StateWays is the only magazine exclusively covering the control state system within the beverage alcohol industry, with annual updates from liquor control commissions and alcohol control boards and yearly fiscal reporting from control jurisdictions
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StateWays | www.stateways.com | May/June 2017 10 REPORT tr i p BY KYLE SWARTZ C ontrol states in 2017 must manage innovation, em- brace modern trends and uphold safe consump- tion practices. These were common themes during sessions at the 24th Annual NABCA Symposium on Alcohol Beverage Law and Regulation, held March 12-14 in Arlington, Virginia. Live from the NABCA Legal Symposium CONTROLLING CRAFT Craft spirits and beer can put control states in tricky situations. One on hand, the model would seem benefi cial for smaller producers. "I tell them it's a great thing for them because they only need to go to one place, one warehouse, to sell their product," says W. Curtis Coleburn III, government relations director for the Virginia Distillers Association. "But that's only if the state can actually list your product." Many control states are facing "SKUmageddon," or the sudden boom in products that seek listing. Ware- houses lack space for the infl ux of new craft offerings, while stores don't have enough slots. And because state legislatures set budget goals for the controlled alco- hol markets, they're likely to stock best-selling corporate brands over comparatively unknown craft products. Another issue arises when craft pro- ducers want to sell tastings and bottles onsite — like at a winery. But this may be illegal, since not all state laws have caught up to the craft movement. "You either have to change the way people think about craft alcohol," Coleburn says, "or you have to fi nd a way to fi t what you want to happen into the cub- byhole that's already there." He recalls helping change laws to allow a Virginia ABC store onsite at a popular distillery, where non-state em- ployees were permitted to sell samples and bottles on behalf of Virginia. RETAILER OR WHOLESALER? The rise of "big box" retailers creates a number of concerns. For instance: have they grown too big for the three- tier system? "The balance of power has shifted to these stores," says Craig Wolf, pres- ident and CEO of the Wine & Spirits Wholesalers Of America. "They don't see a need for wholesalers. They don't have a concern about losing the bene- fi ts brought as a whole to the industry by having that middle tier." Some big box stores are trying to create and sell private labels. At that point, are they still retailers? Wholesal- ers? Suppliers? A mix? And how should states license them? Pennsylvania has banned private labels. Oregon allows them, but only if they're rebranded product, made by "I TELL THEM IT'S A GREAT THING FOR THEM BECAUSE THEY ONLY NEED TO GO TO ONE PLACE, ONE WAREHOUSE, TO SELL THEIR PRODUCT. BUT THAT'S ONLY IF THE STATE CAN ACTUALLY LIST YOUR PRODUCT." —W. Curtis Coleburn III, government relations director, Virginia Distillers Association The 24th Annual NABCA Legal Symposium took place March 12-14 in Arlington, VA.