Gov. Asa Hutchinson on Wednesday signed into law legislation that will allow grocery stores in wet counties to sell any brand of wine.
Senate Bill 284 by Sen. Bart Hester, R-Cave Springs, was backed by Wal-Mart Stores and Kroger Co., whose officials said it would allow them to improve their selection of wines and respond to consumers' demands.
State law has limited grocery stores to selling only wines that are from "smallfarm wineries" that produce 250,000 gallons or less a year, according to the state Alcoholic Beverage Control Board.
But many liquor store owners opposed the legislation because they said it would harm their businesses. Some county-line liquor stores supported the bill after grocers promised that they would not support elections in the next eight years seeking to add to the list of wet counties, or those that allow alcohol sales. Forty of the state's 75 counties are wet, according to the state Department of Finance and Administration.
Hutchinson issued a brief written statement Wednesday night to explain his decision to sign the bill into law.
"Alcohol is one of the most heavily regulated industries in our economy. Dating back to the repeal of prohibition, alcohol laws have evolved uniquely in each state, and Arkansas is no different," the Republican governor said.
"I took a balanced view toward SB284, and in the end I was moved to sign the bill by its positive considerations for the consumer. I believe, in the end, this bill is a compromise solution and represents the best path forward," Hutchinson said.
Hester said that "I was certain that if we got [the bill] to his desk, that he would sign it."
Michael Lindsey, director of public affairs and government relations for Wal-Mart Stores Inc., said, "We are excited to be able to offer our consumers the choices they have been asking for."
Rachel Booker, an adult beverage specialist for Kroger Co., said, "We are very excited for our next opportunity."
Oct. 1 "is the target start date" to offer an expanded selection of wine in these stores, she said.
John Akins, president of United Beverage Retailers of Arkansas and co-owner of Legacy Wine and Spirits in west Little Rock, said that "we are disappointed" with the governor signing the legislation.
The new law dramatically changes the wine and spirits industry in Arkansas, he said.
The Distilled Spirits Council, a national trade association for producers and marketers of distilled spirits sold in the United States, had called on Hutchinson to veto SB284, citing an economic analysis that shows existing liquor stores are projected to lose an average of $90,000 in annual revenue, or about 8 percent, and lead to 35-40 stores going out of business and costing 100-150 people their jobs.
The council said it's disappointed that Hutchinson signed SB284 into law, which it said moves wine into grocery stores and devastates local, Arkansas package stores.
"Instead of picking winners and losers, Arkansas should implement a plan that is consumer-friendly and provides a level playing field for beer, wine and spirits," Distilled Spirits Council Vice President Dale Szyndrowski said in a written statement.
"We urge Governor Hutchinson and the Arkansas legislature to come back to the table and help retailers that were left out of this deal. We believe there is a fair approach to reforming Arkansas' outdated alcohol laws that serves all parties."
Hester said in an interview that "as is the majority of the time when there are bills here in the Legislature people want to pitch worst-case scenarios.
"There will certainly be an effect on local liquor stores. I don't think it will be anything like they believe it is," he said.
Hester said that he wants to encourage the free market.
"I'm sure that our big grocery stores and our big box retailers don't like that everything is moving online, but it is. The world is changing every day, and that's why we come down here to try to be as flexible as possible."
On Feb. 8, the 35-member Senate voted 18-11 to approve the legislation, sending it to the House. The House's initial 48-24 vote fell three votes short of the 51 required for approval before the House later voted 53-34 for the bill.
The Senate voted 18-14 to send the House-amended legislation to the governor last week.
A House-approved amendment allows liquor stores to have "consumables and edible products that complement alcoholic beverages" and requires the Alcoholic Beverage Control agency to promulgate rules to facilitate the sale of complementary products.
Several representatives switched their votes to allow the bill to clear the House. Among them was Rep. Charles Blake, D-Little Rock, who has said the grocers also promised not to push until after 2025 for legislation to allow them to also sell liquor.
Under SB284, a grocery may apply to the Alcoholic Beverage Control Board for a grocery-store wine permit that would allow the store to purchase and sell wine for off-premises consumption.
Wine-inventory orders or purchases are required to be made by the store for delivery to a single, permitted location. Under the bill, an order for an inventory of wine is barred from being combined with an order for another store in a way that would result in bulk discounts.
The grocery-store wine permit fee under SB284 would range from $1,000 for a permitted building space of less than 35,001 square feet to $5,000 for a permitted building space of more than 75,000 square feet.
The fee revenue would go into the Arkansas Wine Grants Fund. Fifty percent of the money would be divided among wineries seeking grant payments, subject to certain limitations. The other 50 percent would go to operating and staffing a wine tourism facility and office space for the Arkansas Wine Producers Council in Franklin County.
A Section on 03/16/2017