Senate City, County, and Local Affairs and House Rules

This is a joint committee meeting for the Senate committee on city county local fairs in the house select committee on rules. And everybody will take the stage will get started. Appreciate everyone coming today this is a talk to Steve about this awhile back and it talked to lance nine a lesson I in a about this alcohol policy form I'm sure we all agree that it ended being chair city county local having alcohol moved over to my committee I understand the complexity of of the laws and regulations dealing with alcohol a lot of. A lot of things that we don't understand but I want to encourage members here today if you have a question any kind of questions because we've got a pretty good line up of speakers here covering just about every topic you can imagine so if you have a question concerning alcohol anything related to alcohol laws of write it down or be prepared to ask it so we're not gonna we're gonna wait any longer the first of speakers going to come up is Kelly Roberson. If you come up and introduce your tell seven tells to your with you're recognized to speak. Thank you as a sign I think it is thank you chairman Stubblefield and chairman ease for inviting the center for alcohol policy to her mother's you might wanna pull that might just a little closer to you thank you this is a little bit better and introduce yourself sure thing thank you for inviting us to host this policy form here at the Senate City County and local affairs committee and house committee on rules and also thank you to miss Barbara and Kendra from their efforts to get this meeting a range and all of the behind the scenes work you've put in to make this possible my name is Kelly Roberson I am the executive director of the center for alcohol policy based in Alexandria Virginia and it's an honor to be with you here today to address some of the most pressing items facing you as those charged handling issues related to alcohol and it's regulation here in Arkansas. I'm confident that no matter how long you've been on this committee or in this body as you will learn something new from our senate panel of experts. Before handed over to our first panel I do want to give some background about the center for alcohol policy and highlight some of the work we do founded over a decade ago our mission is to educate policymakers such as yourselves regulators and the public about alcohol both its uniqueness and its regulation as you likely know the twenty first amendment repealed prohibition in nineteen thirty three and established today's effective system of state based alcohol regulation the foster is a competitive market place can help maintain public health and by the way it generates a whole bunch of tax revenue. Our goal of the centers to provide valuable education on how states came to be the primary authority over alcohol policy and why various alcohol policies exist this understanding is critical to ensuring that effective alcohol policies are maintained so that the problems that led to you and we're experience during prohibition never returned as we strive to accomplish our mission of education our work primarily focuses on three main areas number one producing reports and conducting surveys that address relevant and topical issues related to alcohol regulation you'll learn about several of those today and I do have a few hard copies of some of our reports with me that I'd be more than happy to get into your hands so let me know if those of are of interest but they're all also available on our website for free which is the center its center for alcohol policy dot org. Hi we also conduct a biannual survey that takes a temp of legal drinking age Americans around the nation about their feelings regarding alcohol regulation and we just ran that this year so earlier this year our survey returned a message loud and clear from the public the current alcohol regular regulatory system works and about eighty five percent of Americans really like it so I think in my in my head the phrase if it ain't broke don't fix it comes to mind secondly we host an annual alcohol on policy conference where we bring together some of the best minds in the country to discuss and debate current alcohol issues and challenges this past year we were in Chicago and had more than two hundred legislators regulators public health leaders and industry members in attendance and while we're still in the planning phases for this coming year's conference I would highly encourage you to attend if you have not done so on would love to see you there is a great and varied crew that somewhat resembles the most Is league cantina from Star Wars if you're a fan so I can guarantee it's good it's a good time if nothing else four people watching but also as an opportunity to share solutions and meet some of your counterparts from around the nation and lastly we are always on a mission to get the book toward liquor control which I left at my desk here Paul if you wouldn't mind holding up a copy. There is Lester with the Vanna white of this book we are striving to get on the New York times bestseller lists it was published originally in nineteen thirty three Commission by John D. Rockefeller to study alcohol regulation and prepare the nation for the return of legal alcohol sales so much of the framework laid out in that book still exists and is relevant today and the internal joke is that nearly any questions about America's alcohol regulatory system is answered by toward liquor control so why should lower alcohol products like beer and wine be regulated differently from higher ABB products like liquor why is there a need for a strong and independent state alcohol regulators why shouldn't alcohol manufacturers also on retailers all these questions and more are answered in the book so again I have a couple of copies with me today I will say I put a whole bunch of hobbies in a in a box that they shipped down here in the post office hasn't delivered it so as we think about home delivery of alcohol maybe keep that in mind for handling paper and that's a little bit difficult to deliver so. Do we want to trust out a hole in there I won't steal the thunder of any of our presenters so all wrap it up here but please know that as I mentioned earlier reports are online in the center is here to serve as a resource to all of you as you face questions and have conversations here in this body so please don't hesitate to reach out to me I believe you should have my contact info from reading materials but if not all work with miss Barbara to make sure that you do you the with that I'll turn it back over to you Mr chairman. Thank you Kelly you any questions from members. Anyone have any questions. March go to the next the next session. Okay I'll regulation public health implications and collaboration. Kirk lying. Kirk you entered this yourself for the record who you're with you're recognized to speak. Thank you Mr chairman I'm Kirk lane on the Arkansas state drug director I sit in this capacity and I oversee prevention treatment and enforcement programs and also drug policies for the governor's office and nationally I said on the national board of directors for cat cat which is the community anti drug coalitions of America and also the national association for state alcohol and drug abuse directors. with that said there's a lot of data and I was asked to provide you guys with a state of the state for Arkansas on alcohol issues that we have in our state and there's a lot of data in our state and in the interest of time I was able to capture a lot of the summaries from different studies that were conducted from two thousand eighteen and two thousand twenty and two thousand currently in two thousand twenty one today I like to start off with the Sam's of study substance abuse mental health study that was conducted on alcohol using data from seventeen and two thousand eighteen and in summary of that. They found that Arkansas and a lot of these were comparative studies to other states found while actual alcohol use in Arkansas is lower than nationally perceived no great risk of binge drinking or similar it to the national rate and negative consequences and so what they found that alcohol use in the past thirty days for twelve to twenty years of age and also binge drinking was down below the national average which was good perceive NO great rest of binge drinking one or two times between for twelve the seventeen years old was consistent with the national average were reseeded the national average was the availability for treatment for young adults a youth and young adults we did have some issues with fatality accidents and I'll speak to that a little. Fine tune that a little closer in the in the next little bit and their overall findings was to suggest that the need for harm reduction strategies regarding alcohol use I were needed in Arkansas but a lot of the perceptions and the trains were moving the right way. Going forward we look at the two thousand twenty one highway safety pandemic and I pulled out some items from that looking at impaired driving in Arkansas most of their data was from two thousand fourteen to two thousand eighteen showing a number of five hundred twenty seven finality accidents where alcohol was on board which was lower than the national average per se and a lot of those we're we're going forward with that was lower than the national average the state alcohol or to me this state Let me rephrase that may start again the alcohol insurance industry study show that Arkansas was listed as one of the top top ten states for finality accidents were alcohol was on board actually Arkansas was number seven and this is rated per capita for a three year study accounting is years two thousand nineteen two thousand twenty and currently in twenty one showing five hundred deaths in those three year period at a rate of five point nine The S. per every. One hundred thousand residents. Also in that national highway study we showed that D. W. I. N. D. U. I. has decreased and had a downward trend since the year two thousand ten in two thousand ten Arkansas had nineteen thousand one hundred fifty seven arrests for DWI in the United and in two thousand eighteen we're down the nine thousand three hundred fifty nine I don't have any new data on that on those on those deals but it shows a consistent trend a downward trend of those fatality accidents which is a good thing. also in my capacity I sit on the state epidemiologist goal outcomes workshop that was appointed by the legislature and a steady a variety of of data that has to do with alcohol drug use a mental health type issues all involving the capacity and impact on our youth and then that's that the what the the epidemic epidemiologist worker came to said that with increasing alcohol availability will likely lead to increased alcohol use among our cans and use which will lead to various negative outcomes for instance people who start drinking before the age of fifteen before the age of fifteen are four times more likely to have alcohol use disorder later in life moreover drinking alcohol can lead to poor decision about engaging in risky behavior such as drinking and driving sexual activity also aggressive or violent behavior you the more likely to carry out or to be the victim of physical or sexual assault after drinking and others age who do not direct and these and other consequences can greatly impact the health of Arkansas you and so keeping that in mind as as were going one thing that we are blessed in Arkansas is having a program called act now which is the Arkansas prevention needs assessment survey and so every year we send a survey and through the school districts and almost every school district in Arkansas conducts the survey survey on six eight tenth and twelfth graders about their perceptions of a variety of things we're drug use alcohol bullying say schools whatever the topic that we feel is necessary to put in there and because of that statistical report a lot of times are implemented into funding grants programs treatment. and different programs that we put in there to affect those numbers in our apna studies and we have the two thousand twenty ACT now and apparently a lot of states were kinda rare because a lot of states have some type of similar survey but not at the volume that we have with that many school districts involved in looking at that after the survey things that stood out to me to present to you guys today was using all of the data that we had in that students perceived that they get alcohol five point eight percent of the students said from somebody over twenty one three percent said from someone under twenty one. Three point one said at home without the parents permission and four point nine percent at home with the parents permission so we're looking at that perception and we also looked over the last four years and after the study and the lot of the data is coming down and trending in the right way that students are avoiding the alcohol use and those alcohol issues that were staying in cross the board in there so that's steady is available for They give us that good information perceived ability and perceived harmfulness of using alcohol was perceived by those students across the board and the perceived harmfulness of alcohol seem to be going down except in two thousand twenty with the inside of COVID and all the issues of that COVID brought to the table. going back to the statement that the epidemic epidemiologists work group came up with about increased availability we realize that right now the increased availability along with the impact of COVID in the isolation depression and things that's going on with COVID more saying it right now with heroin and fentanyl is leading to devastating circumstances we certainly don't want to make sure that in there and I think the importance of good regulation good policy is it important factor in weighing that out for you to decide and making good decisions there and having that good regulations will avoid those type issues. Main registered quick second the just to clarify did you say the perceived harmfulness of alcohol is going down its it's perceived going down except in two thousand twenty all right thank. I'm open for any questions. One. Are you finished I am Sir are any any members that question. Representive Eubanks. Thank you Mr chair do do you or does any agency in the state department of health keep track of any alcohol of the number of alcohol related deaths. I believe that would be under the department of health okay. In nineteen eighty eight I read a report where alcohol related deaths for ten times the number of it all the legal drugs in the country of course that's been forty or thirty years ago but I was just wondering I know with because of the opioid epidemic the the number of deaths from from illegal drugs or abuse of prescription drugs has gone up but. I was wondering if you knew. That information by your Senate apartment health would have that information it would be the best resource for that death information I thank you very much. Kurt you Mr you mentioned that Arkansas ranked fifth in the nation is forced the totality Ford how vehicle DWI motor vehicle involving out actually rang seven seven top ten and that was from the auto insurance agency that reported that in August of two thousand twenty one. Is there any particular reason why Arkansas would rank seventh I love the number and then the looking at the number of fatality accidents and then multiply that were divided into the number of people in Arkansas and it prevented that thank you at the. To get you the exact number. Five point nine one. desk for every one hundred thousand people. And so they ran into each state on on those numbers comparatively the in the those numbers go up during the COVID period of COVID two thousand twenty three it just a did a three year average of it and so in it and the study came out in August of two thousand twenty one. We are you know we learned yesterday that and I all these are you know they're not act completely accurate we have had a hundred thousand deaths in the U. S. drug overdoses mostly fentanyl. And you don't you we don't know how many people died in Arkansas from from alcohol I'm sure we do but I can tell you from the substance abuse side on the drug side we know we were over a hundred thousand because I would say I'd venture to guess that were fifteen to thirty percent on reported for various reasons not only as a state that as a country a lot of it has to do with the way we record and we report a death and the requirements on that in our own state we struggle with our corner system we've tried to provide them with accurate databases and updated acre databases but we only have about. Two thirds of our corners on board and and the resistance to change because of the way they've always done things so because of that we don't get really good accurate to the date numbers like you do when you see on TV with COVID but it's really something or working on to improve. So you don't do you know if it's more prevalent I mean you keep any kind of data that shows whether it's more prevalent in certain income groups lower income middle income. Our our other groups if you're any come any particular thing that in regards to alcohol in regard alcohol I don't have any data on that. I'm just curious as you know if. If a particular group is suffering more from the abuse of alcohol than than other groups in society you know it looks like we would go to the sure go to the root of the problem and try to fix it there I don't have that particular data that the department of health would have on that on what social economic background those people may have come from I do know from my own experience in thirty three years a law enforcement a lot of times the lower income type areas a lot of time suffer from the alcoholism that occurs from excessive alcohol use or addiction I know from the treatment studies that we see every month in our state that the three top substances that are people are getting treated for a methamphetamine alcohol and marijuana and marijuana methamphetamines usually at the top number one we're alcohol marijuana a lot of times change seats from month to month so that's the data that I'm seeing on a regular basis that I can report to you. Or any other any other questions from members. Seed eighty four. This. Representive love you're recognized. Thank you Mr chairman Yes I'm very interested in this in this because the district that I serve and there is a number of. Alcohol licenses out there. Have we seen a correlation between the number of alcohol licenses available in areas in the use of alcohol. I wouldn't be the one to answer that question that would probably have to come out from the alcohol beverage control commission okay because I'm thinking it did there there's going to probably be a strong correlation and I'm picking up on where Senator Stubblefield left off in regards to the affected you know if you see in our if we're looking at you know socioeconomic status different things like that you know you can clean race you can include a number of variables. but I think there's going probably there may be a correlation between the number alcohol licenses. There are any area. The socio economic status and in the different variables and I guess what if we keep kind of control because if we're taking a look at the industry as a whole in the regulation on the overview of it I think we need to begin to look at the number of licenses. In certain areas and then what we can do to actually limit that some I make is you can't you can't. I guess you can't deal with alcoholism or anything like that if you don't deal with with all the sources of so I look for to hear what they had to say today thank you Sir thank reps any any of any of the members of questions. One thank you I just a moment. St Patrick Moore calling from. Colorado liquor enforcement division. Gentlemen if you will introduce yourself and again tell us who you're with you're recognized when president. This will. This is just one time. Sorry hi I'm Paul president of general counsel national beer wholesalers association. Yes Mister chairman is Patrick brown and president running consulting services former director of the Colorado liquor enforcement division. You're recognized speak if you general pull those mikes close as you can some of those people in your or time. Just keep. I'm famous for mumbling so I'll try to if you can hear me please raise your hand. We're gonna probably tag team this presentation to kinda. I have a very broad agenda here in a kind of alcohol industry overview and that's that's a pretty broad topics so with a bounce around a bunch a few topics and drawn into Patrick's expertise little bit about my background I've been with the national beer wholesalers association we represent the interests of appear independent beer distributors cross country three thousand locations across the country I've been in this position from fourteen years at hand of dealing with the alcohol issues at the federal court level state level federal level and during that time period. Patrick maybe yes my background if three three years a law enforcement experience anywhere from a deputy sheriff to are in age mother states borough in Colorado and then ended up as director of liquor enforcement and now do consulting and education across the country and in the state of Colorado tell people understand legal laws rules because it's complicated in a lot of it is makes sense so I hope they'll give some that information help you make sense of why look laws are the way they are today and some good things and bad things about it. So some items of four topics for discussion but obviously we want to be a resource for you as you contemplate these issues please feel free to ask. Questions even beyond these issues but some history on alcohol regulation and. What the goals of why alcohol regulations different and regulation of bottled water or your computer's there's there's different approach to that some of challenges are out there and how what it what is it what we know is a work in some the impacts both on competition in public health management and just a little at the end with a bit about how the federal government regulates alcohol the short answer is not much it's really up to you folks in this room. And as we as we look about these issues the take aways here when as we step back and say you know remember to the market so the Arkansas outcome markets different than Tennessee's is different in New York's that's by constitutional design twenty first amendment they're not going to have a national alcohol market for the most part of the states the lead defense you know they play in the background background here which is different than a lot of products out there and market a higher alcohol products have been a more tension more regulation given the public health impacts on the. And in their status as some questions in the previous chief lands presentation still real alcohol related issues that have to be addressed and that's why the work you do here is so important. But just to determine the history in this alcohol in this industry is really important because you know there's a lot of problems before prohibition passed prohibition and then when the repeal provision they said we don't want to go back to the bad problems that were existing answer some industry structure that was set up I walk through some of those proposals. I try to spare too much history lessons everyone the is familiar with the. A prohibition and you know that was passed in nineteen thirty three were coming up on December fifth In an anniversary here but you know the people who am I remember that the twenty first amendment is not just a it wasn't of eighteenth amendment banned alcohol so once in a no alcohol. But twenty first amendment and make alcohol illegal twenty first amendment repealed the eighteenth amendment which is probation but the most important part of that was section two which gave the states the power and that's why states like Utah's you know we know has in a strong view an alcohol regulation they were saying yeah we want that twenty first man because that's going to give us the control to control our future and in Utah and so that's why in other deciding vote to pass twenty for assessment so they can stay very restrictive on alcohol sales and regulation. And you know obviously the timeline for changes before that of of alcohol regulations were you know there's George Washington had a famous whiskey rebellion he put down but remember that before the issues of in a pro life or pro choice or pro second amendment pro gun control which or vaccine vaccination or not those are contentious issues now none of those were as a or as contentious and as prolonged as the wet dry issue that was a national debate that was every election in the eighteen hundreds to nineteen fifteen was wet or dry and that the drive forces got enough power to pass the eighteenth amendment and then the country realize that wasn't what I was working I was a practical solution and that's with the twenty first amendment came through. Again the twenty first amendment is is is our is our lodestone smart start here with the section two which gives the states the power to regulate. Kelly Roberson talked about this book earlier in and forcing her shipment got delayed by the. I encourage this book for legislatures to read at the I tore liquor control was the is kind of a as the introduction as a to other than the Bible is most important in a book on alcohol regulation in America and it's really sets up the structures on how how it's done that was pushed by Rockefeller who push for prohibition so take provision is United he doesn't in any he was a he was a dry but he said Hey this isn't working because we got corrupt police we got people ignoring the law we got you know just horrible disrespectful loss of we're gonna regulate alcohol again we got to do it smartly and so he commissioned a study with you know experts around the world to kind of come up with the system and so this is a book that and as you read this today and and and and twenty twenty one you read this replace alcohol with marijuana and it's it's eerie how similar the conversation is so I I really encourage you to take the chance to to read this book and and you understand a lot of how alcohol regulation in theory came about it wasn't just you know because someone had IT in the state house to do it this way it's it's really it's really comes from a you know it really comes from a of a really well thought out approach to how do we regulate a product that can cause you to public health issues. And and has a lot of industry but power behind it. So some of the highlights of Tulika control that we talk about obviously in a higher strength alcohol products or should should be written regulated stronger of doesn't mean a lower strength doesn't get it regulation that's that's on which I say the state store systems and that eighteen states have came out of this book and otherwise you know if you doubt states persistent to regulate industry very intensely and don't raise taxes too much you're going to create a black you gonna you gonna courage a black market in and some of the rules on on and off premises were regulated differently. Hello Patrick take from here. The thing upon Mister chair so I'll give you a background of the. The three tier system we hear this now you may have heard this term three tiers three tiers and and you hear that a lot today because porn function of alcohol regulation system the set forth after prohibition so like prevention is really came in a provisional why we're here today. It was with the design in a public health and safety. In mine. We talk about toward the control and one on the line continue with that but it is a great book when the first books I read when I became director to understand where we are. So the two types of alcohol licensing states in the country one of them is licensing states that's and I'll would you do here in Arkansas you know you do issue licenses to retailers wholesalers manufacturers. That you're able to minimum onto those licenses it's a private industry situation other states the levels call control states that's right actually almost here are liquor maybe someone in some instances are actually sold by the state the actually the state the state marking is actually regulated by the state in both these license types if if you read liquor control the word controlling control states that we're control was designed. To control consumption and that's what controls about. Control consumption of society back in the thirties because that's with the big problem was pre prohibition. So to to licensing. Service centers we have in this country. So the three tiers the first here's your manufacturer as the company who makes the alcohol pretty simple middle tier is your distributor or wholesaler the ones the middle man to build a distributed to the retailers a retailer is a common license known where you get your alcohol as a consumer whether it's a restaurant a tavern or bar I'm not sure exactly licensed technical here in Arkansas or a grocery store community or a liquor store that's that those are retailers S. the the bottom for the third year so the first two years manufacturer's second tier air wholesalers and third two or retailers across the country some of the top two tiers do have privileges of the third tier but they're still not considered a third year license is a retail licenses just the common ones sold to consumers. They're separate distinct just not in control but in finances. There's a term called tied house townhouse is another to me here and when it comes to three tiers titles pre prohibition is when one company owns can control all three cheers it was tied together you know the manufacturer on the wholesaler on the retailer they're able to control everything from top to bottom there is vertical integration three reviews today no vertical integration off all three tiers are separate therefore you can actually control each year. They would have control over each other. So the benefits of this tax benefit someone talk about just nothing regular but from the public health and safety standpoint of this three tier system and I'm going to use more in detail with the overview of the first of all it's a proven record twenty six US system that allows you to monitor the alcohol you word is all the time where it's at who's selling it you can monitor it in detail. There's an issue counterfeit alcohol really want to go into that talk about how the three tier system helps because it's not here at all but helps really reduce any large scale efforts of counterfeit alcohol the other countries have seen. The equal access you know. Most states in this country I'm of not all states have a thriving craft industry not allowed majority states do and the reason is because a three tier system and I'll talk about that more in detail. It in tax collection what that's really cheating on a tax collection is a huge part of the state's responsibility and how to do that efficiently through the creature system to get out to a show that's a proven. method. Not allowing one company control everything preventing monopolization of that is another but if in the future system that also helps really confidence in the consumer knowing the product that they're buying is is is what it really is. So I'm going wasn't first morning more details referred the jury system. Like Paul mentioned in the state's really. Tasked with making the laws of how the retailer's going to function in their state. The federal government has no hands on retailers they do manufacturers and wholesalers because is Interstate Commerce. But when it comes to retailers all to the states. So you can track the initial licenses track it monitor consumption in any other part of three to to revoke it if something happens if there's bad actors out there not doing it well. In a lot of times people think that more regulations is less competition also how it I think that's the opposite now call. But the bill at the three of you the folks up and that is allowed thank me come a problem is a key element of this so. Repertory system is very strong comes to alcohol. This needed if you're if if not it's a free for all and I'll talk about the availability with an expanded recognition worshipping it becomes a little bit difficult to monitor. Most of what kind of an alcohol. Of all sales follow three tier system so therefore we talked about manufacturer wholesaler retailer has to enter somewhere here it starts at the manufacturer in some cases an importer it's made out of state. So all three all three areas are tracked. You don't have any alcohol entering anywhere but the top to the bottom you. The state each stage records are kept approve moments and the available for compliance reviews. To know with alcohol is in each place is very important. So reduction about counterfeit aka I'm going to that I see in the next. Presentation as well when you have that wholesaler cheer the second tier the like the monitor. They have not manufacturer then and have in their warehouse they sell it to the retailer when they deliver to a retailer and then those that women I didn't deliver that product is the sympathy have on their in their you know their delivery scheme where the applicant for a it's very simple in us pretty simple to take and spot counterfeit alcohol that's why it really **** here United States because it's hard to get in to the three tier system any counterfeit way. So that independent monitoring. Nothing fermented the monitor police but that's a great function they have. Since the retailer has to purchase from the wholesaler solar cells would be obvious it is the not for the future system. Don't we wanna talk about equal access to market death thriving in any country you know. Craft industry. Since you have three separate tiers the large manufacturers not able to dictate what the retailer does. You know that I'm from Colorado new Belgium's from Colorado started the garage is now thriving mill national international brewing company. The real to do that because they were able to engage in wholesalers to move their product for them. You know and then the wholesaler was able to be independent from any other manufacturers with other manufacturers could see no we don't want them and in their will will buy them out or will take care of them some out financially in they're not allowed to do that the wholesaler is holding a pen in their methods in their decision making on what product to sell those who actually based upon you know consumer desire. You know the consumer wants a product the whole service to make sure they got it they're not allow another manufacture concerning love muscle amount. And I'm like I still call center is a great few slides towards in here of Nover comparing a regulated industry non regulated industry regulated industry being alcohol non regulated industry Blake coca Cola products again I'm not has to standard isn't great slides to show this but if you look the way they're. Regulated in the end result you'll understand why regulations actually are good for competition and I'm like I still call center could you did a great job with that. Next collection of jackets taxes excise tax. All alcohol made or imported into your state is subject to excise tax. What is a working on the independent middle cheer tell collect that. In Colorado more states have what's called to come to rest provision which means an alcohol actually come to the warehouse in the wholesaler which counted. In taxes or or calculated. You then have to consent to the retailer if you had the middle tier gone. How do you collect those taxes is based upon the sender and receiver alone is going to pending structure to help keep track of those taxes I ask you a quick question when you're talking about the three tiered system manufacturer wholesaler retailer I'm assuming when you're talking about retailer you're talking about the retail liquor store buying from a wholesaler right well that's a great question thank you I'm also including restaurants okay I know that debt some terminology the same a retailer in this sense and then the presentation includes anything anywhere the customer but to buy the alkylation ONPREMISES location like a restaurant in a bar club or some like that war liquor store so retailer here is really both of those anything on premises or off premises is including the retailer here as well as not package stores. Okay thanks. A committee for moving the middle tier would open up to the alkaline mistreated to miss taxes because you will becomes a a situation where it's a total honor system a collection of taxes well is there much I got shipped to me today and said on this tax in the bay but yeah the middle to the table account that. Can I follow up on that question for a second I'm so you're. You're you're saying that in Arkansas I guess for example retail. Restaurant can by their alcohol from a wholesaler correct but in Arkansas can a set up private club Country Club by direct from a retailer or that are I mean wholesaler that by a retail liquor store you know that's a good question for the I think I had my from a retail liquor store and I don't really understand if restaurants can do that Y. eight. Private club Country Club kind of thing has to buy from a retailer. Somebody raised their hand if you want to call it Allen Barker Mr yeah. Trying to answer thanks. I saw has right of this is Sir could you could you come on down here and we can. We hear of any way to densify yourself for the record. Tell us who you're with. Sure my name Stan Hastings I'm with million distributors here in Arkansas third generation sell wine and spirits distributor for generations right back here in Arkansas we have a private club system in some states it's referred to as a Class B. system so private clubs are allowed to buy their alcohol through retailers but that retailer has to also have a second license that allows them to do that. So there it's a tiered system in. The history of that I'm not a thousand percent sure of originally most private clubs were in dry areas of the state though in in you at country clubs in it allowed for those in drier areas to go to a retail outlet to pick their alcohol up of the matter to retailers are here in the room they all they have those permits to sail through the system so it creates a fourth two year somewhat in parts of Arkansas so whether it's a Country Club or a or a restaurant that operates as a private club in a dry county they're having to pay I'm assuming retail prices for these things in so in essence it does you know I eight oh Faulkner County Conway nine searches of their their dry county with with private club permits seems to me that would just kind of raise the price of these things to the consumer if they can't by like a restaurant in Little Rock that's in what county. All right just as I can I can't speak to them exactly how they sell it but my knowledge is a ho sailor a lot of private clubs actually buy a cheaper price in the reason is we have volume discounts so if you take my retailer sitting behind me on their most popular brands they sale they're buying quantities they're buying ten cases twenty cases fifty cases maybe a hundred cases I've been getting a deep discount in their passing that discount on. In most cases in your you can ask one of them about it specifically so that reads that private club could actually and I think in most cases on our most popular stuff buys it it'll lesser price than the retail price at the store because when I sell it to an individual restaurant they're paying a much higher price than that retailers because they're buying by the individual bottle or by case doesn't get paid more for an individual bottled and they pay for a case but it that discounts not pass through so you're not that makes sense I guess ultimately it's bids because of that way we've set up in Arkansas we have wet and dry counties that's kinda where this comes from correct okay thank you this state again they're passing those discounts through which enables them to buy more. To so they can offer date of discount within their store. Thanks are there are there just to are a limited number of those licenses for retailers to be able to sell it to private clothes is there a limit on the limit. In every retail facility to. Can you get a question for Director Chandler could best of my knowledge I don't think there's any limit on that. License to sell the private clubs other than there's a limit on the number of retail stores which that population it is but population based in was increased to seventy five hundred is that what that was we increased to seventy five hundred you know one store for every seventy five hundred people in your county unless you're grandfathered in. Mr Maroney I'm sorry we got off track just a little bit we have. All these questions from members of their for. Okay art. All right. You only stay here go back. Well are you only are you on the I'm on the next okay yeah you can go and stay or go ahead Mr on the one for thank you Mr chair you know it still goes my point that all alcohol whether used gets the club eventually to the retailer you know it comes to the three tier system. You know you don't today doesn't just show up to the retailer Matt magically gets there through a three tier so you mean because the retailer to the club you're still using a three tier like censored for tier. But still that regulated process we're removing any of those tears really. Makes a less if and less if you might be more cumbersome and actually makes it more secure. It me talk about preventing monopolization you know that's really what the tied house system and what probe one of the many reasons why appropriation was even voted upon and passed back in nineteen seventeen ninety nineteen eighteen. Get your product market. Requires William of the wholesale tier. In monopolization of courage may allow that to happen manufacture give more control so right now I'll state laws and federal laws to allow. Like large companies remain smaller companies to really buy their way in it prevents the wholesaler manufacturer from influencing the retailer or restaurants product selection through any kind of financial incentive in the canopy to play against the will give you a thousand dollars to do this or carry my product I will play a slotting fee lot of under industries allow it. You know go to the grocery store and the products on not not alcohol by other products that are I. level those companies probably pay a premium to be there because or I level. I'll call you can do that because if you'd allow that larger companies would be all over that eliciting your little guys when even have a chance to make it to market because they have no ability to the same visibility. So those things are part three just Justin three process to allow that to be very efficient. Lastly booting the consumer confidence. If you haven't read the last couple three years has been a lot of articles related to counterfeit alcohol in other countries causing trouble thousand deaths Russia Costa Rica Dominican Republic. Anima Mexico it's over and over and over again in the review here and see it thousands of just new to counterfeit alcohol you will see the call and and United States you don't see it here to our product making into a finished bottle you by the liquor store may be by a restaurant is tainted somehow some way it just it is counterfeits illegal. The president made a company made it. It's not the real thing you don't see that here and I think a lot of it is based upon the three tier system because you have those regulatory scheme that tracks it initial checks and balances it's important. Consumers want to know what they're buying is what they're buying. And will that help to the three tiers. In counterfeit products around the United States and lastly if there's going to recall effort there's like a problem and we have this in Colorado there was glass found in one of the manufacturing processes to where they to recall a specific product off the shelf The New within hours of not less than that were every single product was to it with the go they're pulling off the shelf if you in is because a wholesaler tracking. If if you allow a lot of direct consumer shipping that well when you track that I mean we know our products where the beast mail here for the session today lower the alcohol is going to be so boosting consumer confidence in keeping make sure that the public is safe and what they're drinking really depends upon the three tier system. Right now try to land this plane of at some at some point here soon but just a reminder that when again in a alcohol has public health implications but the America uses has always used industry regulation to get those public health measures as well as this competition. and as well as the tax collection measures to regulate the industry to accomplish that. And end up on both sides of the industry regulation to get to the public health side in a regulations regarding aggressive in a sales practices in the past have been curtailed to the regulation in as a result we have some really strong fair competition robust competition in this industry that the economist at the end all we'll we'll show you all those data. just remember that in a back in nineteen thirty three an hour Capone was the problem the gangsters running Kalka assistance and work throughout there's there's the corruption of the police because the on the take and and poisonous products back in the thirties all this issues dependent address. The reality is there is always going to be issues with alcohol according to CDC into your question earlier today in a CDC puts out a annual impact of alcohol this is over a hundred thousand people a year die up due to alcohol in the United States two point eight million life years lost annually the obvious is start is there's lots of stories of individual of arms and concerns with with alcohol in his reminder for us legislators you you're well aware that in the Gallup doesn't annual politic done it since nineteen thirties how many people drink and it's been remarkably steady you know throughout the years of nineteen thirty three to announce one third of Americans do not drink the vote and in some states and summer's gonna be higher than one thirds others is going to be lower but this is a national survey that's been remarkably consistent over the years. And so with the industry regulation in that that's the that the job of the that your state ABC is to make sure the people wholesaling retailing or license to manufacture or following the specific rules and we want to those that aren't bootleggers outside the system or it or other issues the intent and the rescue license for failure to comply with those laws of and so there's that and there's lots relationship laws between the tears to have the three tiers the key is to have a be independents are gonna have to have laws regulating the wholesalers and retailers and suppliers and wholesalers keeping them in their separate in our separate inboxes. The public health issues are are are real the that that chief lane talked about some of those groups there's a there's a lot of federal research out there about and state departments of health of lots of really billions of dollars of research and and Senate roll call policy can help answer any questions about looking for information of from some some from from some of these groups of alcohol regulation in modern times seems often views as an economic development debate but at the end of the day there's a whole host of folks on the Public Health side that have a really strong objection to that because there is a because of alcohol I did the alcohol being ubiquitous everywhere's as something that concerns the public health community greatly. This is the one thing though it you know just and this is being a baby as a point of personal privilege into being in speaking of folks over the years need states different by design as it should be but you know some for too many people in my industry say well we're the most regulated industry in America you know alcohol got too many regulations and I just I just chase me because I mean try opening up one of these in a nuclear power plant I think that's a little more regularly than alcohol so let's bear the hyperbole we're trying open house bill in its that's not as you know or be a lawyer in a pass the bar exam are doctor get your meds certificates to be come a beer distributor basically just don't be a monster you don't have a criminal record and that's a a so that's I think that's important to to give some context And I think a in so one of the in some ways that's but that doesn't mean that you know there's a. Is not laws that need to be changed and and that's what the work of the you folks are fighting over them every year to do so. Of. One of the issues that's really important comes out of toward liquor control and of and and before is this issue of independence is one thing to have three tiers and or or forty year here the other thing is to talk about independent so each each function can do what they want to the retailers can decide I want to sell this on so Budweiser and I want to so Miller and I want to sell Heineken. As opposed to having the supplier says you can't sell the products in your store which was the system before nineteen thirty three so tied house laws or the laws that you trade practice item of values laws keep the suppliers and wholesalers of the retailer's kitchen and franchise laws keep minutes of pliers retailers under the wholesaler's kitchen and and those laws are all about independence and as a result of independence you have independent decisions and you have this market place here that's wonderful we have a mark America marketplace is is a consumer poll market it's not a supplier push market. Senate and it's working I mean it's all issues a couple examples are in from cross country this is a store by me in Virginia this is my I need to update it now because tab is no longer the insult apparently so. I just noticed that like of but I mean this is a prime example but it's beautiful but it's it's all you know it's coke the other half is all Pepsi. the same state couple aisles over same store doesn't it just imported beer section or still whole what dozens of companies individual companies are not just one company dozens of independent companies use an independent distributors to get to market. I'll use another one on premises like the McDonald's you get coke or and I can Pepsi here heard but you go to a bar down the street you're going to get I'll I'll bunch of different products because there's different laws related to that one can write a check the other has to be sold based upon consumer preference. Another said I'll so I'll this is another one so anyone aisles thirty fifty two percent was coke forty two percent Pepsi. soup NO. Thirty in a eighty nine percent raise I'm percent is two companies of beer in a there's and it's it's it's not that way it's because the independent sesta that the state laws you know help support with their tight House franchise all those laws that help allow independent decision making. So wrapping up just want to spend ninety seconds on you know well we're in Little Rock what about what's what's what's what's the federal offense doing here frankly the federal government regulation is is minimal you know obviously the twenty first amendment puts in in the states there's two relevant pieces of federal legislation once the web canyon Act was passed in seventeen in repast thirty five that deals with interstate shipping issues is amended in two thousand to give your state AG the right to go to federal court on shipping issues and in the big issue that is in nineteen thirty five federal ministration Act that's only been change once since nineteen thirty five and that's when Senator Strom Thurman added warning labels to to alcohol and and so that law has been unchanged since since that but on it is you know part of the function of the twenty first amendment act is legislative purpose in it state says is to support the twenty first amendment or act of force posts a loss promote competition to collect revenue. And so regulated by permits enters important issue on the federal government federal government a month my members have to get a federal wholesale license in the state also license but brewery doesn't have to get a federal settlement a federal permit there's no federal permit for breweries and retailers are exempt from the federal regulations such as those are all going to be state issues for you to to deal with. And as a result obviously the the breweries are taken off there's over twelve thousand breweries and just as a reminder some of the issues that will be coming to your Fite in our economists to talk about this briefly but every thousand Newbury's I come in they're all fighting over that arms piece of the pie so that pi get sliced ups enter into enter as in a hundred more breweries come in but that thirty percent is the craft beer market in eighteen that the gray is import and the the the blue is more the domestic premium your bud bud light Miller lite type of product. A state laws are always changing and into reality is alcohol laws are changing into Arkansas consultant Arkansas different today than it was twenty years ago and it was fifty years ago and could be different twenty years from now. but the infrastructure that three tier systems allowed on president consumer choice local control opportunities for public health voices to be heard and regulate the product so you know it's one of the challenges as you as you well know is as people in of try to make something consumer friendly on a product that has you know externalities and costs association with it so there's often you know as a fight between industries about you know you know someone has a better mouse trap and it usually in a causes harm to another a tear in in in the industry. So some people are going to court to change a law and and this is on the market got this litigation but the Supreme Court is disk declined to take up these cases of the Tennessee case they took a couple years ago about residency laws that they that they took but there's been three's recent cases they decide not to take a but that's something people are happy with the law that they go to the state house to try to change it or they go to court house to try to get a federal judge to wave their magic wand and strike a law. If you're interested in those issues and I can give a whole overview on on call but there's a website or run to list all the alcohol law cases that are under under way so feel free to sign up for that information. the center for alcohol policy is a great resource so the resources that we talked the tentative Kelly talked about earlier. And and Patrick is also has resources to the you know he's happy to help provide you with any information to to to deal with these these issues. So I think departing thoughts that I would just I just say in a we've consumers when we'd like I said we have a consumer poll market in America someone has a the consumer's grab what they want in this upper tiers retailers wholesalers and the supply and the suppliers are reacting to consumer demand it's not a supplier says you're going to drink this you're gonna be happy. It's going to be and that's a as a result we have all these competition all these new entrants all these great craft breweries and distilleries and and retailers all of you want with a great idea to to up sell this voters very happy that eighty seven percent of Americans support current system that the twenty first amendment is gives you everyone in this room of direct control over the alcohol regulation and the public health issues a real in the you have the opportunity to to to to fiddle into tweaking to make alcohol regulation fit the concerns in the public health needs of your community. And I think you know it's obviously one of those things that in a common sometimes I will competition I mean how can we have regulation and competition are they mutually inconsistent but not alcohol alcohols with its connection now these and with its mature with its with that system it's given everyone up access to market in which is providing great level playing field for everybody and it's a and is that something that you should embrace and and and and have any questions please let us with us now. I was using I always close with this people say well we have a three tier system and we recognized three tier systems vary from state some states people like affect chatter some like in a Swiss cheese with holes in it some three tiers of holes in it some or or some have no holes in it so but it's still she's. But at the not all the same. Senate. Hillman thank you any members have any questions Senator Johnson. You're recognized thank you Mr chairman and Miss rice thank you for excellent presentation of. I have it any time I have a witness that generates questions that I didn't think of long before this time I'm great grateful to you and I come from a. An outsider view but I watch this industry I watch things change course anyone that should pay attention to live understands that alcohol's definitely to it so we're not this product I have enjoyed from time to time also had. Members of my family suffer from alcoholism I lost a brother to so I I see where we are there's this is a blessing and curse in our lives same tax but I try to see trends coming and that I see this thing that we went through a. Recently and I I thank the lord that we did what we did on internet sales tax because I don't know our state would be the fiscal situation we were after March of twenty twenty if we hadn't been collecting sales tax on mail order sales from other states The. A lot of the issue that is coming is I would think correct me if you disagree consumer pressure for example to be able to order wine from directly from the winery out of state and not wouldn't go through it of a local distributor and I there's probably other products that fall in that category I don't know beer is there yet because obviously it's more bulky hardship every year but I see the fact that we've lost certain retail operations retail opportunities to buy things and one of my favorite stores for years was radio shack. Now forty by diode hunting around and tell my wife all around at a pick up a couple diodes well you went to radio shack will I think they're still in business but they don't keep diode they don't have all the little tiny things they used to have if you want to apart for your ten year old craftsman lawn more used to go down on that it was down southwest little rock and stand I can't remember the name of the street but I see the building it I guess it was on the gosh brings road and you go in this big local office in this huge warehouse they go find some part for you well they're closed you get it online or you don't get it all at I see the world changing there's probably more efficiency is probably benefit consumer but I believe that in some ways the alcohol industry has Benefited from sort of the old way of doing things and as a as a regulator the state I think has to. Be careful about trying to put a thumb on the scale of the market of what consumers want how they want to purchase what their habits are what. Tools they have I mean I can you know pull my phone up here and order a book and it'll be here on my front steps probably tomorrow that encounter digital books all that but can you touch on how. Real world we're about to change I'm not to waited to one solution the other I thought at one time I understood the three tiers. But it gets a little concurrent deluded especially when the the issue comes up as as it has about private clubs in dry counties I've. Have those in my district I understand I'm I'm still a little leery of the whole concept because it basically says this council voted itself dry but we're gonna create a loophole over there now it does exist hi in a knowledge It but I think we've got to at least circle back and look it. That type of. Difference change that change since nineteen thirty three and. Where we are on Amazon and in a traditional retailing that has gone away like radio shack of. Is this your industry in a position to adapt without a hurting the players which you know these are citizens of mean tracings good friend of mine and and also allowing consumers to have the choices that I believe in a free market they should be entitled to that so it's it's a convoluted way to come to a simple question but I guess the question comes at a okay where we going and how does your industry respond to these external changes. Mr chairman and senator that's a great question and and. The reason I say that because really comes down there where the rubber meets road you know we're talking about features system and the importance of it. There's absolutely ways within the three tier system is still me consumer needs yes things are changing and I'm not saying that I want the things be the way they are never changing no because like Paul mentioned that three tier system is been here since nineteen thirty three plus. You women change the the way that's done but within the three tier system as we do and here's an example. I will talk later but try to consumers through retail or that I have issues with their some concerns about the listing that to a site. Zoomer desire of having something delivered to them out all many states have been able to adopt laws and rules to make it number one through the three tier system so it is for the three tier system that is at a local retail liquor store this delivered it to you to you some states have gone to the point to where. The only we can get delivered is of an employee of the liquor store actually delivers the alcohol so controls are even tighter because then that liquor store has some skin in the game when it comes to delivering verses allowing a third party company deliver that have no accountability you have a third party company picking it up live in someone's house and they deliver to a minor or the delivery somebody's business intoxicated who's on the hook for that what's the store is not the the third party company so some states are going to the point where okay let's licensed does third party companies okay so really the consumers still getting what's being want. To the promote part it just to a different ways with the think creatively on how to how to make consumer demands you know met to some degree and not stick on this well we would always do this whiskey but this way not I'm off deathly for change let's do it smarter eligibility slow to the to the gun on this you know because this is so new especially with COVID and some of the regulations that happened how do we come out of that you know how to be come back to a situation where Covin is in the main factor of everything we do. And how should I call be regulated because a lot of regulations with the wayside during covert for good reasons and I have I applaud of those but maybe not permanently so there's ways to do that Senator and instead it's not to the same weight as always but let's be smart how we do it so that those public health and safety concerns we met in addition to consumer desire. Yeah I am so the presentation to give us a month coming up AM on Tuesday president of the national liquor law enforcement association and we talk about the regulation and. Yes consumers are. Someone of the rope broke assaults of the world that's the old really want a movie or in a broken saw wishing I wanted one and now. We're sort of their. We think about what happened you know she went down the tubes is about a. So I don't want to go there I want to make sure we're smart how we do it to where we meet the needs what. Do not lose public health and safety issues just for the second convenience let's combine them and think smartly about it so by answer the question well I appreciate your answer I I'm I'm still kind of the. I think there are things that are evolving and you know we we talk about where we what's happened the last few years I appreciate your your point about the employee of the retailer versus a third party but to. When a let's take UPS or fed ex and they're delivering a case of wine into my house because this really happened my wife and I she I didn't do it I don't order one. She a I had a case of wine shipped to our house from you know what she's always club in this particular of manufacture. Winery is owned by our cans and a person who are people this room no but it's in California a you. The shipper. It took about four tries to get it delivered because they had to see someone and know they're over twenty one and all that so I was. Gratified that eight it was a problem for them to deliver it because that's that make sure they're doing their job is not going to people under age someone I guess we visibly intoxicated or whatever but I guess I'm not thinking that if you're an employee of of Joe's clicker in west little rock that you're going to be a hundred percent more responsible than a bonded driver for fed ex or UPS that Would probably lose his job if he even slightly. Cheated on the rule so to speak so I'm I'm not totally convinced that it that that is a problem per se but again I'll stipulate fact you're bringing up the right questions I don't know of have the answers and Mr chairman I'm watching Mr Hastings stand you have any. Comment on that could you jump in on. Fifty other stuff though we've got a whole panel coming up on direct to consumer shipping that I think may answer some of your questions ultimately your example with the UPS driver is you had a good driver that follow the rules. Had that driver not follow the rules nobody in this state could held responsible. If they had walked into a college dorm and dropped that case all for an eighteen year old there is zero accountability or way to hold them responsible. And I understand that and I think you agree that if the are read Arkansas retailer had a part time employee that the the I want to say this but I'll say it the fraternity guys chipped in and and handed in fifty Bucks to just drop that in the middle of the room and he said yes the guy saw the guys ID then we could have equal amount of corruption it on both sides of I'm just yes that's a good point but I don't know that it's a hundred percent and I apologize for jumping the gun on your panel because I should've waited till the offense for do that thank you Mr. On that panel but I just a I think the point but Mr Hastings true I mean and as a state agency you have to you were licensing whoever has that license is what you guys can get in again by and you know the retailer not on a law is a is a violation of that the permit and that's where you're rules again the federal regulated trucking companies are not under your state ABC rules and that's also on the beer side in a breezy not of a federal permit an out of state and retailers now have a federal permit so you no challenge to do entities that have local accountability to year to year state ABC is as the shepherding here to to effectuate these goals that you want to get and there's been creative solutions across the country I talked about but now there is a some studies from Michigan who's been very active in court and interstate eighty see about just as they looked under the hood how much illegal shipment there is one of every three bottles is the number they're they're saying is is coming outside the system legally shipping and so they're very very concerned by that because the for a for a whole host of reasons. thank you as of censure so when you have a question. You may want to go to drink I don't know. Zenda number eighty. The censure eighty. Senate Chesterville. You're recognized. Are you off. Korea. Early on in. You got. Your half's. And we may have. Thank you so much thank you Mr chair of service at laws that we pass are you in the state of Arkansas. That allow for in home delivery of alcohol. we're I'm not sure we have the proper. Things in place to preclude that from going directly to young people who have all kinds of ways. I as we talk. Here I am again could you speak to how that is working or is that something that is happening in other states as well where we have at home delivery from bars from Guapo been all of this state has it working all right is that something that we do in other places. Mister Senator thinks of the questions so. It's fairly new brands new Holland home deliveries from the third party companies again I was among Emory knight was able to watch a presentation by the North Carolina ABC. And they did it an operation back in two thousand eighteen where the eighteen deliveries to an apartment complex through a liquor storage use inter party companies in and out of those eighteen deliveries there were five. Situations where there the public was given to the minor. You know I can going to one woman details now is dumb is very well thought out operation over three different days. Where they had cameras set up in you know The underage person. When did not lie about the election that ID if they were asked and there's all these things set up and so as I over twenty seven percent failure rate using the third party companies on liquor store deliveries and. Around the country there's not a lot of that right now as far as data because it's so difficult. has a regulator to put that up in those three days of operations and they did under budget was like. There under budget thank goodness but still the time and effort it took them to do that which is is pretty labor intensive as a former regulator we never had the resources in order to do a larger scale you know especially like a wind coming near your house you know Senator you said you the one eventualmente your house of this sign for but how do you how do you really measure that G. of the juvenile you know or eighteen year old waiting at the house for four days we infer that it is so difficult to do that which is a good a good plug I'll give it to your Arkansas you know liquor store each year they need well funded. Because is regular you have to have the resources to be able to do the to do those operations to do the correct an ability have resources to regulate it properly so I just W. applied to them because without the probably funded agency it's really difficult I I know what once the that as one person does regulation how do you do that how does it really work it doesn't so what is your question but I know that one study North Carolina back in two thousand eighteen I know that California during covid they did a similar operation where was that seventy five percent violation rate from the third party company sliver from record store status during code so yeah it's it's it's it's a problem. Yes. The Arkansas law that you pass does not allow for third party delivery. In the reason it doesn't is because again those parties ultimately can't be held responsible because they don't have a permit. The law you passed which I think is a very good law the person delivering it is an employee of the retail outlet where was ordered from so that employee just because that transaction ultimately passed at home or an apartment is still held to the same standard is if they handed it to them in the package store. So they must ask for the ID at the home there what is there to preclude the ID from not being real yes yes it has its pros and its cons I'm not opposed to having it delivered but I do anticipate that they're going to be problems because we have a very memorable individuals whether they be the individual distributing it from their place of employment I or the individual who is accepting it so it is it is subject to flaw get the person delivering it to that consumer is an employee of the store so that stores licensed the tongue on the wall is it risk in that store can be fine they can be penalized they can lose their licence through the ABC process whereas if the product was delivered by GrubHub employee or uber eats or whatever it is those companies have no permits they have no license so there's no enforcement that can take place against that company. In companies always hire the most responsible individuals don't that. They always I'm sorry and companies always hire the most responsible individuals it is six of one half dozen the other we're all having a lousy employee and they don't want to do what they do yes your license is in jeopardy nobody is no doubt civil I doubt it everybody can have a bad employee does so that the prospect of having our young people steal grabbing that liquor at the door you steal their I think we have a better system than others have. But the possibility is still there and and we know this the possibility is always there thank you thank you also the the retailer said I know we're delivering or using their best people to do it. They're not taking a part time college student I'm not gonna I'm not in Arkansas lost feeling we had people here at the state will work with twenty eight years lost their license because they were trying to get money on the side sure so let's let's be clear the possibility this is not a perfect law right it's better than some but the possibility for abuse is still very much alive and well it's thank you. Thanks thanks just for any other questions members. Senate gentleman thank you. Mr I think we're pretty mature party come in real quick yes look out for so I want to thank you for having us come to be today there's many legislative bodies in this country that and in the time that it would you have to actually learn more about it and take the actual time and interest in this because it's an important issue. It really some really appreciate you guys having us here today all this question here is really because the point of each teacher individual they have the ability to make the laws that the should they should be forced. Through federal in a litigation to build this and they really don't want to do so I pledge you guys effort unless it thank you you're welcome thank you Mister brown you're gonna be here for the third session yes are those of you who are participating in the next session. Direct to consumer shipping cost concerns you want to come up. Judge brown born. John crow. Mistrusting. The gentleman will go ahead and introduce yourself record. And tell us who you're with. You're recognized to present a. My name is Brian Bowen I'm the chief of staff for the attorney general's office. Thank you know me Patrick Rooney from Colorado. Stan Hastings Richmond distributors here in Little Rock. And I'm John crow with one of seven liquor retailer. I believe I'm first up is that you're you're you're up thank you Mr chair so. Surely this from foundation with a three tier system is and we talked about with a retailer is miss I third tier. Whether it's our our restaurant a liquor store and all laws are different across the country with most part retailers consider the three tier and I want to. Have any magic answers for your by want to bring up some concerns the that I have concerning shipping interstate or direct consumer shipping from a retail establishment you know most states across this country allow for wineries to do that so I'm not here to talk about how wineries jumped about if a retail liquor store in California New York Colorado where to ship product to a consumer in Arkansas or in any other state and somebody a shipping dredging simmers through retailer that's what specifically and I'm talking about here today. So. First of all the studies that have been done Senator frock all policy as several reports on this can including one that I wrote back in early two thousand the mystery to the three tier system which is closed really has played an important role in protecting from counterfeit alcohol products sure mention that before along with an with deeper. In that the transparent cannibal system that is rooted in dependable series of laws we've had over several decades to oversee manufacture distribution and sale to consumers really is in the best interest of public health and safety. So is so where is I want to talk about yours overview there is a lot of talk about first of all regulations or lack there of. and talk about taxes again taxes through direct consumer should be maybe a issue. I'll touch more details about counterfeit alcohol a seller prohibited items. And around of state alcohol laws how can that be done through direct to consumer shipping and then sell to a minor issue we'll talk about that briefly and we discussed a lot but will go into a bit more. Reduction of competition. And the tracking about products some of this is a little bit did from the first presentation but I'm going to live in more detail so first of all regulatory route loopholes so as mentioned before retailers first you know at the state level there's no federal. No regulations concerning retailers. If direction Schumer shipping was opened up to all and I'll even half of the retail market in the country to a specific state you know the increased of responsibility for the state agency responsible for do not call control with just skyrocket you know yeah go from several hundred or a few thousand to several tens of thousands of not more than that of licensee shipping personal consumers into that state how do you how do you regulate that it's really difficult to do that. First of all yes there's ability for the twenty first amendment act for the state attorney general's office to take action is but that's a laborious process that can can be done overnight into one at a time very slow process versus a licensing process but. If you un allow the direction shipping from a retail level there's this is a definitely a problem because they're not to be regulated very well. From the taxes tuition I mention this before. You know the three tier system providing taxes will if you have a a retailer in state a shipping to a consumer and state B. who's tracking the taxes there who who's doing an independent monitoring of the tax is only going to be relied upon in the manufacturer or the retailer means the retailer that state or a little on the consumer in that state to track that tax who's going to really do it. As a former regular in Colorado I know hundreds of not more than hundreds of examples work even wineries are shipping in Colorado not paying their proper share of excise tax consumers that's just and wind I have a maybe fifteen or permits let alone the ones he did you have a permit so it's huge no problem the independent tears really in the important. To do that. I counterfeit alcohol. I mentioned before but to give an example here. She go online image making this up okay liquor store dot com. As all your products you want you love your product you want you can get it there you you by. It shipped to you you're all happy. Who is the store dot com again This Is fictitious here so if there's liquors trying to calm I apologize some is making this up you know who is liquor store icon. Where the located if you look at a lower websites now. It doesn't give you a phone number doesn't even address to give you a contact form if you want to contact them you know who where they are who they are it does it may not even be in the United States. Yet you're getting your product but you have no clue what's coming from right in other so maybe have a problem with that product you go to the regular set up problems products the regular try to find out my gosh the the that resources are trying to find out who this proof this company is where they are who who owns them. It is almost impossible you know today you can sign up for go to adding it a website for inexpensively with the merchant account and you're off and running right even if you're found to be maybe missed received a desist cease and desist letter from agency no problem listed under open a new one I mean is so quick to change in the counterfeit akel market is open up to this ripe situation versus like a winery doing it that federal permits you know you can definitely do a lot of research quickly to find out who this winery is in public databases the federal alcohol tax and trade bureau the federal government to this federal election of alcohol manufacture side has in all the bombs records on each each winery she can definitely easily NO if this is a true winery or not. Reach out you can't so open up the market really does bring an element of counterfeit alcohol. Some states have a you know bands of selling one ninety proof we can keep that off the internet. If the retailers like to do that. At is just very very very difficult. Certain station again I'm coming from the experience of Colorado and in Arkansas a different light the statute but let him or similar to some degree like for example. Colorado wholesalers are not able to sell to a retailer below the cost. You know so this state by case Rick ten dollars you can't sell the opera to consumer for I mean to the To the retailer for less than that. Some states including Colorado then have another line this is a key retailer you bought it for ten you can't sell it to the consumer for less than ten. So you're bound by certain price structure that you have to sell to the wholesaler in into the into the retailer to the consumer or if you allow dredging shimmer should be from another retail outlet from their statements legitimate. Who knows what price they got it for and they're gonna they're not be bound by the same price restrictions as a Colorado retailer is shall the sun you sort of doing a reverse issue to where the out of state the out of state retailers have a huge advantage of the instate review we charged is not bound by the same state laws because in their own state. And and how do you try to keep them accountable to that again how does someone in Colorado regulates NO a retailer in New York. You know I really the budget to go to concerts one conference year let alone for investigator travel New York you have large scale investigation that's out of one you know think about all that a retailer so allowing that to happen it just brings our Merion of issues one of them is getting around the state alcohol laws that you have passed that may be out of state retailers will have to abide by because there's no way to enforce that. The mission issue seal the miners were talk about that more in deliveries here to the earlier panel. Again another issue the direct consumer shipping you know as a. We have access to so many different kind of methods of payment you know we have an mall we have all these different things that you know the old style will the parents loans credit cards I thought this isn't anymore right so you have access to all different kind of ways to buy things the Bill sell something on the you know or the internet and delivered to you I have heard time and time again I've had personal situations like Senator here that that the check the ID may didn't live until someone was there. I've had personal experience in Colorado where the. Left on my doorstep and after that so many times and people that that is not happening correctly. Thank you sell Hannibal for that. No one's writing tickets to the UPS driver for sale to a minor. Right. Reduce competition we talked about that as well through the three tier system let me give another example you're through DTC shipments to by retailers. So a lot of opponents I mean I'm people really not opponents but proponents and sorry of allowing interstate shipment of alcohol from retailers see this is great for the market allows this retailer English retailers ship somewhere else in the consumer with the product in every as happy well now let's look at is open up to everybody the same thing would happen the larger companies who have the best price would not able to compete or without compete anybody else like your mama public or store so even if they were allowed to do that use of a competition issue. Just like the three tier system helps keep competition within the three tiers allowing the drug consumer shipping now those larger out of state retailers to get it first eleven deal will in there gonna I'll price any kind entity retailer easily even with shipping. And lastly tracking bad product I'm sure to mention that and sort of talked about that earlier. How do you track with that product is if it's loud from there from a retailer to consumer. In its goes back in happens life is price means and that does happen how do tractor recall that product. Where is it again again we shall we say material here for you guys to look at and several booklets and stuff over a week ago this wasn't done here in tracking numbers work. That was no fluke in the system but can that happen you will note that the app of the alcohol is where is it so these are all issues I want to bring up again I don't have any magic cancers but they're things that states need to talk about before they make decisions on whether they will or will not allow retailers to be able to ship you know from out of state into your state never implied you effort of of doing that. You get my information here is on the slide is first contact information and again I appreciate here today. Thank you Sir members any questions. You saying none let's NISC's guest you. Yes I'm up next again Stan Hastings from a committee distributors here in Little Rock. The third generation as I mentioned earlier in the House sell wine and spirits business in this state been involved on a national level for many many years I will tell you that in my opinion Arkansas has one of the top ten best alcohol distribution systems in the country when it comes to retail and wholesale and consumer laws we've done a very good job at regulating alcohol in our state. Alcohol is like no other product it's not like chips it's not like soda it's not like anything else it is very addictive in most people in this industry I understand the product they sell and I think most people in this industry appreciate the regulation that we have in if anything were for stronger regulation not less. Direct to consumer. Chipping of anything I get it I'm like everybody else in this room order stuff online all the time I've done all my Christmas shopping and I am going to the store yet. But alcohol shouldn't be that way. There's lots of reasons we've heard a lot of them here today. But. The the biggest problem with direct shipping that I see is how do we hold out of state retailers and suppliers because suppliers are now shipping directly from their facilities to your point earlier about enforcing one state's laws against another in Kentucky you can go to the Bourbon trail you go to all these distilleries and you can buy right there on premise at their facility so they're allowed to ship out of those facilities because Kentucky law says they are retailer in that state. Can they ship it to our state directly yes that supplier can to tens of thousands of if we passed Rick shipping. the tens of thousands of retail outlets out there can. It also means that our craft brewers crafted Stiller's in this state could ship out of state to other states that may not allow that. Just this week I believe it was South Carolina introduced a bill into their state legislature to reduce the drinking age to eighteen. But a lot of discussion here today about under age drinking. If you pass direct shipment to consumers shipping in this state can a winery in South Carolina if that bill passes. It says it's legal in that state to ship to an eighteen year old ship to an eighteen year old in this state. That's a huge question. And I think it's coming down the train tracks fast in the country it's not the first state to try to introduce that law and it is tied to some federal funding and some other things to change it. But it's just one of the many problems are out there created along with as I stated earlier how do we enforce and hold those people responsible. John sitting here as a retail store one of his people delivers to somebody and they there are minor he can be held responsible. Can't find suspension a license loses license. With direct to consumer how we gonna go after or enforce people across the country. In Kansas. Well start off with Virginia in two thousand eighteen Virginia densified six hundred and fifty unlicensed shippers into their state which equated to twenty thirty eight percent of all alcohol shipments into the State. So think about that six hundred and fifty of more doing it illegal that was only thirty eight percent of the alcohol that was shipped in. January twenty first Kansas. Partminer revenue reported to their legislature and I'm going to quote this unlawful shipments of alcohol liquor or a known problem. The cancers report went on to say the quote again it is clearly easy to order alcohol liquor online giving easy access to under age individuals not only is under age access a problem there's a higher risk for tainted or Kerr or counterfeit alcohol liquor which passes. Which poses a health risk additionally there's a significant loss of revenue in the form of unpaid taxes state of Arkansas has an internet sales tax but it's just the state sales tax it five and a half percent believe whatever that is. I pay gallon each taxes on every bottle that comes through my warehouse and it varies based on wine beer. Spirits in the proof it is but I pay you the state millions of dollars a year in taxes should say I collect them. John here's a retailer. As additional sales taxes all alcohol has additional taxes and those taxes depend on where you are in this state I think the lowest on alcohol is someplace over ten percent the highest of believers Miller county in Texarkana that is something like fourteen percent. So we're missing out on millions of dollars in direction it's going on. But it's on regulated it's totally unregulated sale of alcohol and I just don't think that's right I don't think that's good because our product is very very different. The current three tier system is worked in this state for eighty six years. In really Arkansas system didn't get set up to nineteen thirty five but a. In its. It's important. For the public health in the public safety in this state for us to make sure that the products weeks I'll. Our good products they're not counterfeit and counterfeit products an alcohol industry are huge especially in other parts of the world. Just a couple years ago in Mexico there was a lot about counterfeit alcohol being served at some resorts and people getting sick and passed away you don't hear about that in the United States and it's because we have a great system. Where everything is accountable for every case of alcohol every bottle goes from a supplier to a host sailor to a retailer into a consumer. Well you can't track an individual bottle we can sure track lots in we know where it goes periodically we have recalls and we go find that product. Just this last year we had a case where there's can shortage for beer one of the craft beer people in the State bought some cans there were actually came from a nonalcoholic product or printed on they used to shrink wrap label around those cans they got out in the they sold in the market perfectly legal to do that somebody posted a video on tick tock and how to get your beer into the ball games where they were cutting the shrink wrap label often underneath of it was a nonalcoholic label. Director Chandler's office called us and enforcement missed more we went out and found all that product in this state that was still in the market place. But if you're ordering stuff online who knows and who knows what's in the bottle. Who knows where it came from. That is there any questions. The other questions from members. I would like to certainly not here the AG's response to that. Thank you Mr chair you know that I can speak of a high level and and and while I don't want to Beaded at horse on this one of the biggest concerns that the attorney general's office would have would be sales to minors and access to minors and a direction to conduct to consumer sale process. The other big issue that we are seeing across the nation has been an issue that really hasn't been addressed here very much today I don't think which is counterfeit product there is a massive increase on complaints of counterfeit alcohol purchases not so much in Arkansas but we are seeing a massive uptick nationwide and have been addressing this or or K. the industry has come and to all of the major conferences that we have been to to address the issue. What that means for the industry as the consumers not getting what they purchased Pappy van Winkle comes to mind because it is probably the most commonly known alcohol that is sold at a very high price. One of the biggest issues that they have seen is people taking empty bottles and re packaging it and selling it for quite a profit through e-commerce businesses such as Facebook marketplace eBay exciter those companies do try to combat counterfeit products moving across their forms but it is a it is a problem. Hi it's not only a problem for the businesses but also the consumer's purchasing what they thought that they were getting. And as you said earlier who knows what's in the bottle at that point so not only is there a public safety concern there is also a consumer protection concerned that is raised by direct to consumer purchases and shipping the state so this. Is this all is this a counterfeit is it domestic. It's very very hard to tell so we don't really know if it's domestic or coming in or coming in from from out of the country and and it varies website to website some of it is domestic some of it is form as well as state if China being one of The biggest issues that we are aware of of counterfeit products being shipped into the United States. So Brian you could fill a bottle with federal and get across the border yes Sir that's correct. Mr driving coming. Get to this point. To have any questions of a lot of it was even some of was the order never got it are they got it was empty bottle you know but as for example in other countries it's just not left to the expensive stuff not too long ago a huge batch of yellowtail. Fine wine was found counters you know I'm I'm waiting for them to counterfeit Boone's farm you know I may have been counterfeit along I don't know but so. The beginner Drug consumer shipping is going to just explode when it comes to counterfeit is no way to do that whether it's an inexpensive or expensive product then find a way to get in there. Is this a has this issue gotten worse. With the open border policy. Or is it been like this for a number of years I'd say you know. That the the bigger issue really is E. commerce and the explosion of the current e-commerce and availability for people to sell products online I really think that's where. The biggest issues arise primarily because it's a largely unregulated market It's to use vaping as an example all. Our office has worked with other state agencies to. Set up operations for online sale of a products I don't think we've done this for alcohol products at with with the other with our one of our sister agencies but. Tracking where the VPN number came from sometimes lead you down a rabbit hole or you're trying to find where that product was actually came from ship from who the actual retailer is so from our standpoint when we're trying to go get that actors it's really bad and people. Selling out of their basement honestly. so when I say when you ask is an open borders problem at I don't know that I know enough about that information to say yes or no but I do know that e-commerce has created a problem for enforcement for offices such as ours. In Mister chair in February or March of two thousand twenty Asian. Author report for the center for alcohol policy really goes over a lot of the details on just ninety tissue to consumer for retailers but just the overall E. commerce issue in the federal government is taking a really and not so much now call point of view but just overly commerce in general in fraud to the purses to the in on to the electronic devices and stuff like that the thing in very good interest in in that so they've it rested but I make sure that all calls a part of that too because it's it's it's here not prevalent in a Feb The Amendment was a fairly new development in this in this market right now as far as being counterfeit that's really the first thing we saw on the radar for it so it's really I think a lot of this because we're now starting to see it because E. commerce is opening up were wasn't before. One way of representing fortune to the legalization of marijuana in Colorado have any effect on alcoholism sales welcome. A Mister chair I I ain't it did I don't have the specific issues of that as director looking for smoke marijuana as a separate entity but it is good because we're in a very beginning other studies done that the. Salesman down about call but it's come back up next level off to where. Sales are still by the weather we're before I'm referring mainly to recreational marijuana not not medical I was referring to recreational marijuana yes the chair that was in January first of two thousand sixteen is when right shall start in Colorado and in the was it Smosh shortened up. Or a representative Ferguson. I borrowed representative persons who is it by. Representative Beck you're recognized. Thank you Mr chair of. My questions relate to. I qualifying something's I heard some people upon whoever wants to answer this is fine but I have a massive increase of counterfeit I heard that word used and and then so to help help me quantify this how much is this massive increase of counterfeit alcohol that you're talking about what percentage of it is of the overall market. And then also what per centage of that would you attribute directly to direct sales because that seems to be the topic that we're talking about. So let me I'll take this or try to. Counterfeit is like black market anything that happens in underworld nobody really knows how much there is. But. What I will say is if you take the products that we sell. Spirits and wine primarily and now to a great extent craft beer. They're all finite products there's only so much of it there's only so many barrels of whiskey there's only so many. Adabi plants to make tequila there's only so many grapes to make wine out of and if you take all of that. There's even a smaller percentage sits at the very top the most expensive. On eBay and empty happy van Winkle bottle Conseil from two to five hundred dollars. Now why would somebody pay two hundred dollars for an empty bottle there's only one reason. There's also the today with computer power anybody in your home with scanners cameras and stuff can reproduce labels reproduce those bottles it's a problem. At least in this country. If somebody's roof refilling a Pappy van Winkle bottler probably buying a cheaper Bourbons. The cheap in putting in it that still came from a legitimate supplier. Burch is what you have in the rest of the world specially in third world countries as people are making product in their bathtub home still with lead poisoning and other bad problems putting caramel coloring in it and putting it in that same model. To answer your question I don't know how you can quantify I don't know that anybody has what I do know is TT bay has stepped up their enforcement in their reports that they put out monthly of fines and arrest and stuff around the country very seldom do those reports come out that they don't have something of somebody counterfeiting some product. Are you one thing I can add I don't really have a presentation we do have a hand out for you but these guys been hitting all the points but as the as the retailer the last step before the customer I just wanna impress upon you guys how important my permit is to do business my whole livelihood state on my permit and I'm not gonna do anything that jeopardizes that in my employees know that they lose their job if they do so I know there's some talk about a part time employee going to a fraternity house and what they have to lose they have their job to lose and and I I've got everything on the line so I'm not risking it. Direct consumers have got no accountability no no way to enforce. you've gotta wait you you guys have control over me and I'm like to do the wrong thing you don't have control over. Direct consumer shipping. The representative Dalby. Thank you Mr chair. This is really boil down to we're we're pretty okay with our interest state laws as they are in our intrastate shipping from our small wineries or breweries or whether it's from a wholesaler what that's located with Arkansas but the real beef today is the Interstate. Shipment in my correct is that what we're really looking at. I would say yes what we're talking about with direct to consumer shipping it's people that go on a website. To the point earlier you have no idea where that is where that's by East where it's coming from it could come from overseas can come from across town you know we just don't know so and how to control that side by I think that this is look I understand the consumer understand the changing world or in I think that there's no state that has a perfect system I think some states have better systems than others but they all have loopholes. If you back up twenty years ago when direct to consumer shipping started there really wasn't the internet it was people that would go to California visit a winery want to shake up the winery started direct mail campaigns and that kind of things internet has changed it but also all of those early laws that were passed just said you can ship ship it in. There was no meat to them there was no enforcement there was nothing there if this state is thinking about passing something you need to think about the enforcement and at least leveling the playing field with our in state people myself is a wholesaler John is a retailer in making sure that everybody that handles that product can and will be held accountable the shipper again we had a good example of a UPS driver that was good I don't know if they're all that way or not I kind of doubt it because again they know they can ultimately be held responsible so and that's been a problem across the country to along with there's more states even in the delivery thing that are really looking hard at third party delivery because it has become a big problem because I can't hold it responsible everybody that touches alcohol should be licensed. And have to go through a process to have a permit if they don't have it they should it be just like somebody opened a retail store without a permit. Our yes what it does. Thank you Mr chair just one quick follow ups of it so that I understand what you're aiming at and what we're looking toward for the next session you're pretty much okay with the laws that we have within our state and how it is shipping but you're wanting us to look at a how we somehow get around the Interstate Commerce Clause of the US constitution or how to regulate that and that's really what you're wanting us to begin our focus on more directly than what we have in our interest state laws I just wanna be clear on that. Mister chair of center. You know I'm not from Arkansas I'm I don't know the specific loss in your cart Arkansas but the. Commerce Clause issue. You know is really being challenge cross country several lawsuits have been filed in the processing stages some of been dropped off so we're still active on the retail level. Shooting Kenny retailer be discretionary of the State me discretionary saying okay in state retailers you're able to to deliver your in state people but I just to be tell you can't that's been challenged so far it's been a while at sea the loosely. It has been overturned for that way so the the Interstate Commerce Clause is still viable but the court is set over and over again and I speak from a turning point of view but this machine is Elena because I'm involved in some this lawsuit is an expert That. If a public health and safety issue can be addressed can articulated. The state's right to the twenty first amendment yeah. Trump took Commerce Clause that's easiest way to put it so. denture questions. President questions. Hillman. We appreciate your. Thank you for the information thank you thank you Mr. We've got a hand out they were handing out on the sofa. Okay. So of Mister Jones. You want to come forward so we can all make an impact of alcohol industry in Arkansas. Fuel introduce yourself who you're with. You're recognized good morning my name's Lester Jones on the chief economist of the national beer wholesalers association. I believe I have some slides when the are these the files upon the. Jean. There ARE terrace I found in the. Excellent. Also my name's Lundstrum of the communist on alcohol beverage economist particularly a peer economists specifically been counting beryl's cases and gallons and pints of beer for almost twenty years now for the industry for the upper side and the distributor side and also for many retailers are one thing I've learned over the years is that the media doesn't fact love an outrageous alcohol beverage story and if you've been paying attention to the news you've been seeing a lot so the stories about pandemic drinking maybe dry January is destroying the alcohol business and order people are drinking too much of the been very entertaining but many of them are you know when in fact you know. Slightly slightly off center of the facts and hopefully what I'm going to do today with you guys is take you through some of the industry data acts Plainview how I look at it how the industry looks at it and hope you guys have a better perspective on alcohol policy going forward you know all the stores are kind of great you know that that you know they all tend to focus around surveys in around frequency in people saying that they're drinking more are frequently but not necessarily drinking more volume those are the kind of the the the nuances of the stories. Are you know the story keeps on the most recent one I recently enjoyed was the off was a a medical study that was published in jam all but well respected off a medical journal that declared that pandemic drinking have caused people to have more liver transplants which all was just an eye popping thing from us in the industry because you know what's of what's alcohol abuse delivers a long term problem it doesn't just happen immediately and it by the media grab the story and ran with it the states you know but if you sit back and I saw this question come up earlier which was you know the site this idea of alcohol harm an alcohol forms primarily a look that through chronic liver disease and over time you know chronic liver disease has fluctuated its way through the population all right now it is on the rise but it's actually going to have to start around two thousand and ten it's it's associated with alcohol but it's also associated with the opioid epidemic epidemic associated with Titan of the city and your would actually you know most of the the prescription drug Senator that Americans take today are it's not recommended to drink alcohol because they have adverse effects on the liver so these are all these are all confounding impacts on public health it's easy to take a story and drive it in the alcohol because most people reference liver disease with alcohol but in the reality these are much deeper statistical associations that need to be worked out and and while they make good headlines the reality is is that there's there's a lot deeper story behind all of these these ideas. One thing I do know for sure having been in this business for a while is that there is a huge shift in how people think about alcohol use drinking it and wear their drinking it we've seen thousands of alcohol laws change over the last you know ten years we've seen everything from changes in dry counties Sunday sales brunch laws your to go spears ago cocktails to go of home delivery it's just an everyday you can hear another story about how alcohol policy is changing and that is in fact a reaction to the changing demographics and economics of the time. gets is just cultural acceptance and someone said earlier I said are you in this perceived all harmfulness of alcohol is yeah if it's changed a lot it's just not that we don't look at it the same way we did twenty years ago we've seen everything from main street turning into Bourbon street we've seen barber shops beauty salons laundromats libraries around the country you see alcohol and so many more places than you ever have seen it before and that is just the demographic and economic change in our thinking of alcohol beverages. Do we go too far of course we go too far that's our nature. In the market place this is a the story just popped up in the news a couple weeks ago in DC fraternal order of police was by a vote of beryl whiskey from Jack Daniel's bottled it put their logo on it and sold it you know a hundred years ago they were breaking up stills you know today there. Salamat so it's a very interesting example of just what's happening today in the the way we percent alcohol and you know the next full story another great story that's you know my favorite airline passenger whose duct taped to a United Airlines seat because he was drunk and unruly and next thing you know the FAA is saying you know maybe one a little too far with the cocktails to go idea because this is not a place where long so while this pendulum swings this way now we can find that kind of feel it's swinging back the other way it's super interesting to watch these stories play out in the news in the market place. All purpose under brought up earlier this idea the Gallup poll that you know that but you know statistically speaking or looking at the long term trends worst consisting of consumers of alcohol this is a question that Gallup has been asking since nineteen thirty nineteen thirty they've been asking people do you have the Cajuns drink alcohol and the reality is that bounces around but it for the most part it's pretty stable and consistent over time a big bump therein to seventies but yes since the eighteen eighties pretty flat steady consumption of alcohol in terms of do you have the occasion to drink alcohol. S. is working at all tricky for you guys and I've my apologize apologies to start with this is basic arithmetic this isn't this isn't any statistical all your high statistical analysis what I do is I look at the total volume of beer sold in the country a look at the top total volume of wine to the vine the spirits and I multiply them by their average weighted A. B. vis how much alcohol is in it so peers about four and a half four point six percent spirits is about thirty seven percent ciders for five lines eleven twelve and if you do this exercise every year what you find is that you know thank you divided by the population what you'll find is that nationally at the national level we were very predictable reliable moderate consumers of alcohol comes out to about two point five gallons of total ethanol per year it's it's and it's you know we're so awesome increase and supplying twenty twenty because we made a lot of hand sanitizers out of spent beer wine and spirits but even if you look at the the bump in twenty twenty it only the increase was only one extra drink per person per month one extra drink per person per month it's not it wasn't this pandemic. Excessive amount of drinking that you read about all the time because you can't drink which you don't have so when you look at these numbers it just it just didn't happen the way it was played out in the news. And at the same time the market's very dynamic in this dynamic market we seen the average ABVD of a beer that we drink is actually started to decrease so what one point in time was four point seven today we see it down to about four point six ounce doesn't seem like a lot but when you look at this huge volume of alcohol that decrease has has changed the dynamics of how much actual volume we drink in what we talk about frequency is up everyone's at home to drink a little bit more they're drinking differently but they're not necessarily drinking absolutely more alcohol which lands back to this idea that we are still relatively. All reliable predictable moderate consumers of alcoholic beverage. This story plays out around the world this is example of the United Kingdom that they record everything in leaders they drink a lot more cider than beer but the reality is if you cheated you do the same basic math with the U. K. numbers you get about the same two point five gallons of Europe and all across the across the pond in in England. This is acting thing with all with Arkansas I can go to the Department rooms your state of Arkansas I can pull down your beer your malt your side your high liquor liquor multiply out by the average weighted ABB's divided by the population and lo and behold this same story plays out all be it it's a little bit lower it's closer to two point two gallons inspected relative to the two point five gallons that we see for the US but once again this number is indicative of a very moderate predictable amount of consumption Senate but don't get me wrong there's always going to be harmed in the marketplace with other people you know people interact with alcohol they learn about it some people get in trouble with it but as people get into trouble with that other people are getting over that but the overall sphere here in the overall story here is that it's pretty steady. When I look at all I think this I take data I can do it every month and I do this every month around the country it looks pretty rad Act but this goes all the way back to two thousand nine it's a monthly number it's purely from the department of revenue but it shows about a little bit less than two tenths of a gallon per capita every month there are some that some big U. radic numbers up there in the office but that's board collection that's of all functions mechanisms of collecting the excise taxes but for the most part it's been very very predictable. Apple taxes two thousand Texas doing a talk just last week and you can kind of see it's a little bit higher to above that point two tenths of a gallon per month but the story plays out just in using the Texas department of taxation revenue just like it does using the the data from the from Arkansas it's brought to the stable predictable. Same for Colorado the question was was was asked how did marijuana impact the state of Colorado the answer is not really the they've changed where what they drink but for the most part. Little bit higher their point two five gallons so Colorado little bit younger little different much more craft beer fest centric of a all of the state they tend to drink a little bit more alcohol and violence as little bit above the national average once again that story plays out very predictable I pull down Illinois is another example because once again that same trend you can see that same red line there looks just like all the other red lines it's very stable predictable. What's interesting behind this that was the demographics of the op you have the growth rates for these four states you can see that Illinois has been losing population in the last couple years and despite the loss of population there per capita the people that are remaining are still consuming as as predicted in a place like Arkansas in the states such as Arkansas it's relatively low growth rate of population but when you look up to these because state to Colorado and Texas you can see the high growth rates hi influence the influx of more residents to the states and once again you know we if you look member back on those slides they're all still balancing out to about the same amount of alcohol consumption. And what's interesting is what I said in the beginning I mean there's a cultural shift in how we look at alcohol market place amongst consumers this is the part this is a chart of the US population by single age group rate you can see that big P. correct there those are your millennials this is that the group of people that are kind of changing the way we live and work today you can see the little depth right there there's year Gen x.'ers you have a lost generation I guess is what we like to call and then the baby boomers out there but what's interesting is both of these big demographic groups are indeed changing the way we look in view of alcohol at the market place and for policy as well three out of four every people in this country over twenty one you know that it's not a it's not the same country it was twenty one you're twenty one years ago twenty years ago when most of those millennials were less than twenty one they're all over twenty one wire why do people have a different perception of alcohol while you're basically much older in the demographic timeline. ACT do the same chart for for for Arkansas and what you see still see the same sync groups there however they're just not as all you know is not as prominent as they are in the US is lot more stable we can kind of see the the the the less than twenty one your crowd there there there it's Dyess steep of the decline is the U. S. once again it's all it's it's an idea that these demographic groups are moving through the country and move into the marketplace and they will be influencing demographics. So I lived down in Austin the signs have been popping up quite frequently it's from the the northwest style Arkansas Economic Development folks encouraging folks from Austin to opt to move to the place a lot of the signs everything bigger in Texas except your mortgage payment yeah the median fine hot for the mission home price to fifty to sixty five in Fayetteville Austin Round Rock five fifteen when you look at what's happening in place like Texas you can just see how dramatically different the demographics are of this state it's all front loaded into younger demographics they're all pounding on the the that the housing market in the infrastructure there it's one of these ideas that it's it's if it's going to change the state and as well and when you look at a place like Arkansas that has all this opportunity and we're tracking people in yeah I start thinking about as you become one of these. One of the centers of of employment growth and and relocation for people that are looking for different better lifestyles you're gonna bring all of their alcohol culture with the. And like we've heard and we just talked about the last panel access to alcohol is expanding its growing at a phenomenal rate when I look around the country I can see it in fast food stores I see and bed bath and beyond's and whole foods that are not just grocery stores in Texas there have bars now grocery stores are now crossing over into bars and restaurants where people are staying and having a drink you see it in petal pods in zoos and taprooms in movie theaters and larger amounts around the country this is the cultural change that we're going through with how we look and then think about alcohol as a country. I mean the library one is a great story Austin library has a bar you can read a book and have a drink at the same time that the only bar right now in the country that only library in the country that I know has a bar think about that for a little bit. In a recent presentation that I was listening to from the. That the conference board having failed bill all right up on the map is one of the high tech both clubs for high tech jobs in the country so once again around the country we have lots of demographic change we have lots of migration what's a member lots of migration of. Leding Illinois people leaving California people leaving New York these are all negative growth states offer population things are changing. And we look in you look at just the sheer number of alcohol manufacturers in this country we're looking at over thirty thousand manufacturers of domestic alcohol across the pure wine and spirits space thirty thousand we're up to thirteen thousand permitted breweries in this country most of which are small independent tap rooms bars they're they're just they're at their very small suppliers are not the big Anheuser Busch Miller most quarters and other such companies. Winery's the same way I mean DC now has ten permitted wineries. Not sure if you've been to DC recently and observe their beautiful vineyards but the fact is there are now ten ten minute ten vendors in DC making alcohol making wine for DC residents. Arkansas alone has served seventy five permitted breweries in that state along twenty years ago. Maybe two to three and just a short period of time machine explosion in the number of breweries. You've added five in just twenty twenty one alone since the US between Sisi and since December of twenty twenty two June of twenty twenty one you've added five new permitted breweries and this is in an environment where the on premise most of these are tap rooms this is environment in the off premises still struggling to grow. So let me just close by saying they saw it's it it's a tightrope we walk between the regulatory environment public health environment people's acceptance of alcohol in the culture and then the market place of it this is a snapshot of the economic impacts of the alcohol beverage industry in Arkansas. Almost five billion dollars of economic impacts over over a billion dollars in taxes you can look down that list we have brewery jobs winery drops to still reach jobs wholesaler jobs and retailer jobs all of which to come up to ten ten thousand people to work in the industry if you look at their multiplier impact the induced and supplier impact you can get up to twenty four thousand jobs all in all it owns turns out to be pretty substantial economic impact of almost five billion dollars and over billion dollars wages and a billion dollars of taxes so these are. These are this is this is substantial impacts to the economy and they're all derived from the market place for alcohol beverages so I all in all some of them just tell you that it's so it's an interesting world we live in as we watch these pendulum swing and we watch the cultural change of how people interact and think about optional marketplace. Mr Jones thank you for that presentation very very authoritative. I don't think we've got any questions because we don't have anybody left yup that's all right what we have so I know we had some caucus meetings it individuals had to go to so of thank you for your presentation you're welcome Presian yep. Kelly you wanna come up and. For the closing remarks. Well what an act to follow with Lester Jones I eighty one say thank you again to to both of these committees for hosting us it's been a pleasure and make sure that you do know that the center and all of our presenters are more than happy to be resources we've mentioned a lot of reports Mr give you a lot of great information and data that I know would be happy to cover again so please don't hesitate to reach out to us and I know that's difficult to mention this to all of our members who are at a different meeting right now but hopefully they do hear this over the PA that we're having a delicious lunch at red white and blue down the street and I hear it's a cat fish lunch so I am particularly looking forward to that I want to make sure everyone shows up over there as well but if you have no other questions for me just thank you again and all alternates back over to you Mr thank you thank all of you that presented today was it was very informative I mean we dealt with everything from out of state shipping to entertainment districts this last year in the in the two thousand twenty one session so I appreciate each one of you come an educator has more on what's going on nationally fours alcohol and a maybe we can do it again so thank you all that being said we're Journ.