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Alcohol bills move to full House for consideration after changes

February 14, 2019

State lawmakers on Wednesday made changes to two major bills addressing alcohol issues before moving both pieces of legislation to the full House for consideration.

The omnibus alcohol bill authored by Rep. Ben Smaltz, R-Auburn, would give cities and towns another way to increase the number of available alcohol permits and would create a special food hall permit meant to benefit the $300 million Bottleworks development that is under construction at College and Massachusetts avenues in Indianapolis.

The bill would create a food hall three-way alcohol license for an initial fee of $100,000, plus one-, two- and three-way sub-permits for $25,000 for the vendors in the food hall. (Three-way permits allow retailers to serve beer, wine and liquor.) The food hall permits — and the sub-permits — would not be counted as part of a city’s overall permit limit.

Despite some concerns about the cost of the permits from the developer of the Bottleworks project, the prices were not changed during the House Public Policy Committee hearing on Wednesday.

Other amendments were made, though, including removing a provision that would have required retailers to keep alcohol in one section of their stores.

An amendment filed by Rep. Sean Eberhart, R-Shelbyville, removed that language. Eberhart said he hadn’t heard any major issues with retailers being allowed to display alcohol in multiple locations, so he didn’t think the amendment should stay in the bill.

“It’s a free market amendment,” Eberhart said.

But other legislators on the House Public Policy Committee said alcohol displays can sometimes be overwhelming when they are spread throughout stores. Smaltz said he included the language originally because he felt like consumers should be protected from being confronted by alcohol displays at every turn when they go shopping.

The committee voted 7-6 to approve the amendment and remove the segregation provision, but different language addressing the issue could return when the bill is considered in the full House.

“I think there’s a balance out there,” Rep. Justin Moed, D-Indianapolis, said. “Hopefully as this moves through the process that balance will be found.”

The bill still calls for so-called Riverfront Redevelopment Districts as initially proposed. The districts allow an unlimited number of liquor licenses within 1,500 feet of a buildable river bank. Communities have created these areas as a way to increase the number of available alcohol permits.

The state’s existing quota system caps the number of alcohol permits a city or town is allocated based on its U.S. Census population, and when a community hits its cap, the only way a business can obtain a permit is to purchase an existing one from a current permit-holder. Privately sold alcohol permits can cost tens of thousands of dollars more than the state charges.

House Bill 1518 would allow cities and towns to create “entertainment revitalization areas” that could be drawn anywhere and receive alcohol licenses. Voters would have to approve the district and the additional permits in a referendum. The number of new permits in the district would be 25 percent of the community’s existing quota, with a minimum of five new permits, and the number would round up.

The bill initially grandfathered in the licenses granted in riverfront districts, but it now says a community cannot have both a riverfront district and an entertainment revitalization area. It also prohibits any new riverfront districts from being created after June 30.

A new provision added to the bill Wednesday would allow craft breweries, farm wineries and artisan distilleries to sell their products for carryout at the Indiana State Fairgrounds. Currently, alcohol is contained to one area for consumption and carryout sales are not offered.

Rep. Tim Wesco, R-Osceola, said he had concerns about allowing carryout purchases even though customers would still not be allowed to consume it on-site.

“What prevents people from just keeping that in their pocket and sipping on it?” Wesco asked.

“Well, it would be against the law,” Smaltz said.

The House Public Policy Committee passed the bill 12-1. Wesco voted against it.

The committee also significantly amended House Bill 1422, which was intended to give more freedom to wineries and distilleries to sell and promote their products.

The bill, authored by New Albany Republican Ed Clere, would allow wineries and distilleries that include restaurants to take alcohol produced directly on their properties to their restaurants. Current law requires them to sell alcohol to a distributor who has to take it to a warehouse and then sell it back to the winery or distillery before it can be sold in the restaurant.

The measure also would allow wineries to have common ownership of a winery permit and a micro-wholesale permit — something that is prohibited under state law today. The micro-wholesale permit allows wineries to self-distribute up to 12,000 gallons per year.

Owners of small wineries have said this is an issue, because they might not have someone else who can hold the micro-wholesale permit, but they would still like to self-distribute because attracting a distributor can be difficult.

Language that was stripped from the bill on Wednesday included allowing wineries to offer samples at farmers markets without a special permit and allowing distilleries to sell their products and provide tastings at farmers markets.

The provisions to allow distilleries to ship directly to their consumers in Indiana and to address outdoor bars were also removed.

The committee approved that bill 12-1. Wesco voted against it.

The deadline for bills to be heard on second reading in the House is Feb. 21.

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