The 2022 Virginia General Assembly is well underway, and as usual, the VBWA legislative team is advocating both for and against bills that touch the Three-Tier System. Last week, we held our virtual legislative conference with the VBWA Board and briefed them on our progress.
This year, lawmakers are considering over 2,400 pieces of introduced legislation, and a handful touch on issues related to beer, wine, and spirit distribution. There are two weeks until “Crossover Day” on Tuesday, February 15, when all legislation must advance to the other Chamber, or find itself dead by default.
Here are the bills of high interest to VBWA members, along with our positions on them, if any.
Virginia Wine Distribution Company Study
HB1336 (Robinson): The Virginia Craft Brewers Guild attempted introduce legislation that would have allowed craft breweries to sell their beer through the Virginia Wine Distribution Company (VWDC). The VWDC is a program run by the Department of Agriculture that allows farm wineries access to the market without going through a traditional wine distributor. It has a Board consisting of wineries and wine distributors, limits on volume, and operates at a deficit — and therefore, requires an annual state appropriation. It’s operated by the Department of Agriculture because it’s a way to support wineries, which are agricultural businesses. While the VBWA has long committed to having a conversation about including beer in the VWDC, we did not support the proposed legislation or approach that the Guild was attempting to take.
What we did support was legislation that requires the Department of Agriculture to study both if and how beer should be included in the program, as well as other aspects of the craft beer market. As introduced, the VBWA supports the alternative bill and looks forward to working on the issue over the summer.
ABC Privatization
HB119 (March) & HB328 (Freitas): With Republicans regaining control of the House, the ABC “Privatization” issue resurfaced as an item for discussion. Del. Nick Freitas’ HB328 would have kept the Commonwealth in the distribution business for spirits, but privatized the retail end. Del. Marie March introduced a broader bill that would prohibit the state from offering a service that “competes with the private sector,” which we believe would include ABC. The VBWA is strongly opposed to both bills. The Freitas bill was defeated in the subcommittee on an 8-0 vote and we’re working towards a similar outcome for Del. March’s bill.
Cross-Tier Employment
HB464 (Bulova): As most in the service industry, craft brewers are having difficulty finding and retaining quality employees. They claim the ABC regulation that prohibits a retailer from employing a brewery employee if that retail account sells that brewery’s beer is complicating their efforts to find employees. The Craft Brewers Guild and asked Del. David Bulova to introduce legislation overturning the long-standing regulation. He was surprised by the overwhelming opposition that’s come forward to his bill. In addition to the VBWA, the Virginia Wine Wholesalers Association, Anheuser-Busch Inc. (ABI) and MolsonCoors have come out in opposition with the various retailer groups being neutral.
Cocktails-to-Go
HB426 (Bulova) & SB254 (Bell): As COVID raged and restaurants were shut down, then-Gov. Ralph Northam loosened restrictions on “alcohol-to-go” for spirits by Executive Order to offer retailers a lifeline. The 2021 General Assembly allowed for that policy to continue on a temporary basis when the Executive Order expired and agreed to study making the policy permanent. The VBWA was part of the workgroup that studied the issue over the past year. That workgroup proposed extending the current “cocktails-to-go” policy for two more years so we can fully evaluate what the unintended consequences the policy may have on public health. After working through some last minute amendments by Amazon, both the House and Senate versions of the bill were sent to the floor of their respective chambers and are expected to pass.
Dram Shop
HB984 (Runion), SB230 (Hanger) & SB555 (Obenshain): Several “Dram Shop” bills have been introduced as a result of some recent high-profile underage DUI incidents. Dram Shop is a legal principle that exists in a majority of states across the nation that assigns civil liability to a retailer for actions taken by their patrons. That liability does not extend to the wholesale or manufacturing tier except in instances where they have retail privileges. The VBWA is closely tracking these bills; however, our Board decided to remain neutral as long as liability does not extend to the wholesaler. The legacy breweries are taking a similar position.
New ABC Licensing Privileges
HB455 (Knight) & SB519 (Lucas): Casinos are now legal in Virginia and preparing to open in the months ahead. As such, they’ve been working with the broader ABC community to develop a customized ABC license that makes sense for how they operate. Del. Barry Knight and Sen. Louise Lucas have led those efforts and put in bills establishing a casino ABC license, which the VBWA supports.
Craft Distilleries
HB300 (Freitas), HB387 (Freitas), SB65 (Ruff): There are several bills being proposed by craft distillers that are of concern. The most troublesome of the bills, which would have allowed direct shipments by distilleries, was defeated this week. The VBWA is closely tracking the remaining bills and weighing in when appropriate.
Bottle Bill/Recycling
HB647 (Carr), HB709 (Keam), HB826 (Hope) & HB918 (Lopez): As expected, we saw a bottle bill introduced. In addition to the bottle bill, there were three bills that would establish the Packaging Stewardship Program, administered by DEQ. Under the Program, a producer that sells products with packaging materials pays a fee to DEQ based on the amount of packaging used and whether or not it is easily recyclable. A producer may establish an alternative collection program to offset some or all of the fees. The fees would be paid into a newly created “Packaging Stewardship Fund,” and used to reimburse participating localities for expenses related to recycling, invest in recycling infrastructure and education, and pay administrative costs related to the Program. While the focus is on having the manufacturer pay the new fees, we’re naive to think that it wouldn’t ultimately hit your bottom line. The VBWA joined a broad group of business interests to oppose these bills, which were all defeated in the subcommittee.
Marijuana
There are over a dozen bills introduced to-date impacting how the Commonwealth will move forward with cannabis sales. We are monitoring these bills.
