Affected by COVID-19 and 2019 law, Kansas alcohol seeks loosened regulations to help out industry

Titus Wu
Topeka Capital-Journal
Liquor bottles line up at Barrel House Liquor. The store would be able to start selling its products earlier on Sundays if Kansas lawmakers pass a bill allowing such.

Barrel House Liquor in Topeka saw an increase in sales during the COVID-19 pandemic, said its manager Karla Rettig.

But not everybody in the alcohol sector can say the same. While bars and restaurants incapacitated by virus restrictions helped drive traffic toward liquor stores, it's still affected parts of Barrel House's business, too.

"We sell to them like three or four times a week," Rettig said about the bars and other establishments. "Last year, when they shut down and stuff, we had no business. But now things are opening back up, and it's getting quite a bit better."

As the pandemic subsides and focus turns toward reopening the economy, lobbyists for Kansas alcohol businesses are pitching changes to loosen regulations around when and how alcohol establishments can operate as helpful to the industry's recovery. The state has one of the nation's strictest alcohol laws.

"The restaurant industry in Kansas has suffered more during this pandemic than any other industry," said Scott Schneider, of the Kansas Restaurant and Hospitality Association, of which many restaurant members sell alcohol.

During the last half of 2020, alcohol sales have decreased by 25.5% in drinking establishments and increased by 12.3% in retail liquor stores.

More:Victims of drunken driving cannot sue Kansas bars. Advocates want that to change.

But the proposed laws are also helpful in combating the effects of the 2019 Beer Law allowing grocers and convenience stores to sell beer. That shifted a significant portion of beer sales away from liquor businesses to groceries.

Such efforts for change failed last year due to a legislative session shortened by COVID-19. This year, three large alcohol bills have made it to the point where they're being hashed out and could be passed out in May.

Making to-go alcohol permanent

Allowing carryout and curbside alcohol has been a big priority. It was made allowable under the COVID-19 emergency, but making it permanent beyond the pandemic would be a boost, some said.

"While we are recovering (from the pandemic), this is one reform that can accommodate the shifting attitudes and habits of customers," Schneider said, calling the to-go provision a major "lifeline" for many businesses.

Those to-go sections, which are limited to on-premise alcohol products, dictate selling to-go alcohol to end at 11 p.m. and be sold in tamper-proof, transparent bags. There must also be a dated receipt, among other limitations.

An employee puts tape on the top of a to-go alcohol order in Colorado. Such to-go provisions could become permanent law in Kansas and elsewhere.

The Kansas Association of Beverage Retailers, while supporting to-go alcohol, recommended those regulations in an effort to retain space for liquor stores. The organization had also asked to link to-go alcohol with food sales, though that was not formally adopted.

"If you start to make restaurants look like liquor stores, then at what point does a corporate entity who can have a chain of corporate restaurants come in and say, 'Well I also want to be a liquor store'?" said Amy Campbell, representing KABR.

Opponents to this, however, have brought up concerns whether legalizing to-go drinks would encourage more drunken driving.

Cereal malt beverages

Lawmakers could soon get rid of restrictions surrounding cereal malt beverages, weak alcohol differentiated from beer as having no more than 6% alcohol by volume.

While the 2019 Beer Law gave grocers the ability to sell beer, it also let liquor stores sell CMBs in return.  

But currently, liquor stores don't have explicit permission to sell CMBs to taverns or restaurants licensed to have CMBs. Bars and clubs, in general, must also have a local license to sell cereal malt beverages.

Getting rid of those hurdles would not only help liquor stores but also on-premise sellers of alcohol in the same county.

More:We asked Topekans which now-closed restaurants they miss the most. Here's what they said.

"We anticipate the greatest benefit of this change will occur in smaller towns with locally owned taverns and restaurants," said Campbell. "It will allow these small businesses to turn to their local liquor store to fill that need, just as other on-premise clubs and restaurants do today."

The success of liquor stores is interwoven with the success of drinking establishments, proponents said. The changes would allow for increased sales of CMBs by liquor stores, helping offset the increased competition around beer from grocery locations.

Sales on Sundays and holidays

Kansas liquor stores can only sell between noon and 8 p.m. on Sundays if the city or county allows it. Sales are prohibited on Memorial Day, Independence Day, Easter Sunday and Labor Day.

The proposed legislation would expand that to 10 a.m. to 8 p.m., and stores could sell on all those holidays except Easter, all of which would still be dependent on allowance from local governments. 

Those expanded opportunities to sell are to level the playing field with grocery stores that don't face such barriers, Campbell said.

More:New law limiting local COVID-19 orders accelerates rollback of restrictions across Kansas

"Our members highly respect the cultural nature of Sunday sales," she said, but "now my members are competing against Walmart and Kroger and Casey's who are selling on those summer holidays."

She also noted how next-door-neighbor Missouri opened up its hours to allow liquor stores to sell early Sunday, a disadvantage for Kansas. 

Rettig, with Barrel House Liquor, said she saw the longer Sunday hours as beneficial.

"We have a lot of people that go to the lake and stuff on the weekends, so they wouldn't be there before noon," she said, adding football game audiences are also a lost potential if they go out Sunday morning to purchase beer.

Liquor stores may soon be able to start selling their products earlier on Sunday thanks to a new law introduced by legislation this session.

Most lawmakers agreed with the expanded Sunday hours, except those like Rep. Trevor Jacobs, R-Fort Scott, on moralistic reasons.

"I do believe the state has gone too far for opening up alcohol sales and encouraging consumption as early as 9 in the morning on Sundays,” he said.

As the language is now, liquor stores can only sell on summer holidays if the local government also lets them sell on Sundays. Campbell said she would try to separate the two so any store can sell on the holidays, regardless of Sunday sales or not.

Other changes

Multiple other policy changes could help alcohol businesses increase their sales and the industry grow.

One, for instance, would allow liquor retailers and drinking establishments to sell alcohol in growlers and howlers, refillable brown bottles used for alcoholic drinks. Microbreweries can already do such. 

Spouses of police officers would be allowed to hold liquor licenses under proposed law. Potentially, this could help grow the number of liquor businesses in Kansas, especially considering that anyone out-of-state might be able to hold licenses as well.

Three Rings Brewery in McPherson offers refillable bottles.

That's because the state Department of Revenue's alcohol regulator is asking that residency requirements be removed after similar requirements in Tennessee were deemed unconstitutional, a violation of the Commerce Clause.

"In Kansas, the law requires nearly every licensed type for liquor to have some type of residency requirement," said Debbie Beavers, of the revenue department. "We think the original intent of this residency requirement was allowing local knowledge and control of licensees by only issuing licenses to established upstanding local residents and entities."

Now, the bill takes out any residency language, and instead, out-of-state residents would need to appoint a Kansas resident as an agent to acknowledge Kansas laws and its jurisdiction.

KABR didn't like the change, calling residency "an extremely effective tool for the oversight" of the alcohol industry, though it understood why it had to go. Campbell feared it would be harder to regulate out-of-state businesses than in-state ones, which can lead to an unfair playing field.

She drew the hard line, though, on any ideas of giving licensure to big box stores and corporations.

"Every change to our statutes does have an effect on our members and their business viability," Campbell said. "Please remember that our liquor store owners are still dealing with the aftermath" of the 2019 law.