`

Monarch affiliate gets OK to sell liquor after judge denies stay

September 29, 2016

After years of trying, Monarch Beverage Co. affiliate Spirited Sales LLC is now officially distributing alcohol in Indiana—at least for now.

The Indiana Alcohol and Tobacco Commission granted Spirited a temporary permit to sell liquor on a wholesale basis this week after a Marion County Special Court judge denied the state of Indiana’s request for a stay on an August ruling that found the state agency was “arbitrary and capricious” in its decision to deny the company a liquor wholesaling permit back in 2014.

The state is appealing the case, so Spirited may not be permanently in business. The ATC permit is for 30 days or pending another decision of the court. The appeals process could take several months, or even years.

For now, Monarch—Indiana's largest beer and wine distributor—is celebrating.

Spirited CEO Phil Terry, who is also the leader of Monarch Beverage Co., said the decision means that “Spirited is in the liquor business.” He hopes the permit will be extended past 30 days provided there is no court ruling that nullifies it.

Longtime Monarch customer Gallo Winery, which Terry had feared would ditch the company as a client because Monarch can’t distribute liquor under Indiana law, has made Spirited Sales the wholesaler of Gallo's expanding line of liquor products, he said.

“We’re pleased that Spirited is able to begin business,” Terry said. “We have to temper those thoughts with knowing that the case is on appeal. It’s good for now. We’re hoping that everyone recognizes that this is not a bad thing for the public. There will be more competition … and at the end of the day, it won’t be disruptive to the industry.”

Monarch and Spirited have waged a yearslong fight to enter the liquor wholesaling business in Indiana. Under Indiana law, beer wholesalers like Monarch are unable to also distribute liquor.

Spirited is a separate company, but it has a lot in common with Monarch. Besides sharing the same CEO and board of directors, Spirited is wholly owned by E.F. Transit Inc., which provides transportation services to Monarch and other companies. The same shareholders that own Monarch also own EFT .

However, the company’s financial books are separate, they have separate permits, maintain separate insurance, and have separate bank accounts, tax returns and payrolls. That level of separation was enough for a Marion County judge to deny the stay.

The companies’ competitors in the past have argued that if Spirited or Monarch could sell liquor, there is the “potential to do great harm” to the state’s prohibition-era alcohol-distribution system.

Marion County Special Judge Heather Welch stated in a Sept. 23 ruling that the court was “unconvinced that a stay of its [August] judgment would serve the public interest.” She also ruled that Spirited would suffer harm if the stay had been granted.

“Spirited has already had to wait years to process its permit application as a result of the ATC’s actions during the investigation phase, a process which normally takes substantially less time,” Welch wrote.

Welch said the court was not swayed by the argument that Spirited’s competitors—multibillion dollar companies—would be put in harm's way by Spirited.

“This Court finds that any of [Monarch’s] ‘economic might’ to which the ATC claims Spirited has access would not prevent Spirited’s multibillion-dollar competitors, who participated as remonstrators in this case, from competing with Spirited for market share of the liquor wholesaling business in Indiana,” Welch wrote.

A spokesperson for the Indiana Attorney General’s office did not immediately respond to IBJ’s request for comment.

ADVERTISEMENT

Recent Articles by Hayleigh Colombo