Full-strength beer at Dillons or QuikTrip? Look to Kansas’ neighbors

The fight continues to ferment between liquor and retail stores over who can sell which type of beer in Kansas. And the latest round comes in part of because of the neighbors.

Oklahoma and Colorado could change their liquor laws this year to allow full-strength beer on grocery and convenience store shelves.

Some say that would lead brewers to cut down on – or quit – making beer with the lighter alcoholic content, 3.2 percent by weight.

That adds weight to the years-long push by grocery and convenience stores in Kansas to sell more than 3.2 beer.

“If there are changes in Oklahoma and Colorado, we have to take a serious look at some sort of approach to guaranteeing that Kansans have access to beer at the places they’ve always bought beer,” said Jason Watkins, executive director of the Kansas Beer Wholesalers’ Association.

But liquor stores oppose pre-emptive efforts to change state law, saying small locally owned liquor stores could lose customers if chain groceries and convenience stores sell full-strength beer.

“A few large businesses want to try to get all of the pie for themselves at the expense of Kansas taxpayers and Kansas consumers,” said Jeff Breault, a Wichita liquor store owner.

The liquor store owners say they doubt that 3.2 percent beer would ever go away, even if Oklahoma changes its laws.

Two major brewers of 3.2 percent beer wouldn’t specify how the efforts in Colorado and Oklahoma might affect their production plans.

Neighbor states weigh changes

Grocery stores, like Dillons and Wal-Mart, and convenience stores, like QuikTrip and KwikShop, in Kansas and Oklahoma can sell only beer that has an alcoholic content by weight of no more than 3.2 percent. There are similar restrictions in Colorado, Utah and Minnesota based on the 3.2 percent content benchmark.

In Kansas, customers can buy refrigerated full-strength beer, with more than 3.2 percent alcoholic content by weight, at liquor stores.

But not in the Sooner State. Full-strength beer is only sold at room temperature in liquor stores.

Some lawmakers in Oklahoma want to change that.

Rep. Clark Jolley, R-Edmond, is co-sponsoring Senate Joint Resolution 68. It would allow grocery and convenience stores in Oklahoma to sell full-strength beer.

“Polling data, feedback from the public and media interest all point to the fact that the majority of Oklahomans feel modernization of our laws is overdue,” Jolley wrote in a February statement. “That’s why it is critical to get it right.”

The resolution has passed the state Senate and is expected to be taken up soon by the House of Representatives. If it passes there, the measure would go to Oklahoma voters in the fall.

Some Coloradans also are trying to change their liquor laws. Your Choice Colorado hopes to gather about 92,000 signatures to get the issue on the ballot this fall.

“In 42 other states, you can buy and sell Colorado beer and wine in grocery stores, but in the state where they’re brewed, in the state where there is a robust culture around craft beer, consumers can’t buy it,” said Matt Chandler, a group spokesman. “We’re trying to update our antiquated laws to reflect modern times.”

Bill stalled in Topeka

Kansans who sell alcohol are watching closely to see what will happen in Oklahoma, which makes up a large share of the market for 3.2 beer.

The Kansas Beer Wholesalers Association pushed a bill that was tabled in the state Legislature this session.

“Our concern is that if Oklahoma gets rid of 3.2, it’s likely that 3.2 basically as we know it goes away,” Watkins said.

House Bill 2718 would have allowed grocery and convenience stores in Kansas to apply to the state to sell full-strength beer if tax revenues from 3.2 percent beer declined enough.

Watkins said the bill would only kick in if state revenue from taxing 3.2 percent beer fell by 25 percent or more in one calendar month from one year to the next.

“If 3.2 (percent beer) is always available, this bill does nothing,” he said.

Mike Thornbrugh, a QuikTrip public and government affairs manager, said the bill served as a defensive move in case brewers cut back on producing 3.2 percent beer.

“The whole purpose of the bill was to get ready because most of us believe Oklahoma is going to change and most believe Colorado most likely will be changed,” Thornbrugh said.

“In essence, our cooler doors are going to be vacant,” he said. “We won’t even be able to sell beer.”

Watkins said they’ll revisit the topic next year.

“We got a lot of feedback in the Legislature that they didn’t feel like this is something that they needed to do this year,” Watkins said. “Let’s just look at it next year and wait and see what Oklahoma and Colorado do.”

3.2 tax receipts declining

Beer with 3.2 percent alcohol by weight is taxed in Kansas as “cereal malt beverage.” And it is making less and less money for the state.

Retailers are taxed by the gallon of what they buy from wholesalers. In the 2012 fiscal year, the state made $2.1 million from cereal malt beverage taxes. That dropped to $1.6 million in the last fiscal year.

The state hasn’t changed the way it taxes liquor, so the decline means sales of 3.2 percent beer to retailers have decreased, said Kansas Department of Revenue spokeswoman Jeannine Koranda.

Some retailers point to the decline as evidence that 3.2 percent beer could be dealt a death blow if Oklahoma lessens its restrictions on full-strength beer.

“The demand for that product, which is already has a diminished demand, is going to be so much more diminished,” Watkins said.

But it’s unclear what the largest brewers of 3.2 percent beer would do.

A spokesman for Miller-Coors, which is based in Colorado, said “it would speculative” to comment on how the Oklahoma change would affect 3.2 percent beer production.

An Oklahoma-based Anheuser-Busch spokesman said the company “will be prepared to continue to provide Oklahomans with the products they demand.

Liquor store opposition

Opponents of the Kansas bill said it was premature and had a “sky is falling” sense attached to it.

“That’s what they’ve used to get a degree of urgency to get it in front of the Legislature,” said Jeff Breault. “That’s misdirection: To use Oklahoma as ‘Oh my gosh. Something is happening 30 minutes south of here. We got to do something.’”

Breault and his wife own the R&J Discount Liquor Store near Douglas and Hillside. It sits directly across from a Dillon’s grocery store.

He said liquor stores, large and small, would be hurt by allowing grocery and convenience stores to sell full-strength beer, which makes up a large part of many liquor stores’ sales.

“We have a lot of traffic and so a lot of stores in Wichita may stay open, but I doubt I’d have 18 employees,” Breault said.

Stacey Harlow owns Twisted H Liquor store in Hugoton, a small town in Stevens County in western Kansas. She said the town’s grocery store and two convenience stores could sell strong beer “cheaper than I can with their other products.”

“It would more than likely put me out of business,” Harlow said. “If it didn’t put me out of business, I would have to let go of all my help and have to run the store by myself.”

“So I don’t understand why they want to change Kansas laws over something that may or may not even happen,” Harlow said.

This story was originally published March 29, 2016 at 6:32 PM with the headline "Full-strength beer at Dillons or QuikTrip? Look to Kansas’ neighbors."