It’s been a busy week with both the House and Senate getting to work.  As expected, both parties highlighted issues of importance to their respective bases with the House GOP passing the Gov’s $1 Billion tax cut, passing “election integrity” bills and killing all the Democrats gun control bills. In the Senate, the Democratic majority killed all GOP drafted bills restricting abortions, passed a constitutional amendment protecting gay marriage and put the Gov’s tax cuts on life support. There were really no surprises by most political observers.  We can expect more of the same next week as it’s the last full week before the legislature hits the critical “crossover” deadline on Feb. 7th.

Now, onto the bills:

Virginia Beer Distribution Company

SB885 (Favola) and HB2258 (Robinson)

Background: The VBWA has been working with the legislature, Virginia Craft Brewers Guild, Virginia Wine Wholesalers Association, Virginia wineries and the Youngkin Administration on the creation of a Virginia Beer Distribution Company (VBDC), modeled after the existing Virginia Wine Distribution Company (VWDC). The VWDC provides access to retail markets for farm wineries that do not fit with a traditional wine distributor and has been a resounding success in keeping Virginia wineries from seeking self-distribution.

Del. Roxann Robinson’s (R-Chesterfield) bill reflects the compromise negotiated between the VBWA and Guild. The compromise caps the VBDC to 500 barrels per brewery, requires the VBDC to respect existing franchise territories and closes an existing loophole that allows for a brewer’s spouse to hold a wholesale license. Sen. Barbara Favola (D-Arlington) does not think the issue is ready for primetime and has put in legislation that will direct ABC and other stakeholders to continue studying the issue for another year.  The Robinson bill is strongly supported by the Craft Brewers Guild and they are opposing the Favola study.  In addition to the legislation, the Robinson bill will need state funding to go into effect. The Guild is working on two budget amendments (one in the House and one in the Senate) for roughly $750,000 each to finance the creation of the VBDC. It is unclear how those amendments will fare.

The Latest: Del. Robinson’s bill was heard in the ABC Subcommittee and reported without opposition. It was approved by the full General Laws Committee and now goes to House Appropriations where they’ll decide if the legislation will be funded at a price tag of roughly $780,000. Sen. Favola’s study is expected to be heard in Senate Rule next week.

Product Placement

HB1979 (Leftwich) and SB809 (Favola)

Background: In response to several recent examples of underage consumers purchasing an alcoholic product or having an alcoholic product unknowing purchased on their behalf, the VBWA worked with Anheuser-Busch and ABC to draft legislation regulating the placement of “crossover” products.

If enacted, the legislation would require all alcoholic products to be clearly labeled as such in the display and prohibit a crossover product from being placed near its non-alcoholic counterpart to prevent consumer confusion.

The legislation is opposed by the major grocery chains and some C-store groups, but supported by other retail groups and consumer advocates. Sen. Favola’s bill was heard in a committee and after a robust discussion and testimony from several opponents, the bill was reported out of the committee without a negative vote. The legislation now heads to the Senate floor.

The Latest: Sen. Favola’s bill passed the Senate 47-1 and will be heard in the House after “Crossover”. The House companion bill was heard in House General Laws this week with a similar line-up of testimony to the Senate version. The bill was reported to the House floor 22-0 and will be voted on by the full House next week.

Slotting Fees

HB1971 (Leftwich) and SB1387 (Norment)

Background: Anheuser-Busch is pushing legislation across the country to increase transparency in slotting fees as a result of new entrants into the alcohol space. HB1971 and SB1387 are a direct result of that effort and would give Virginia ABC the authority to access retailers’ records related to slotting fees paid for non-alcoholic products for the purposes of determining if a supplier was using slotting fees paid for their NA products to gain shelf space for their alcoholic products.

The Latest: The legislation generated broad opposition from retailers, bottlers and soda manufacturers. The VBWA board has reviewed the issue and decided to stay neutral on the matter. ABI reached an agreement with the coalition of opponents. The deal they cut was that they’ll ask their patrons to withdraw their bills if all agree to participate in an ABC run study this summer to look into the broader slotting fee issue. Both patrons struck their bills this week and ABC has agreed to convene a workgroup on the matter.

Transfer of Ownership by Soft Drink Companies & Bottlers

HB2486 (Kilgore): Del. Kilgore introduced legislation extending protections to bottlers similar to those afforded beer distributors that limit a manufacturer’s ability to deny the sale and/or transfer of a business. The VBWA has been asked to weigh in since beer distributors have similar protections and many of you carry N/As. There are some concerns with how the bill is drafted and how broadly it would apply to N/As. The Virginia Beverage Association is staying neutral on the bill. After careful consideration, the VBWA Board of Directors has directed staff to communicate that we welcome the broader conversation about extending protections afforded to beer distributors, wine distributors and auto dealers to soda and other N/A products; however, we are not prepared to weigh in on the specific legislation at this time.

Dram Shop

SB1113 (Hanger) and SB1226 (Obenshain)

Several “Dram Shop” bills have been introduced as the result of a recent high-profile underage DUI incident at a craft brewery in the Valley. Sen. Mark Obenshain’s (R-Harrisonburg) bill focuses on selling to minors. 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 will be closely tracking these bills; however, the Board decided to remain neutral as long as liability does not extend to the wholesaler. The legacy breweries are taking a similar position. The bills are being strongly opposed by restaurants and craft breweries.

The Latest: Both bills were heard and defeated in the Senate Courts Committee this week. The issue is now dead for the session.

New ABC Licensing Privileges

HB1753 (Robinson) and SB1100 (Boysko)

Background: Capital One and American Express are pushing legislation that would allow them to operate “passenger lounges” within the Commonwealth. The legislation is needed because of the way our airport authorities are set-up in the code.

The VBWA worked with Capital One and American Express before the session and are fine with the legislation. The financial institutions accepted amendments from restaurant groups to narrow the definition since they will be exempt from the food ratio.

The Latest: The Senate version passed the Senate 38-0 last week and the House version was reported out of House General Laws 21-1. The House bill now goes to the floor for final approval by the body.

Reinstatement of a Suspended Retail Licence

HB1866 (Scott, P.)

After a high profile case where a restaurant owner had his ABC license revoked and product confiscated because he lost his health permit due to lack of complying with COVID regulations, Del. Phil Scott (R-Fredericksburg) introduced legislation that makes it clear that a retailer’s ABC license is reinstated when any health code violations are resolved.
There was and continues to be plenty of drama around the retailer at the center of the issue, so this has the potential to draw lots of attention. As it is now, VBWA plans to simply track the bill, but things could change if the bill does. Stay tuned as things develop.
The Latest: The bill was heard in House General Laws and reported on a party line vote 11-10. It now goes to the floor, where you can expect a similar vote.

Hiring of Felons

HB1730 (Bennett-Parker)

Background: Facing staffing shortages, local restaurants asked Del. Elizabeth Bennett-Parker (D-Alexandria), who represents the vibrant retail district of “Old Town” Alexandria, to carry legislation that would repeal ABC’s long-standing policy that prohibits licensees from hiring convicted felons.

Thinking it was a good idea, Del. Bennett-Parker reached out to the VBWA for our support and we worked with her on the legislation to include wholesalers. If passed, individuals must still disclose they have a past felony conviction; however, if they have been crime-free for two years, a wholesaler or any licensee may choose to hire them without seeking a waiver from ABC.

The Latest: The bill was tabled for this week to give Del. Bennett-Parker time to work on new language with the bill. It will be heard again in the ABC Subcommittee next week. Stay tuned.

Marijuana

There are multiple bills introduced to-date impacting how the Commonwealth will move forward with cannabis sales. The VBWA is monitoring all the bills and will have more to report as things develop.

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