Beer distributors are taking issue with a little-known provision in Kentucky’s new alcohol regulations that allows brewing companies and distributors to give refrigerators to retailers for free.
During a committee hearing reviewing the new regulations Friday, Jennifer Doering of Seligman Distributing said the policy has an outsized benefit for large brewers.
“This is a giveaway,” Doering said. “It is a violation of the checks and balances that have guided our system, this three-tier system of alcohol distribution. This erosion introduces into Kentucky a pay-to-play relationship between the distributors, the brewers and the retailers.”
Dating back to the repeal of Prohibition, Kentucky’s (and most other states’) laws require alcohol brewers, distributors and retailers to be independent entities to prevent monopolies.
During this year’s legislative session, lawmakers passed an omnibus bill that tweaked many alcohol rules in Kentucky — microbrewers are now allowed to brew up to 50,000 barrels per month instead of 25,000, distilleries can now sell bourbon by the glass.
But tucked away in the bill was the provision allowing for the gifting of refrigerators to retailers.
George Clark of Clark Distributing said that the change “will only lead to commercial bribery or pay-to-play.”
The bill amended current law, which already allows brewers or distributors to give drink signs, devices, decorations and other advertisements to retailers.
The original version of the omnibus beer bill, SB 11, was proposed by Republican Sen. John Schickel of Union. It didn’t have the refrigerator provision, which was added in the House version of the bill before heading back to the Senate for final passage.
“We were told that it was put in last minute in the House and that if we took it out that it would kill the bill,” said Senate Floor Leader Damon Thayer, a Republican from Georgetown. “Under the category of ‘don’t let the perfect be the enemy of the good, we went ahead and passed SB 11 because there are so many good provisions that Sen. Schickel’s been working on for a long time.”
Rep. Larry Clark, a Democrat from Louisville, said the distributors were embellishing accusations that the provision would create a “pay-to-play” environment.
“It sort of upset me when you talked about bribery and all that,” Clark said. “I think you might say you ‘think it’s an un-level playing field.’”