Proposal To Overhaul Wisconsin Alcohol Rules Gets First Hearing

Beer sampler. Photo by QuinnDombrowski (CC-BY-SA)

A massive legislative package to overhaul Wisconsin’s alcohol regulation system through the clarification of existing laws, addition of new permits and the creation of a dedicated alcohol enforcement agency under the state Department of Revenue (DOR), got a public hearing Tuesday in the Assembly Committee on State Affairs.

Lawmakers and alcohol industry representatives touted a compromise between the Legislature, DOR and industry representatives that took nearly a decade to reach over the regulatory changes. Those groups were largely supportive of the bill. But operators of wedding barns across the state complained that they’d been left out of that negotiation process and that the bill would kneecap a growing industry in many parts of rural Wisconsin.

“It is not a hastily written document and it certainly is not perfect,” said Will Glass, owner of the Brewing Projekt in Eau Claire and president of both the Wisconsin Brewers Guild and Wisconsin Craft Beverage Coalition. “What it is, is it’s long overdue and it is a compromise. It is the result of years of conversations and negotiations that at occasion got very tense. It is a much more equitable regulatory system for Wisconsin craft producers as it brings clarity to the rules by which we start, build and invest in our businesses.”

The bill, AB 304, would make a number of changes to Wisconsin’s alcohol licensing and permitting system. The state’s liquor license system divides businesses into a number of different groups, including suppliers, wholesalers and retailers, selling different combinations of “fermented malt beverages,” wine and liquor. The 90-year-old system operates by alcohol producers selling their products to wholesalers, who then sell them to retailers.

The system was initially created to prevent the rise of monopolies in the state’s alcohol industry, but those divisions have become murkier as the popularity of craft breweries, wineries and distilleries has grown and the divide between those businesses, producers and other types of bars and restaurants has become less clear.

The bill, authored in part by Assembly Speaker Robin Vos (R-Rochester) and Senate Majority Leader Devin LeMahieu (R-Oostburg), would create a Division of Alcohol Beverages under DOR to educate about the regulatory system and enforce those laws. At the hearing on Tuesday, DOR staff said that enforcement of the state’s alcohol rules is done by two staff members who are also responsible for the enforcement of the state’s tobacco and gaming rules. Lawmakers said that DOR would be given the necessary resources to fund the new division.

In addition to the new agency, the bill extends the hours that wineries are allowed to be open; changes the definition of fermented malt beverage to include products such as hard seltzers; allows small producers to sell other types of alcohol; creates a statewide permit process for bartenders outside of the already existing municipal bartender licensing system and allows businesses applying for liquor licenses to receive one from the county if they are located within a municipality that has already reached its limit.

The bill would also expand the hours that bars and restaurants can serve during the Republican National Convention in Milwaukee next year.

“The proposed legislation would add consistency across regulations for brewers, brewpubs, wineries, distillers and rectifiers to provide clarity to the existing three-tier system,” LeMahieu said. “Wisconsin has developed one of the most robust alcohol beverage industries in the country. I ask you to support AB 304, which would allow an already dynamic industry to further grow while ensuring the promotion of health, welfare, safety and competition.”

Despite industry representatives calling the legislation “a massive bill” they said the effects to the public will be minimal beyond some moderate benefits for the experience at these businesses.

“If I’m a consumer, it doesn’t do anything to their detriment, but arguably if I go to a winery that currently has to close earlier, and now a winery can have uniform hours with the taverns in its community, I as a consumer, I’ll feel the benefit of that,” Mike Wittenwyler, a lobbyist for the Wisconsin Wine and Spirits Institute, said. “Or if I like to drink craft beer, and my wife likes to drink spirits. I can now go to a craft brewery and she can have a spirit product. So to me, at least those are ways where the individual consumer will be positively affected by this bill because the assumption is if they consume alcohol, it will allow for lifestyle choices to be better met.”

Despite the overwhelming support for most of the bill’s provisions, several wedding venue operators testified against the “wedding barn” part of the bill. That section of the bill would require these businesses, and any other “public place” that serves alcohol, to obtain a “no sale event venue permit” that allows the owner to rent or lease the property and allow beer and wine to be served at no more than six events per year and no more than once per month. The section exempts tailgating outside of sporting events and the consumption of alcohol at public parks and campgrounds.

Under the bill, venues that hold more than five events per year and bring in more than $20,000 in revenue from renting the property would qualify for a “class B” license, which allows them to serve beer, wine and liquor at as many events as they want all year. In municipalities that have already reached their limit on providing these types of liquor licenses, the state would automatically grant the license.

Lawmakers said the purpose of this bill was to bring this kind of business under the state’s regulatory umbrella. Previous interpretation of state law has allowed “wedding barns” to serve alcohol largely unregulated for decades.

“Entrepreneurs who did what they thought was legal, and nobody told me they couldn’t do it, they opened up wedding barns all across the state. It wouldn’t be fair for us to just drop the hammer and say I don’t care that you’ve invested a million dollars, tough luck,” Vos said. “So I think this strikes a compromise which is one that I strongly support, to say if you’re an existing operator, you have two choices: You can continue to do everything that you are doing right now but in a much more limited basis, or you can go and get an above-quota liquor license. So for an operator, it really wouldn’t change their way of operating other than ensure that the public knows that when you go there, the safety, the regulatory reforms that are in place are all going to be applied equally, no matter what the establishment is called, restaurant, wedding barn, veterans hall, all the same.”

“So I think it’s a reasonable compromise,” he continued. “Now granted, if for a decade, you’ve been able to do whatever you want with no regulation whatsoever, you might not love that. But in order to be fair, I really think this is a reasonable compromise that doesn’t take anybody’s livelihood away. It just makes sure that we’re all following the same rules.”

But venue operators complained that if they want to continue their business at current levels, they’ll need to put significant investment into changing their business models and be forced to turn into a tavern or restaurant.

“Assembly Bill 304 makes many thoughtful adjustments to alcohol laws that have become outdated since the days of prohibition from which they arose, but they also crushed the business model that has become popular nationwide through a natural process of evolution of business models,” said Hayden Nagy, who runs Appleton-based wedding venue Homestead Farms with his family. “This kind of evolution is what builds the American economy based on free enterprise and open competition. And just to clarify, we are not the same as bars and taverns. We do not touch the alcohol. We do not profit from the alcohol and we are there to provide the facility for private events where only the guests there are invited through the private family hosting. It’s hard for me to even sit here and believe that some representatives can say that this is a good compromise.”

“So I also beg of you to consider excluding any agri-tourism based event venues from public spaces on the no sale permit,” he continued. “Because we cannot operate six days a year, one event a month and operate weddings without serving or having alcohol on premises. It’s just illogical.”

Republican bill to overhaul alcohol regulations gets public hearing was originally published by the Wisconsin Examiner.