Ruling may impact alcohol sales in Somerset
August 15, 2012 Share

Ruling may impact alcohol sales in Somerset

As Somerset businesses ready themselves to sell alcohol in the wake of June’s historic vote, grocery stores and gas stations with an interest in selling wine and spirits had to make special preparations that many competitors didn’t.
 
Now, it looks like that won’t be the case — opening up the pool of candidates for an already limited quota to ever broader numbers.
 
Judge John Heyburn II of the U.S. District Court, Louisville Division, has ruled that Kentucky’s long-standing ban on wine and liquor sales in grocery stores, convenience stores, and gasoline retailers is unconstitutional, as it violates the equal protection clause of the Fourteenth Amendment.
 
Other businesses that may deal in otherwise similar products — specifically drug stores — have had no such prohibition, and are able to sell the same kind of products one would find in liquor stores. 
 
If a supermarket or convenience store wanted to sell wine or liquor, they would have had to build a new facility or addition that would have a separate entrance from the main store. The only licenses that were available for products to be sold inside the store were for malt beverages, or beer.
 
Judge Heyburn’s 9-page opinion, issued Monday, effectively nullifies that, and would allow groceries and convenience stores to sell wine and liquor inside the main facility, the same as drug and liquor retailers.
 
Kroger is one grocery store, for example, that could be affected. The store has applied for retail beer licenses locally. However, in other Kentucky communities, Kroger has stores with adjacent liquor stores with a separate entrance.
 
The store’s representatives spoke to the Commonwealth Journal in July, but did not confirm whether or not they had plans to build an addition and apply for a liquor license. Now, however, they would be able to put in an application to sell wine and spirits with no new entrance necessary. 
 
Heyburn’s opinion said that the state legislature “wanted to limit liquor sales generally … and it did so by arbitrarily distinguishing grocers from all other retailers” when the law was adopted, not long after the end of Prohibition in the early 1930s.
 
“Perhaps back then grocers were different from other potential alcohol vendors in some manner that rationally related to the sale of liquor and wine. If so, none of those differences appear today; most drug stores sell staples and some grocers sell prescription drugs,” Heyburn wrote.
 
The ruling is not expected to affect quota status — that is, the limited number of liquor retailers and bars that the state determines for each community in which alcohol sales are legal (the ruling does not automatically legalize alcohol sales everywhere in Kentucky). 
 
Somerset was granted a quota number of five liquor stores, with heavy competition expected to come from a substantial number of applicants. Now, the number of parties competing for those five licenses stands to grow even greater since the financial burden of building a separate facility has been removed.
 
Chris Brooker, an attorney with the law firm Wyatt, Tarrant & Combs  representing the Food with Wine Coalition, a plaintiff in the case that was ruled upon, said that the ruling “makes sure everyone is treated fairly.”
 
The ruling could be finalized after next week, when attorneys have been asked to meet with the judge to address any remaining issues. The change in law would not go into effect until after the ruling is made final. 
 
Brooker said he isn’t sure if the defendants, which include Alcoholic Beverage Control Commission Tony Dehner, Distilled Spirits Administrator Danny Reed, and box liquor store Party Source of northern Ky., will file any sort of appeal, which could potentially draw out the process.
 
The Commonwealth Journal contacted Steve Humphress, general counsel for the Kentucky ABC offices, but the call was not immediately returned.
 
However, according to the Associated Press, Dick Brown, a spokesman for the state ABC, said “We are studying the ruling to determine its impact.”
 
Carrie Wiese, Somerset City Attorney, suggested that Somerset finds itself in a holding pattern of sorts as a result of the ruling.
 
The city just passed its alcohol ordinance regulating alcohol sales, as a result of the June 26 vote that repealed prohibition within the city limits. It could stand to change depending on how the ABC reacts to the ruling, said Wiese.
 
“We’ll just have to go by the statutes and what the regulations say until the state ABC office tells us differently,” said Wiese. “We have to follow whatever their license requirements are. If they change theirs, we will have to amend ours. The ordinance already addresses that.”
 
Wiese said that the only effect she could foresee would be on those thinking of applying for one of the quota licenses to sell liquor or wine at a retail store.
 
“(The case) could affect the way those quota licenses are given out,” she said. “… It may potentially change the way the quota system works. They’ll let us know.
 
“Whatever the state rule is, that’s what we’re applying here locally,” she added. “It’s a matter of (the Kentucky ABC office) telling us they’re changing.”
 
Louisville convenience store Maxwell’s Pic-Pac and the Food With Wine Coalition filed the lawsuit in 2011, claiming the law treated them differently from package liquor stores because of what they sold.
 
In a statement, the Food with Wine Coalition said Kentucky now joins a list of approximately 36 other states allowing consumers to add wine and distilled spirits to their shopping cart as they shop for food.
 
In a statement, the Frankfort-based Food with Wine Coalition said the ruling “vindicates the members’ belief in the unjustifiably discriminatory nature of the state statute.”
 
Heyburn’s ruling comes on the eve of the first meeting of The Governor’s Task Force on the Study of Alcoholic Beverage Control Laws in Kentucky. Gov. Steve Beshear put together the 20-member panel of lawmakers, activists, ABC department administrators and industry hands to study if and how Kentucky’s liquor laws could be overhauled. The panel is set to meet Thursday.
 
The state has more than 13,000 licenses issued to manufacturers, distributors, and retailers for alcoholic beverages, with more than 70 different license types to regulate those operations.
BY CHRIS HARRIS, CJ Staff WriterCommonwealth Journal
 
The Associated Press contributed to this article

Admin