Alcohol bill aimed to help special interests, further status quo

An amendment to Illinois’ longstanding Liquor Control Act creates curious guidelines that seem likely to favor a few specific Chicago businesses, while keeping the status quo intact for the rest.

Illinois’ liquor laws, more than 80 years on the books, have long been restrictive for businesses, with the exception of the politically connected. And new legislation in the Illinois House might continue that trend.

House Bill 3164, introduced by state Rep. Juliana Stratton, D-Chicago, would make oddly specific carve outs in access to liquor licenses for businesses, likely to exempt specific Chicago liquor stores, restaurants or bars – but not others – from the longstanding law.

HB 3164 would amend the Liquor Control Act of 1934 to authorize the issuance and renewal of a license to sell liquor at premises located within 100 feet of specific “places of worship and schools in the City of Chicago.” But the legislation does not simply relax the rules for any business hoping to sell alcohol within 100 feet of churches or schools. Rather, it provides extremely specific guidelines, including:

• The premises are at least 5,300 square feet and located in a building that was built prior to 1940 with frontage on South Michigan Avenue.

• The shortest distance between the property line of the premises and the exterior wall of the building in which the church is located is at least 109 feet.

• The distance between the building in which the church is located and the building in which the premises are located is at least 118 feet.

• The main entrance to the church faces west and is at least 602 feet from the main entrance of the premises.

• The shortest distance between the property line of the school is at least 177 feet.

• The applicant has been in business for more than 10 years.

The legislation also requires the religious leader of the church or principal of the school to indicate his or her support for the issuance or renewal of the liquor license, and written approval from the alderman of the ward in which the premise is located.

The specificity of the guidelines makes it curious which businesses this legislation was written for, but a glance at past amendments to the law and a history of Illinois government’s approach to the liquor industry makes it no surprise.

Before Stratton’s legislation, other changes to this provision of the Liquor Control Act allowed for alcohol sales within 100 feet of homes for the aged if the home for the aged was completed in 2015 and is exactly five stories. Another amendment, for example, allowed for restaurants within 100 feet of a school to sell alcohol if the restaurant occupied the first floor of a three-story building at least 90 years old with the rear corner of the building and the rear lot of the school separated by an alley.

The list goes on and on of narrowly tailored conditions for special interests, while the law itself remains restrictive and outdated.

The Liquor Control Act, passed shortly after the end of prohibition, established a three-tier system of alcohol distribution in the state. Under that act, the Illinois liquor industry was set up into three distinct tiers: producers of alcohol – such as wineries, distilleries and breweries – retail outlets and distributors. Licensed distributors buy alcoholic beverages from breweries, distilleries and wineries and then sell them to retailers such as restaurants, bars and grocery stores. With certain exceptions for smaller wineries and breweries, it is illegal to operate under more than one tier.

Every state in the country – with the exception of Washington – operates under this system. But in Illinois especially, the politically connected benefit the most.

In May 2013, then-Gov. Pat Quinn signed into law House Bill 2606, which also amended the Liquor Control Act, this time to prohibit out-of-state brewers from owning any part of a beer distributor in Illinois. The Associated Beer Distributors of Illinois, or ABDI, gave thousands in campaign contributions to the sponsors of that 2013 bill, including plenty of cash to main sponsor state Rep. Frank Mautino, D-Spring Valley, before and during consideration of it.

Lawmakers took that a step further last when they passed legislation that made bypassing Illinois distributors for out-of-state purchases a criminal offense. A law that went into effect Jan. 1, 2017, made purchasing alcohol across state lines for resale in Illinois a Class 4 felony, as opposed to a lesser business offense. ABDI was present again while this legislation was under consideration in the General Assembly, making a $1,000 donation to bill sponsor state Sen. James Clayborne, D-Belleville, totaling more than $60,000 donated to him over the years, and a $20,000 donation to House Speaker Mike Madigan.

Beyond amendments to the Liquor Control Act, Illinois state government has also passed legislation to limit choice in distributorships in state – favoring big, politically connected distributors that make up a large share of the market.

In 1982, the House passed the Beer Industry Fair Dealing Act, which bound beer manufacturers to their distributors unless they can prove “good cause” – such as breach of contract – to change distributors. A similar law, the Wine and Spirits Fair Dealing Act, passed in 1999 extended that rule to distillers and wineries. The Wine and Spirits Fair Dealing Act passed in large part due to the financial backing of the Wine & Spirits Distributors of Illinois PAC, Judge & Dolph, LTD, Southern Wine – largely funded by former Chicago Blackhawks owner Bill Wirtz – which gave thousands of dollars to several lawmakers, including Madigan and former Minority Leader Lee Daniels.

A U.S. District Court judge struck down the 1999 law for violating the commerce clause of the Constitution, but the 1982 law still exists.

Politicians shouldn’t be using existing alcohol laws to eliminate competition or carve out benefits for special interests. On the positive side, Senate Bill 1288, introduced by state Sen. Dan McConchie, R-Hawthorne Woods, would allow craft distillers to sell a certain amount of their own products directly to retailers, opposed to having to go through distributors.

But still, Springfield politicians’ history of rigging the state’s crony liquor laws show there are significant changes needed to the way Illinois state government approaches alcohol regulation. HB 3164 and all the previous amendments making special rules for special interests are proof.