3tier LONEGIRL

Brewpubs like Lone Girl Brewing Company in Waunakee, pictured here, is one of several beer producers statewide that would be affected by a bill by Rep. Gary Tauchen that would change the state's liquor laws. 

PHOTO BY SAIYNA BASHIR

State Republican lawmakers say they want to restart a conversation about the state’s liquor laws by introducing a bill they say will remove barriers to business growth.

Rep. Gary Tauchen, R-Bonduel, on Tuesday filed a bill that he said aims to change a series of state liquor laws called the three-tier system. The system regulates how liquor, beer and wine are manufactured, distributed and sold in Wisconsin. For example, a business that makes alcohol cannot also distribute it. In addition, within the system, businesses that make the alcohol — brewers, wineries and distilleries — each have distinct rules they must follow.

Tauchen and his supporters, including Rep. Shannon Zimmerman, R-River Falls, who owns a winery, say there needs to be more flexibility within that system.

The regulatory structure was originally intended to prevent monopolies, but small craft brewers and wineries — which often operate their own tasting rooms or brewpubs — say it now does the opposite. Zimmerman and Tauchen say a fundamental change in policy is needed.

“What we’re trying to do here is modernize the three-tier system,” Tauchen said. “We need to make sure that everyone has an opportunity to expand their business, to grow their businesses. This could really help improve things."

“We have to start taking a different philosophical approach to this subject in our state," Zimmerman said.  

The bill would make key changes to how wine, beer and liquor are sold and regulated in the state. It would:

  • create a distillpub permit issued by the state Department of Revenue that would allow for the sale and manufacture of liquor other than wine and allows a distillery to sell and distribute its spirits
  • increase the quota by 10 percent, rounded to the nearest whole number, for retail liquor licenses, known as “class B” licenses that municipalities issue
  • increase the amount of beer that a brewpub may manufacture, from 10,000 to 20,000 barrels per year, and double the number of locations from which they can operate, from six to 12
  • raise the cap on permits that brewers can hold to sell wine and distilled spirits on their premises, and allow brewpubs to sell liquor on site
  • extend the winery closing hour from 9 p.m. to 2 a.m.
  • allow a winery to hold a retail beer license and sell beer on site
  • loosen eligibility requirements for membership in a wine distribution co-op by changing the definition of a “small winery.” Only wineries defined by the Department of Revenue as “small” can be a part of a co-op distributor. This widens that definition by raising the cap on how much wine a small winery can produce, from 25,000 gallons of wine to 50,000 gallons of wine per year
  • eliminate the requirement that beer and liquor wholesalers have a minimum number of customers. Currently, a wholesaler must sell beer to 25 different retailers and liquor to 10 different retailers.

“We’re trying to find balance,” Tauchen said. “This will create conversation and that’s what we want.”

The bill comes as a response to an anonymous controversial proposal circulated last month that would have altered how distributors, manufacturers and retailers of alcohol operate. That proposal would also establish a state office of alcohol enforcement to crack down on violations. The proposal drew widespread criticism from small craft brewers, Miller Coors and wineries that said it would hamper business.

Some lawmakers fear the proposal could still be slipped into the state budget, which is now several weeks past due. The threat of the earlier proposal to slip it into a 999 motion, a last minute wrap-up budget motion, was real, Zimmerman said. 

"The recent ruckus around the 999 motion, we opted to take a very different approach," Zimmerman said. "It is going to force a conversation that is long overdue."

"This issue is not going away," Tauchen said. "It needs to be resolved so we’re pushing forward."

Tauchen and Zimmerman said they did not consult any special interest groups from the alcohol industry when writing the bill, but said they hope the bill can go through committee and bring all interested parties to the table. 

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"The reason you do a bill like this is so that it forces all the right parties to a public hearing to the table so that no one is operating in the shadows, everybody instead is operating is a transparent manner," Zimmerman said.

The state budget has been used several times over the last decade to change the state’s liquor laws. Tauchen and Zimmerman said the bill aims to reverse those last-minute changes pushed through years ago.

“What this bill is about is looking back over the last 10 years or so and reversing maybe some of the things that happened which have resulted in either intentionally or unintentionally challenging some of Wisconsin’s small businesses,” Zimmerman said. “This bill aims to reverse some of those things so that all businesses, big or small, find themselves on equal footing.”

Wisconsin's liquor laws were most recently changed in 2007 and 2011, both times slipped into the budget in its last days. The 2007 change, which prohibited wineries from self-distributing their wine, was slipped into the budget but later vetoed by then-Gov. Jim Doyle. The change later cleared the legislative process and became law. A 2011 change prohibited brewers from selling liquor and wine and was inserted in the budget that passed.

Eric Bott, state director for Americans for Prosperity, a conservative advocacy group, has been a vocal opponent of the state’s status quo when it comes to regulating liquor. Tauchen’s bill is a good step, but will be difficult to advance in the Legislature, he said.

“I think at the very least this is a really good way to raise public awareness and awareness in the Legislature about the burden created by the state government for those who produce liquor and beer (and wine),” he said. "It’s going to be really difficult to move a bill like this.”

Tauchen and Zimmerman are scheduled to publicize the bill at a press conference Tuesday at 4 p.m. at Wisconsin Brewing Company in Verona.

 

Katelyn Ferral is The Cap Times' public affairs and investigative reporter. She joined the paper in 2015 and previously covered the energy industry for the Pittsburgh Tribune Review. She's also covered state politics and government in North Carolina.