Annals of regulation: Jeremy Hutchinson's anticompetitive booze bill | Arkansas Blog

Friday, January 30, 2015

Annals of regulation: Jeremy Hutchinson's anticompetitive booze bill

Posted By on Fri, Jan 30, 2015 at 6:52 AM


The Arkansas Legislature rarely works on Friday during the early going and this week is no different. No meetings. But not to worry, under tough new ethics rules in the House and Senate, members may still claim per diem expense reimbursement for today — $150 for those living farthest away.

It's only fair, right, to reward these honest toilers.

PS — I rolled out my new Big Swill logo today, which normally appears with the rundown of daily free feeds and drinks by the lobby. You won't see many on Fridays because — duh — no legislators in town. House rules on setting up the "scheduled activities" at which legislative committees may get free dinners and drinks at pricey Little Rock restaurants urge no dinners on Thursday night. See, only a few hard partiers hang around on Thursday night. Most go home. The parking lot outside the Capitol Hill Building, home to most favored legislators at below-market rent courtesy of the secretary of state, was virtually empty last night at 9 p.m.

Speaking of swilling, of the alcoholic variety

I noted yesterday Sen. Jeremy Hutchinson's bill SB 151. I wondered about it.

It requires a permit fee of $25,000 — yes, $25,000 — for an APPLICATION to sell wine, spirits or malt liquor. It authorizes a refund of $21,000 for a successful applicant and $23,000 for an unsuccessful applicant. You pay $2,000 just to apply and fail. The current law requires a $2,000 fee and a refund of $1,000 to failed applicants.

It doesn't take a genius to see yet another anti-competitive piece of legislation by another self-professed small government Republican. 

Nathan Chaney, an Arkadelphia lawyer who worked in the effort to open Clark County to alcohol sales, corresponded with Hutchinson about it.

I messaged Jeremy and asked about it. He says it’s to prevent family members, business partners, and friends from stacking the application process. He says it is gaming the system, $25,000 may be too high, and he is considering amendments.

I was the lawyer for Clark County going wet in 2010 and Columbia County in 2014. The Columbia County folks are pretty upset about this bill.

It seems to me that requiring such a large fee will decrease the total number of applicants, thus increasing the chances one of the bigger players gets the permit anyway. Any little guy who would have applied with a low fee, which would have diluted the “family and friends” applications, can’t swing it now. Contrast that with most liquor store owners I know, who wouldn’t have too much trouble raising the funds necessary to apply for new permits for family and friends.

Of course, you need working capital to outfit and stock a new liquor store, but I suspect it’s far easier to get a bank loan WITH a permit rather than FOR a permit.

Gaming the system to help the "haves" and penalizing the "have nots"? It is neither the first nor last example we are likely to see. I noted a Republican call the other day for a reduction in state regulatory boards dominated by the industries that are regulated. Couldn't agree more. He will soon run hard up against the fact of life that these boards weren't created in the public interest but in the interest of the regulated. One side of that equation has lobbyists. One does not.

I do have an additional question for Hutchinson. Does he have any paying legal clients who are in the alcoholic beverage sales business in, say, Saline County, which has just opened the door to a land rush of alcohol permits when it voted wet in November? Saline happens to be part of his district.

Hutchinson worked on at least two pieces of legislation in 2013 that had direct impact on his clients, a furniture store and medical clinic. He also labored hard to beat a tort reform amendment — a particular project of a powerful lawyer, John Goodson, who's hired Hutchinson for unspecified legal duties from time to time. Who better to understand the needs of a member of the public than a lawyer/legislator who works for said member of the public.

UPDATE: Hutchinson left me a phone message that says he has no clients seeking alcohol permits, but said the bill responded to concerns of constituents who are interested in the business. He said amendments are planned.

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