Packies Forcing Beacon Hill To Examine Retail Landscape

Licensing Ballot Question Draws Industry Opposition

Matt Murphy3/14/22 5:32 PM

MARCH 14, 2022.....After dodging what would have been a well-financed ballot campaign to lift the cap on alcohol licenses for food stores, Massachusetts package store owners told lawmakers they've come to the table with a compromise that is essential for their future survival.

The Massachusetts Package Stores Association has proposed a change to state liquor licensing laws to double the number of allowable licenses any one retailer can hold to 18 by 2031, but to reduce the cap on licenses for the sale of all alcoholic beverages - beer, wine and liquor - from nine to seven.

The proposal wending its way toward the November ballot would also put new rules in place prohibiting self-checkout of alcoholic beverages and allowing retailers to accept out-of-state IDs.

"One reason we have this ballot question is because of the change in the retail landscape of large corporate interests seeking to take over the marketplace," testified Rob Mellion, executive director of the Massachusetts Package Stores Association.

The initiative, however, is being opposed by a hoard of food industry groups, including the Massachusetts Food Association representing supermarkets, the New England Convenience Store and Energy Marketers Association, Cumberland Farms, Whole Foods and Retailers Association of Massachusetts.

Cumberland Farms began an effort in 2020 to put a question on the ballot that would have created a new alcohol license for food stores and gradually eliminate the cap on the number of licenses retailers can hold. The national chain abandoned the campaign as the COVID-19 pandemic worsened, and opted against a second effort this year in favor of working with the Legislature on a bill (H 318) to create a new category of licenses allowing food stores to sell beer and wine.

While the convenience of one-stop shopping has proven popular with consumers, package store owners say the ability of large corporations to dominate the marketplace and rewrite the rules in their favor is threatening their livelihoods.

MPSA stepped up with its own proposal that it is pitching this year as a middle ground.

"This is probably one of the only ballot initiatives you will ever get that is not entirely self-serving, because we have looked inside ourselves and said, 'What can we compromise on?'" said Ryan Maloney, president of the Massachusetts Package Stores Association and owner of Julio's Liquors in Westboro.

The Joint Committee on Consumer Protection and Professional Licensure held an afternoon hearing on the petition (H 4377) where package store owners described their proposal as essential to preserving a share of the alcohol retail market in Massachusetts for small, independently-owned businesses as large out-of-state corporations muscle into the space.

The Retailers Association of Massachusetts, however, said the proposal was laced with "poison pill provisions" and said that despite its support for expanding existing caps on licenses the organization opposed the bill as presented.

"We consider this to be overreach and a blatant attempt to stifle competition from businesses that seek to offer a wide array of products," RAM General Counsel Ryan Kearney said.

Kearney's concerns were echoed in many of the letters submitted in opposition.

"It is not fair or rational to limit multi-store grocers to a limited number of full licenses they can hold statewide simply because they sell food," wrote Brian Houghton, senior vice president of the Massachusetts Food Association.

Matthew Durand, senior counsel for Cumberland Farms, told the committee in written testimony that the ballot question's "flaws and inadequacies" failed to address the concerns of food stores, and the company remains interested in working toward a legislative solution.

The Legislature has until May 4 to act on the petition before proponents will go back into the field to collect the remaining 13,374 voter signatures required to qualify for the November ballot. If lawmakers choose not to act before that deadline, a legislative compromise could still be reached, before signatures must be turned in to Secretary of State William Galvin by July 6, to stop the question from appearing on the ballot.

Rep. Tackey Chan, a Quincy Democrat and the House chair of the committee, did not indicate whether he thought there was an appetite in the Legislature to take this issue on in the coming month, though he encouraged all players to continue talking.

The Retailers Association of Massachusetts said it opposes two provisions in particular in the ballot question: the reduction in the cap of all-alcohol retail licenses and a new method for calculating the fines a retailer can pay in lieu of a license suspension if found selling alcohol in violation of state laws.

Fines levied under the ballot question would be calculated based on an establishment's gross receipts on all retail sales rather than just their gross alcohol sales, potentially putting a greater financial burden on retailers who sell more than just alcohol.

Maloney said the new fine structure is necessary to keep honest large corporate retailers whose alcohol sales amount to a small percentage of their overall business.

"If you can still operate without alcohol sales, is the penalty really going to change your behavior? I don't think so," Maloney said.

But Kearney called it "unjustly punitive" and disputed the suggestion that it would only impact big-box chains like Walmart.

"A small bodega on Main Street that has 50 percent sales from alcohol and 50 percent from other goods would have their fines doubled," Kearney said.

The retailers association also said the reduction in the cap on licenses for the sale of all alcoholic beverages would be a "regression" from the law passed a decade ago that only fully went into effect in 2020 boosting the cap to nine.

"We do believe there's a reasonable middle ground that should be explored but we know the nature of this as a ballot initiative may not lead to such negotiations," Kearney said.

In 2006, voters rejected a ballot question championed by supermarkets that would have allowed food stores to sell beer and wine. Five years later, with supermarkets and other interest groups threatening to go back to the ballot in 2012, legislators struck a deal to avoid the ballot fight by increasing the cap on the number of licenses for all alcohol sales a business can hold from three to nine.

Chan noted that because the petition is a ballot initiative the committee cannot amend the proposal, but in the past the Legislature has been able to negotiate compromise legislation on other issues that was sufficient to convince ballot questions proponents to drop their campaigns.

The increase in the license cap for retailers would rise gradually, under the ballot question, from nine to 12 in 2023, to 15 licenses in 2027, and to 18 licenses in 2031.

"It has been said by some opponents that this ballot initiative is radical or it is discriminatory. It is nothing of the sort," Mellion said.

Mellion also said the cap is significantly higher than any other state in the country that has a three-tier alcohol regulatory system - producers, distributors, and retailers. "This ballot initiative creates 18 licenses for out-of-state interests who have been seeking unlimited licenses for 20 years. That's a compromise," he said.

Tina Messina, owner of Wine Connection in North Hanover, said the provision in the proposed ballot question prohibiting self-checkout of alcohol purchases is also a critical element.

"When I see things like self checkout, I shake my head," Messina said, arguing that it requires human interaction to prevent alcohol sales to minor or to someone who might be intoxicated when they attempt to purchase alcohol.