Easy or Hard to Swallow

In 2016, State Question 792 hit the ballots and passed with flying colors. Set to take effect Oct. 1, the law makes sweeping changes to Oklahoma’s playbook regulating alcohol and its distribution.

For better or for worse, everyone from consumers and breweries to distributors and retailers await the law’s implementation and outcomes.

Many Oklahomans understand that grocery and convenience stores can sell wine and high-point beer next month, but the law is much more extensive than that, says Steven Barker, deputy director and general counsel for the Oklahoma Alcoholic Beverage Laws Enforcement (ABLE) Commission. For instance, liquor stores, under the law, can sell cold beer and wine, not just beverages at room temperature, as well as non-alcoholic products as long as they don’t exceed 20 percent of total sales.

SQ 792 “significantly alters the regulatory scheme for alcoholic beverages in Oklahoma across the manufacturing, wholesaling and retailing tiers,” says Barker, adding that other says notable changes “include loosening happy hour restrictions at bars and restaurants, mandating server training statewide, authorizing counties to determine if liquor stores within the county can be open on Sundays, and the direct shipment of wine to consumers.”

The logistics of implementation have been staggering, and Barker says community buy-in has been crucial.

“Because of the complete constitutional and statutory rewrite, we were also required to overhaul our administrative code provisions, which was completed [in June],” Barker says. “One of the biggest challenges … of implementation has been education and outreach. Since the passage of SQ 792, ABLE Commission agents and employees have attended hundreds of public meetings, forums, symposiums and training courses for those interested in learning about the changes. The alcoholic beverage industry, along with various trade organizations, have been instrumental in providing many of these [free] outreach opportunities. We would not have had the ability to reach a fraction of the audience without their efforts over the past year and a half.”

For Sean McCanne, managing member of the League of Oklahomans for Change in Alcohol Laws, this new era of revised alcohol regulations can’t come soon enough. The nonprofit began as a small group of consumers interested in change and morphed into a grassroots movement.

“LOCAL’s first mission was to allow breweries the right to sell their product in their taprooms,” McCanne says. “We called the first mission #FreeTheTaps.”

Before and after SQ 792 got on the ballot, McCanne says his group had informational events, social media outreach and meetings with legislators. The new regulations are victories for both breweries and consumers, he says.

“For consumers, not only is strong Oklahoma beer now available from the breweries, but there have been many breweries opened, and out-of-state breweries are beginning to distribute within the state, expecting that beer will soon be sold cold at liquor stores and other locations,” he says. “The increase in sales locations will increase both competition and availability. All of these changes for breweries will impact the consumer in a positive way.”

Shea Gillock, executive director of the Craft Brewers Association of Oklahoma, agrees that the law is good for business and customers.

“Oklahoma brewers will see their products reach new customers when strong beer is allowed in convenience and grocery stores,” Gillock says. “Beer will also stay fresh longer, as local liquor stores will begin to refrigerate products. Consumers will see more breweries and brewpubs open across the state, contributing to the growth of the local craft beer industry and, in turn, the local economy.”

For Dead Armadillo Craft Brewing in Tulsa, the new laws promise to make distribution more streamlined, says co-founder Tony Peck.

“Right now, any distributor can order from me and I have to try and fulfill that order. So someone could request 50 cases of our amber ale and I have to attempt to fill it within 45 days, even if I don’t have the product,” Peck says. “This law creates a franchise system. We pick one distributor and they distribute statewide. It feels more like a partner system, and it’s a welcome change for us.”

Peck says it may give retailers a few frazzled moments as they figure out where to get their products from after Oct. 1, but overall, it’s a benefit to brewers and consumers.

“From a consumer side, I’m thrilled I’ll be able to go buy cold product like you can in other states around us,” he says.

Of all the provisions in SQ 792, one of the most popular and controversial is the ability for grocery and convenience stores to sell wine and high-point beer.

Reasor’s Foods, with 18 grocery stores across northeast Oklahoma, has adapted to the changes scheduled for Oct. 1. President and CEO Jeff Reasor says a team has selected products, installed custom shelving and racks, and planned ways to integrate wine and beer into different areas, such as having suggested wines in the meat department.

“We feel the new wine and expanded craft beer departments will blend in seamlessly and … will make for a simple yet productive shopping trip that we feel all customers will recognize and enjoy,” Reasor says.

The changes aren’t just in the lay of the land, but in personnel as well.

“Reasor’s will take the lead as a full-service wine department as we’ll have at least five locations that will employ wine stewards,” Reasor says. “These folks will bring an enlightened experience for the first-time buyer to those with extensive wine experience. These stewards are on duty now and helping with some of the product placement as they learn their store and their associates.”

New regulations always mean work and adaptation, but Reasor says customers should benefit.

“From a consumer point of view I can only see positives,” he says. “There are those that feel the status quo was alright, but then the people of Oklahoma spoke and consumer choice was the end result.”

The implementation of SQ 792 is a boon for breweries and grocery stores, but others say it creates hardship on small, independent liquor retailers.

Bryan Kerr, owner of Moore Liquor, is president of the Retail Liquor Association of Oklahoma, which represents many independent stores. Kerr says the organization often works with lawmakers and other interest groups to develop legislation, but he says he could not be more disappointed with the passage of SQ 792. His group filed an unsuccessful suit to have the law declared unconstitutional.

“The bill treats two similarly situated business entities completely differently under the law,” Kerr says. “We believed this to be a violation of the equal protection clause [in the] 14th Amendment, particularly the restrictions on licensing and the 20 percent cap on the sale of non-alcoholic goods.”

Kerr says the new regulations are unfairly skewed toward grocery and convenience stores and national chains while placing unfair burdens on independent liquor retailers. He says another example of the differences is personnel age. Liquor store employees must be at least 21, but grocery store employees need only be 18 to sell strong beer and wine (and can be employed in other parts of the store at a younger age). In addition, liquor stores cannot allow parents to bring their children inside, but they have free range in a grocery store.

“We knew the bill was bad for locally owned liquor stores,” Kerr says. “In effect, it will also make Wal-Mart the largest wine retailer in the state; that money comes directly out of the profits of Oklahomans who have played by the same rules set by the state since 1959.

“As a result, it also hurts local economies as Wal-Mart and the other ‘big box’ players effectively shut down another neighborhood business, then move those profits to their [out-of-state] headquarters, which will eliminate both the income and jobs associated with these small businesses.”

Kerr says laws like SQ 792 have devastated independent liquor stores in other states.

“A similar model exists in Texas, and Texas has about half the number of retail package stores per capita that we do,” Kerr says. “We have about 680 individually owned liquor stores in Oklahoma. I would not be surprised if that number was under 400 within five years. That’s a loss of 300 or so small businesses with owners and employees who contribute directly to their local economies.

“Tennessee adopted a similar model two years ago and liquor store owners reported revenue losses up to 60 percent. Even those stores who survive will likely have to lose employees in order to cut costs. Also, the consumer who enjoys spirits, craft beer and fine wine will suffer because liquor stores will need to raise their prices to try and offset the money being lost to grocery and [convenience] stores, who will only carry the fast-moving, most popular brands.”

Reasor, however, says only a handful of grocery stores should enter the new alcohol market.

“The first thing people need to understand is that a large number of grocers will only continue with their beer departments,” he says. “Many will not want to take on the expense of permits or train someone to handle wine in their store, even if they have space for wine (and many do not). That being said, those that do add to their craft beer sections and wine departments could and should see a small overall increase in total store sales.”

Regardless, Barker says the beverage control commission has processed “over 2,500 new applications from grocery and convenience stores for purposes of high-point beer and wine sales.”

SQ 792 should have winners and losers. What’s on tap after Oct. 1 is how many businesses are affected positively or negatively.

An Oklahoma Liquor Timeline

• 1888 The Women’s Christian Temperance Union opens its first chapter (in Muskogee) and lobbies against liquor sale and consumption.
• 1890 Congress creates Indian Territory and Oklahoma Territory and bans the distribution and sale of intoxicating beverages throughout Indian Territory.
• 1898 The Oklahoma Territory Anti-Saloon League forms to spearhead the campaign for prohibition in Oklahoma Territory.
• 1900 More than 21 chapters of the Women’s Christian Temperance Union are active in Oklahoma Territory.
• 1907 After statehood, prohibition is ratified in the state constitution. Oklahoma is the only state to ever include prohibition within its constitution.
• 1911 Oklahoma’s blue laws cause mass closings of pool halls and movie theaters.
• 1917 The most stringent liquor law, known as the Bone-Dry Law, passes after the fervent backing of the politically influential Walter Ferguson.
• 1918 On May 21, the Oklahoma Supreme Court rules that churches are exempt from the Bone-Dry Law and can use wine in religious ceremonies.
• 1919 Oklahoma is the 18th state to vote for the ratification of the 18th Amendment to the U.S. Constitution.
• 1920 The 18th Amendment is ratified and prohibits the transportation and sale of intoxicating liquors nationwide.
• 1933 Led by the Beer for Oklahoma League, a state proposal to legalize the sale of 3.2-percent beer passes with a margin of more than 95,000 votes that summer.
• 1933 Prohibition ends nationally with the ratification of the 21st Amendment to the U.S. Constitution.
• 1947 Oklahoma defines the legal difference between low-point (3.2 percent) beer and intoxicating liquors.
• 1959 Oklahoma adopts Article 27, Section 1 to its state constitution on April 7, making the sale of packaged liquor legal.
• 1959 The state House and Senate pass the Liquor Control Bill on June 23. Gov. J. Howard Edmondson signs it the same day, establishing the Liquor Control Act.
• 1972 The state votes against an amendment to the state constitution that would allow for liquor to be sold by the drink.
• 1976 The same amendment is added to the ballot again and is defeated by a large margin.
• 1979 The Supreme Court strikes down an Oklahoma statute allowing women to purchase beer at age 18 and men at 21.
• 1984 With the passage of House Bill 1118, Oklahoman counties can decide whether to allow the sale of liquor-by-the-drink.
• 2016 Alcohol distributors and wholesalers form the Oklahoma Beer Alliance on Jan. 20 to persuade the legislature to legalize the sale of full-strength beer in grocery stores.
• 2016 State Question 792 passes on Nov. 8 with a 65-percent majority and modernizes Oklahoma liquor regulations.
• 2018 Twelve Oklahoma counties still ban the sale of liquor-by-the-drink.
• Oct. 1 The liquor reforms outlined in SQ 792 go into effect. They allow convenience, grocery drug and big-box stores to sell wine and full-strength beer and liquor stores to sell refrigerated beer along with drinking accessories.