urban residents. 70% of suburban residents support the caps and 66% of rural residents.
The poll was taken by Public Opinion Strategies of 600 likely voters on January 5-6 and has a margin of error of plus or minus 4.0%.
