MacIver News Service

By M.D. Kittle

MADISON, Wis. – After seemingly mothballed for months, a controversial draft bill creating an “alcohol czar” with more power to enforce Wisconsin’s booze laws is back at the table – just in time for the end-of-session bill blitz, and just before campaign season begins in earnest.

In a memo obtained by MacIver News Service, Wisconsin Legislative Council senior staff attorney Melissa Schmidt breaks down the draft bill that aims to create an “Office of Alcohol Beverages Enforcement,” or OABE. The memo, dated Feb. 7, was completed at the request of Senate Majority Leader Scott Fitzgerald (R-Juneau).

The proposal is similar to “drafting instructions” pushed last summer by the state’s alcohol distributors and the Wisconsin Tavern League to tweak Wisconsin’s complicated and protectionist three-tier regulatory system of the production, distribution and sale of alcohol.

That draft document was condemned by a number of critics, including free-market advocate Americans for Prosperity and members of the Wisconsin Distillers Guild and the Wisconsin Brewers Guild. Beyond their concerns about the language, critics feared the bill was about to be dumped into an end-of-budget catch-all bill with little debate.

The proposal eventually stalled.

The latest proposal would attach the OABE to the state Department of Revenue, which currently handles alcohol administration and enforcement. DOR would transfer its alcohol regulation duties and enforcement functions to the new agency, including “certain alcohol beverages permits,” the memo states.

DOR also would transfer its power to make warrantless arrests to the “alcohol czar.”

A director, appointed by the governor and confirmed by the Senate to a six-year term would lead the OABE. This alcohol czar would then appoint a chief legal counsel and “may appoint special agents and other employees necessary to carry out the permitting, audit, education and enforcement functions of the office,” according to the Legislative Council summary of the bill.

Department of Revenue employees working in the alcohol enforcement division would transfer to the new agency and the director could hire up to six additional staff members, according to the memo. The office would be funded from program revenue – drawn from alcohol beverage permit fees and other fees received by the OABE. The memo did not include estimated costs to launch the new office.

“The director and employees of the office may not be employed by or have a financial interest in the alcohol beverages industry and are subject to the standards of conduct and conflict of interest prohibitions for state officials,” the memo states.

Last year’s proposal, reportedly crafted by lobbyists, was aimed at “clarifying” the regulations tied to Wisconsin’s long-standing three-tier system.

A special interest provision folded into the 2011 state budget prohibits brewery proprietors from owning and operating a restaurant that sells beer, for instance. The Prohibition-era three-tiered system in general aims to keep alcohol beverage makers, wholesalers and retailers, including restaurants, bars, and liquor stores, out of each others’ businesses.

“Breweries, wineries, and other alcohol-beverage producers can distribute their products only to independent, licensed wholesalers (also called distributors). These wholesalers then distribute the products only to independent, licensed retailers. Only licensed retailers can sell the products to the public. Thus, under a strict three-tier system, alcohol beverages must pass through both a licensed wholesaler and a licensed retailer before reaching the consumer,” a State Bar of Wisconsin piece summed up.

There are many exceptions to the rules, and apparently that’s what the “drafting instructions” seemingly looked to clarify.

Americans for Prosperity-Wisconsin and other critics warned that the bill would beef up the onerous “three-tier restricting” law.

Larger, well-established alcohol producers would have a much easier time complying with the strict three-tier system than smaller producers like microbreweries, small wineries, and boutique distilleries that have become increasingly popular. That increasing popularity also poses a competitive threat to larger alcohol producers and their in-perpetuity distributors.

Closed-door talks between the lawmakers, lobbyists and the major players broke down soon after word broke of the draft legislation. The bill seemed to die at the table.

State Rep. Dale Kooyenga (R-Brookfield) authored a bill last year that would have begun to reform the three-tier system. That bill has gone nowhere.

M.D. Kittle is an Investigative Reporter with the MacIver Institute. This article appears courtesy of the MacIver Institute.