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Four small independent liquor stores in Arkansas will get a chance Nov. 13 to try to persuade a federal judge to temporarily halt the implementation of a new law that would allow grocery stores to sell any brand of wine.

Act 508 of 2017, which took effect Oct. 1, allows grocery stores in the state's 40 wet counties to expand their wine sales to include more than just wines from small farms that produce 250,000 gallons or less a year. Before the law took effect, grocery stores were limited to selling only the small-farm wines.

The legislation was signed into law March 15 by Gov. Asa Hutchinson, who cited its "positive considerations for the consumer." It was backed by Wal-Mart Stores and Kroger Co., whose spokesmen said it would allow them to improve their selections and respond to consumers' demands. But many liquor store owners opposed the legislation, saying it would harm their businesses.

On Oct. 23, the four liquor stores sued the director of the state Alcoholic Beverage Control Board and its five commissioners, saying the new law unfairly allows grocery stores to bypass restrictions that apply to liquor stores, and that it conflicts with existing state laws.

The suit was filed in Pulaski County Circuit Court, but was transferred to federal court earlier this week by the attorney general's office.

On Thursday, Chief U.S. District Judge Brian Miller set a hearing for 1:30 p.m. Nov. 13 to hear arguments on whether he should grant a preliminary injunction blocking the law's enforcement until issues about whether the law conflicts with other state statutes, and is unconstitutional, are more closely examined.

The hearing was set in advance of the Alcoholic Beverage Control Board's scheduled Nov. 15 meeting, where it plans to make decisions on pending applications for permits, said Little Rock attorney Deborah Truby Riordan, who filed the suit along with Little Rock attorney Paul James. She said 234 permit applications had been filed as of Thursday, noting that grocery chains must file a separate application for each location where they hope to sell an expanded selection of wine.

Riordan said the four liquor stores, who are representative of the liquor store industry throughout the state, hope to stop the permits from being issued pending a trial on the legal issues.

The stores are 107 Liquor Inc. in Pulaski County; AB Liquor LLC, doing business as Legacy Wine & Spirits in Pulaski County; Deborah W. Goolsby, doing business as Crossroads Wine & Spirits in Saline County; and Bulloch Smith Holdings LLC, doing business as Longhills Wine & Spirits in Saline County.

According to the lawsuit, Act 508 amended Arkansas Code Annotated 3-4-601(a) to add a permit defined as "grocery store wine permit." It provides only that "grocery stores" may apply for a grocery store wine permit.

But under existing law -- Arkansas Code Annotated 3-4-201, enacted in 1935 and amended in 2013 -- the number of permits for off-premises sales of wine, spirits or malt liquor is limited based on specific criteria, including population, number of existing permits, qualifications and location. An exception, added in 2013, applies to small-farm wines, so that places that sell only small-farm wines don't have to adhere to the regulations.

Among the regulations that liquor stores must abide by are restrictions on the number of new applications that must be accepted in a particular county, after the alcohol agency's posting of a legal notice after the publication of new census figures.

In addition to limiting the number of permits that can be issued for a certain population -- say, one permit for every 5,000 residents -- the liquor stores cannot sit within 1,000 feet of a church or school, and the applicant must publish a notice of its intent to sell alcoholic beverages at least once a week for four consecutive weeks in a legal newspaper of general circulation in the area.

The law was established as a matter of public policy to limit the number of retail liquor establishments in the state's counties that allow alcohol sales, attorneys said. Of the state's 75 counties, 40 are wet.

The liquor stores who oppose the new legislation say grocery stores should have to follow the same set of regulations as they do, but that the way Act 508 was written, the grocery stores aren't required to comply.

The new legislation directly conflicts with existing law, according to the lawsuit, in that the new grocery store wine permits created by the beverage control board "make no mention of the requirements set forth" in another state statute, which applies to permits for the sale of all wine, spirits and malt liquors that contain up to 21 percent alcoholic content.

While grocery stores seeking wine permits are now required to meet the same criteria as the holder of an off-premises retail beer permit, yet another existing statute "expressly precludes holders of retail beer permits from selling the very product, wine, that is sought to be sold under the grocery store wine permit," the suit complains.

Unless the beverage control board is permanently enjoined from issuing grocery store wine permits, liquor stores will be irreparably harmed by the loss of business caused by the grocery stores' ability to sell wine at better locations and under preferential conditions than those applying to the liquor stores, the suit contends.

Judd Deere, a spokesman for Attorney General Leslie Rutledge, said Thursday that "the attorney general is reviewing the lawsuit and will respond appropriately in court filings."

Metro on 11/03/2017

Print Headline: Hearing set on liquor stores' bid to block law on expanded wine sales

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