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Kansas let people get booze to go during the pandemic, and deliveries might be next

082019_JM_BootHillDistillery_DodgeCity.jpg
Jim McLean
/
Kansas News Service
Proposed changes in Kansas liquor laws would give small producers like the Boot Hill Distillery in Dodge City more direct access to consumers.

Liquor industry and grocers pushing Kansas lawmakers to lift restrictions on home delivery and online sales.

TOPEKA – The to-go cocktails and longer liquor store hours adopted in Kansas during the pandemic could live on after the virus threat has passed.

But some lawmakers worry that additional changes sought by grocery chains and liquor companies could hurt small businesses and overwhelm state regulators.

Changes approved during the 2021 legislative session included expanding the hours liquor stores could operate on Sundays and holidays and allowing the sale of to-go cocktails and drive-through drinks.

A  special legislative committee is being lobbied to make it even easier for consumers to purchase beer, wine and hard liquor — changes that would need approval from the Legislature in the spring.

Home delivery and online sales

Several large grocery chains want to include beer with groceries they’re delivering to people’s doorsteps. And liquor companies — both small, Kansas-based distilleries and international conglomerates — want restrictions lifted that prohibit them from selling directly to Kansas consumers online.

Dillons, Hy-Vee, Whole Foods and Walmart are among grocers urging lawmakers to allow them to make home deliveries of beer.

Rob Budd, a Hy-Vee vice president, said beer delivery “represents an important opportunity … to access this emerging and growing market.”

Any increase in sales would boost tax revenues to the state and local governments and create additional delivery jobs, Budd said.

Kansas liquor store owners are not strongly opposed to allowing home delivery of beer. They are far more concerned about competing against large distilleries if lawmakers allow online sales from outside the state.

“Please step back and take a few years before enacting further change and disruption to the Kansas liquor system,” said Aaron Rosenow, the owner of Vern’s Retail Liquor in Topeka.

R.E. “Tuck” Duncan, a longtime lobbyist for the Kansas Wine & Spirits Wholesalers Association, told lawmakers that the state’s current “three-tiered system” works well. He said the system, in which wholesalers purchase products from liquor companies and then market them to retailers, provides consumers with convenient access while protecting them from “counterfeit” liquor and ensuring that all players pay their required taxes.

“The alcohol market has innovated to meet modern consumer convenience demands without undermining a well-balanced state regulatory system,” Duncan said.

David Ozgo, a senior vice president for the Distilled Spirits Council of the United States, argued change is needed to level the playing field. He said wineries have an unfair advantage because they can sell online and ship their products directly to Kansas consumers.

He said Kansans want the same convenience when it comes to purchasing liquor, or spirits.

“Spirits have been taking market share from beer and wine for the past 20 years,” he said. “It’s only natural that they (consumers) want to purchase their preferred beverage as easily as possible.”

Kansas distilleries in the mix

Anticipating that legislators might have concerns about giving big liquor companies direct access to consumers, Ozgo said that Kansas-based craft distilleries would also benefit from a change in the law. Marketing their products online would free them from dealing exclusively with distributors who often don’t push their products.

More than 40% of craft distillers surveyed by the American Distilling Institute reported difficulty “finding a wholesaler willing to take their products,” Ozgo said.

Of those who could, he said, nearly 70% said the wholesaler didn’t do enough to market their products.

“Small craft brands just do not have the volume to get much interest from the highly consolidated wholesale industry,” Ozgo said.

The Boot Hill Distillery in Dodge City is one of several in Kansas that could benefit from direct marketing. It’s founder, Hayes Kelman, a Haskell County grain farmer, said the only way the distillery can sell its vodka, whiskey, gin and other products outside of its tasting room is to sign on with a distributor.

But even that, Kelman said, doesn’t guarantee placement on liquor store shelves or cocktail menus at bars and restaurants.

“There are more brands than distributors,” Kelman said in written testimony to the committee.

Rep. Sean Tarwater, a Republican from Stillwell and a member of the committee, told the Topeka Capital-Journal that he would like to make it possible for people who visit Kansas microbreweries and distilleries to purchase “another bottle of whatever they liked” when they get home.

Whitney Damron, a lobbyist for liquor store owners, reminded lawmakers that any accommodation they make for small Kansas producers would also apply to “out-of-state distillers, big and small.”

Lots of illegal shipments

Beyond the harm that direct-to-consumer sales could do to local liquor stores, opponents say it would overwhelm state regulators who are already struggling to collect taxes from wineries.

Debbi Beavers, director of the Kansas Department of Revenue division that enforces state liquor laws, told lawmakers that a limited investigation showed that 50% of the companies shipping wine into the state in 2020 didn’t have the required federal or state licenses.

Legalizing direct shipments of liquor, Beavers said, both would lead to more underage drinking and the importation of alcohol that’s not been regulated for purity. And she said the state would experience a “significant loss of revenue” from liquor taxes that would go uncollected.

Duncan, the wholesalers’ lobbyist, urged lawmakers to wait before making any more changes to the state’s liquor laws.

“Don’t move too quickly,” he said. “Let’s see how the (wine) shipments clean themselves up and how the taxes get paid.”

Rep. John Barker, an Abilene Republican and the committee chair, said the panel will finalize recommendations to the full Legislature at its final meeting Nov. 10.

Jim McLean is the senior correspondent for the Kansas News Service. You can reach him on Twitter @jmcleanks or email jim (at) kcur (dot) org.

The Kansas News Service is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy.

Kansas News Service stories and photos may be republished by news media at no cost with proper attribution and a link to ksnewsservice.org.

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