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Arkansas Senate approves contentious grocery store wine bill, now moves to House

A coalition of grocery store chains, dry county liquor store owners and small winery operators won the first round of a hot legislative battle when a bill allowing sales of all wine varieties in local grocery stores cleared the Senate floor on Wednesday.

Senate Bill 284, which was filed on Monday and given a committee “do-pass” recommendation on Tuesday, was approved by the full Senate after several lawmakers said they’ve been inundated with emails and phone calls from a second group of liquor store owners who said they were caught by surprise by the bill.

SB284 sponsor Sen. Bart Hester, R-Cave Springs, defended the bill as consumer-friendly legislation that will enable grocery stores to obtain permits to sell wines of all types. Currently, grocery store chains operating in Arkansas, such as Walmart U.S., Kroger’s, Edwards Food Giant and Brookshire’s, can only sell Arkansas and other small farm wines that produce less than 250,000 gallons of vinous product year.

“This is a bill that the Grocers Store Association has been working on since 2015. There were some concerns then and they pulled it down and worked on it with different areas of the wine industry in the state of Arkansas for two years now,” Hester said. “This is a simple change to allow the grocery stores to carry the product and brands that best suits their customers (needs).”

Sens. Linda Collins-Smith, R-Pocahontas, and Joyce Elliott, D-Little Rock, peppered Hester with several questions about why the bill was pushed through committee so quickly without input from a group of liquor store operators who said they were not involved in negotiations before HB284 was filed. Elliott also questioned Hester concerning a one-page missive circulating at the State Capitol by opponents of SB284 that grocery stores and other retailers won’t have to abide by the same rules and restrictions that now govern liquor stores, such as store setback rules on the distance from school and churches and prohibitions that prevent most wine retailers from selling groceries.

Hester testified he was well aware that some liquor store owners were upset with his bill, but said his legislation would open up the state’s liquor industry to “free market” principles. He also dismissed concerns that Walmart and other “big box” grocery store chains would have an unfair advantage in obtaining volume price discount on out-of-state wines, and offering food products at wine tasting events that liquor stores can’t.

“Some factions of the liquor store owners (will) support this bill, others will not,” Hester said. “Today, if the liquor stores want to pass bills where they can sell crackers, I would be supportive of that.”

After a few other questions about other details of the six-page bill, the Senate approved the bill by a vote of 18-11. Three senators voted present and two did not vote. Afterward, members of a newly-created group of about 400 liquor store owners from across the state, called United Beverage Retailers of Arkansas (UBRA), said Hester bill’s caught them off-guard. Tom Smith, owner of Spirits Liquor in Little Rock, said two years ago the liquor stores and small wineries across the state were solidly united against a similar bill. He said Walmart and the grocery groups only sought out a few “county-line” and dry county liquor store owners to help pen Hester’s bill.

“We were not invited to the table. (This) really took me out of the blue … and got me by surprise, I did not know that these discussions were going on,” Smith said. “Last time around two years ago, we had the wineries on our side and we had all the county line liquor stores. They took those two groups right away from us.”

Francois Guilloux, owner of There Performance Group, a Little Rock-based data analytics and consulting firm for the liquor store industry, told Talk Business & Politics that SB284 will negatively impact smaller, independent liquor stores across Arkansas.

“This bill will have devastating impacts on the wine and spirits industry in Arkansas,” said Guilloux, who has sent hundreds of emails to liquor store owners and lawmakers. “We estimate that close to $80 million of cash flow is in jeopardy for a group of 1,000 small businesses and over 2,000 jobs are at risk in Arkansas.”

Supporters of SB284 say the independent liquor store owners are exaggerating the economic impact of SB284, citing how similar legislation in Tennessee, Florida and other states allow retail sales of wine.

During a bill signing ceremony on the other side of the State Capitol on Wednesday, Gov. Asa Hutchinson refused to jump into the fray, saying he would remain “neutral” on SB284 and “the interested parties should seek some common ground.”

“When you have those competing interests, I was counting on them communicating and talking and working out consensus. I think they thought they had a consensus bill that they were presenting,” the governor said. “We are continuing to monitor that. We are hearing from some people that had some concerns about it, so we will continue to watch that as it goes through the process.”

Hutchinson said lawmakers need to balance any “competing interest” between all the interested parties.

“The legislation tries to do, (but) we will see if there needs to be modifications as it goes through the legislature,” he said.

Late Wednesday evening, Hester’s bill was on the agenda of the House Select Committee on Rules, which generally deals with all legislation concerning alcohol, cigarettes, tobacco, lobbying, code of ethics, pari-mutuel betting and other similar bills.

One particular note discussed by some lawmakers interested in SB284 is the potential revenue that it would generate from increased wine sales. In Hester’s bill, a grocery store seeking a wine permit would pay $1,000 for building space of less than 35,001 square feet. Larger stores with space over 75,000 square feet would pay $5,000 for wine permits.

According to the bill, fees from the wine permits would be equally divided between the “Arkansas Wine Grant” program and the Tourism Development Trust Fund, which would be designated to the Department of Parks and Tourism to promote the state’s wine industry.