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News & Press: Government Affairs

Kentucky Law Upheld on Alcohol Sales

Wednesday, September 30, 2015  
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The Sixth Circuit Court of Appeals has ruled in a case that hits close to home for Indiana package stores. The ruling upholds Kentucky laws regulating which businesses can sell liquor and wine. A coalition of retailers filed a legal challenge in Kentucky against the state arguing that they were "irrationally" discriminated against because state law prohibited them licenses to sell wine and liquor. Grocers and gas stations claimed the law was a violation of state and federal equal-protection rights, due process rights and alleged the state gave its administrative board "unfettered" discretion to apply state law. Those who sued included Maxwell's Pic-Pac and the Food with Wine Coalition. The Party Source, a liquor store, joined as an intervenor in the case tp present the industry and legal views of the package store industry. In August last year, a district court judge sustained a motion for summary judgment made by the plaintiffs based on the federal equal-protection claim. The same judge rejected other claims about due process and the state's separation of powers. The case quickly went on appeal to the Sixth Circuit in Cincinnati by all parties. In the ruling issued Wednesday, the court had positive notes overall - especially in light of similar legal challenges being made here in Indiana. Here are some excerpts:
"Though some modern pharmacies sell staple groceries, grocery stores may remain the go-to place for life's essentials. And though Kentucky otherwise reduces access to wine and liquor by capping the number of places that supply it, the state can also reduce access by limiting the types of places that supply it - just as a parent can reduce a child's access to liquor by keeping smaller amounts in the house and by locking it in a liquor cabinet."
"According to a plausible set of facts, more minors work at grocery stores and gas stations than other retailers; after all, grocery stores and gas stations conceivably provide more low-skilled and low-experience jobs, including clerks, baggers and stockers. Kentucky could also believe that grocery stores typically outweigh other retailers in size and traffic, allowing minors to more easily steal wine and liquor. Regarding gas stations, their convenience and prevalence near highways suggest and even greater danger in allowing alcohol sales."
"For present purposes, we note the 21st Amendment's express grant of authority to states, if it means anything in this context, provides legitimacy to the state's interest in restricting access to alcohol."
The court referred often to a study by Raymond Fosdick and Albert Scott, who argued that a regulatory system must limit access to products with high alcohol content, such as liquor. (In 1933 John D. Rockefeller, Jr. commissioned Raymond Fosdick and Albert Scott to study alcohol regulation and prepare America for the return of legal alcohol and its regulation. They produced "Toward Liquor Control," which provided guidance to policymakers as they set up regulatory systems for alcohol. Much of that framework still exists today.) None of these arguments may sound new to members of this association - as we've been stating the same during prominent court cases and legislative battles on the deregulation of alcohol over the years. Per our legal counsel Tony Kogut, the case may not steer a similar outcome here in Indiana, however, appeals circuits do always take into consideration what other circuits have ruled. A victory in the Kentucky case is good news overall. Our national trade organization, the American Beverage Licensees, also weighed in with an amicus brief to represent those whose businesses would have been severely impaired had the district court's ruling been allowed to stand. Here's a copy of the opinion to download.

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