After public hearing, alcohol overhaul passes Assembly

Ever since the repeal of Prohibition, Wisconsin has been staring down into an empty glass when it comes to reforming the state’s 1930s three-tiered alcohol laws, but, with a sweeping reform measure passing the Assembly recently, the glass right now is at least half full.

Depending on what happens in the Senate, it could overflow — or drain dry again.

The massive bill, which is co-authored by Rep. Rob Swearingen (R-Rhinelander), makes at least 23 changes to current laws, including the creation of a Division of Alcohol Beverages within the Department of Revenue (DOR) with alcohol regulatory and enforcement functions. 

It also establishes a no-sale event venue permit authorizing property owners to rent or lease real property for use as an event venue at which beer and wine are consumed on no more than six days per year and one day per month.

The bill was fast-tracked through the Assembly. It was introduced by legislative leaders, Assembly speaker Robin Vos (R-Rochester) and Sen. Devin LeMahieu (R-Oostburg), on June 8, received a June 13 public hearing, and was passed by the Assembly 90-4 on June 21 and sent to the Senate.

Large industry players and associations in the hospitality and alcohol industry are on board — that might explain its fast-tracked status — but that’s not the case for agricultural tourism facilities such as wedding barns and similar event venues, whose owners say the new law as it stands would eviscerate their industry and put many of them out of business.

However, in testimony at the June 13 public hearing, Swearingen said the bill had been in the making for over a decade and the final result represented a widespread consensus within Wisconsin's alcohol industry. 

“It represents a crucial step in modernizing our state’s alcohol regulations to meet the evolving needs and preferences of Wisconsinites while promoting responsible consumption,” Swearingen testified. “[The bill] offers us a unique opportunity to foster a more competitive and consumer-friendly marketplace. By leveling the playing field between distillers, breweries, and wineries, we can create a robust alcohol industry that encourages innovation and healthy competition among these sectors.”

In particular, Swearingen said, the proposed creation of a division of alcohol beverages within the DOR would greatly enhance the enforcement of alcohol laws and regulations by ensuring that businesses operate in compliance with established guidelines.

Another benefit of the bill, Swearingen said, would be a suite of streamlined processes, one example being the statewide utilization of a bartender’s license, which would be referred to as an operator’s permit. Obtaining the permit at the state level rather than at the municipal level would allow bartenders to work anywhere in the state with the permit.

“By reducing bureaucratic burdens and simplifying procedures, we can create a more efficient path for individuals pursuing careers in the alcohol service industry,” he said.

Swearingen said the bill also prioritizes public safety by including a provision to increase the DUI surcharge for the Safe Ride program by $25. 

“This demonstrates our commitment to responsible alcohol consumption and resident safety,” he said. “Allocating additional funds to the Safe Ride program will enhance transportation options for those who have consumed alcohol and reduce the risk of drunk driving incidents.”

Among other changes, the bill allows breweries, wineries, and distilleries to engage in retail sales of its own products on the production premises and, depending upon specified production thresholds, to also establish from one to three full-service retail outlets away from the production premises at which full-service retail sales may be made with a permit.

The bill would also expand the hours of operation for breweries, wineries, and distilleries with retail outlets to match those of bars and restaurants with Class B alcohol licenses. 

Closing the wedding barn door

Not everyone was happy with the bill, especially the owners and operators of agricultural tourism facilities such as wedding barns and similar event venues.

Under the legislation, those operators would be required to have a no-sale event venue permit, which would authorize the renter or lessee of the event venue to either obtain temporary Class B liquor licenses to sell wine and beer at an event; or bring their own beer and wine and serve it to guests without charge; or allow the guests of the renter or lessee to bring beer and wine onto the event venue to be consumed by the guests without charge; or allow the renter or lessee to contract with a licensed caterer for the caterer to provide beer and wine to the renter or lessee and guests without charge.

One big sticking point is that event venues operating under “no sale event venue” permits would be allowed to offer alcohol no more than six days per year and one day per month.

At the public hearing and in emails to lawmakers, event venue owners said the regulatory scheme was burdensome and would force the closure of many businesses. Rebecca Mumm, who has been an event venue owner in Polk County for seven years, said she was very concerned about limiting the events to no more than six days per year, at one a month.

“This is a very limiting to our types of spaces,” Mumm wrote in a June 13 email to lawmakers. “I would like to propose no more than 20 days per year and no restrictions on months.”

Mumm said she was not sure what the meaning of the restrictions were or the benefits of having them.

“Having 20 events will still be a limitation for most of our spaces but gives options for revenue gained [versus] six which you could never financially support your business with all the expenses behind insurance, supplies, waste management, staffing, etc.,” she wrote. “… This may cause businesses to close, and in some of our very rural areas we bring financial gain to our townships with people traveling through for these types of events, buying gas, hotel stays, meal and alcohol purchases at other establishments. I know our small town establishments gain this when our events close around 11:30 p.m and then they can still participate in their spaces until 2 a.m.”

In another June 13 email, Sara Haase, the owner of Croix-View Farm in western Wisconsin, said she had been operating under current law since 2016 without any issues. 

“The newly proposed Consumption on Premises permit is something that we are not only against but completely squashes our business model and most models like ours,” Haase wrote. 

Haase disputed the grand consensus touted by lawmakers.

“It is said that ‘all parties’ agreed,” she wrote. “I’m unsure which parties we are discussing because none of us (ag event venues/members of [Wisconsin Agricultural Tourism Association]) to my knowledge were asked to the table.”

Haase said limiting the group to six events a year when some are doing 100 or better would not only put them out of business but also kill the local economy. 

“Think of the other business and tax dollars these businesses are bringing into the community,” she wrote. “Hotels, restaurants, bars, caterers, hair stylists, DJs, etc. All of which pay sales and income tax to the state. So now you are also reducing the revenue the state itself is getting. That number is for lack of a better word, laughable.”

Haase wondered if lawmakers planned to limit the days a tavern could be open.

“And we sure made sure to list tailgating as an exception,” she wrote. “Mustn’t mess with Packer/Brewer/Badger games.”

Haase said the new law would infringe on event venue owners’ economic liberty.

“The economic impact it would have far outreaches just the venues itself,” she wrote. “It would strike the state right in the pocket book. The folks that should have been ‘brought to the table’ clearly weren’t. Or the committee was able to find venues only doing six events a year, which I don’t even know how that’s possible. Please remove the ridiculous language and perhaps ask a business that this truly affects to the table.”

Preserving a lifeline

Hayden Thomas Nagy, the owner with his wife Madison of Homestead Meadows Farm of Appleton, said his business was honored last year by being designated an “Agricultural Tourism Destination Legacy” for helping establish the now popular business model of Agriculture-themed Event Venues (AEVs).

“Since 1981, Homestead Meadows has hosted more than six thousand groups,” Nagy testified. “Events such as farm tours, summer day camps, hayrides and sleigh rides, conservation events and business and social gatherings of all types—including just short of 1,700 weddings. We have also helped establish Greenville’s Greenbelt Preservation District and Agricultural Enterprise Area. Thousands of our events involve enjoyment of alcoholic beverages by guests. All such events are private and are conducted in compliance with every existing state law regarding the purchase and serving of alcoholic beverages.”

Nagy said there are now several hundred AEVs involving private events hosted on private farms, and not involving the sale and serving of alcohol by the venue owners. 

“In many cases the additional income has become a lifeline for struggling farm families,” he testified. “But you cannot operate a business on six events per year.”

Nagy said the bill crushes a business model that has become popular nationwide through the natural process of evolution of business models.

“Pardon me for reminding you of the obvious, that it is your job to pass laws that encourage competition and build Wisconsin’s robust economy,” he testified. “Your job is not to make laws that give advantage to powerful lobbies like members of the Tavern League of Wisconsin.”

As he read the bill, Nagy said he kept trying to give the benefit of the doubt that agri-tourism-based event venues were overlooked, not targeted. 

“But the more I read, the more it felt like our successful business model was being looked at as a competition, and so a law is trying to be passed that takes out the competition, us, so that their enterprises, the Tavern League, can have more business,” he testified. “It is without a doubt a conflict of interest for the former president of the Tavern League to suggest that agri-tourism event venues, AEV, be cornered into acquiring a liquor license, which still could be turned down by the local ordinance or be restricted to six events per year, which would ultimately put us out of business.”

The business models do not need to change, Nagy testified; the bill does.

Another concern over the legislation came from Peter Barca, the secretary of the Department of Revenue. While Barca said the bill would provide for a long-overdue rewrite of the law and create a new division to oversee the regulation and enforcement of alcoholic beverage laws, he also said the money allocated for those duties was not enough.

“The $2.5 million appropriated in the bill does not adequately fund the division,” Barca said. “The four new permits and two new monthly reports in the bill is more work than can be accomplished by the 20 staff proposed in the bill while maintaining the same level of service. Significant resources are also needed to administer contract production agreements, off-site retail outlets, and new reports from fulfillment houses and common carriers.”

Thankfully, Barca said, the bill is estimated to generate $3.7 million in program revenue, which would be enough to fund a new 25-position alcohol division. 

“Based on experience and workloads, 25 positions are the minimum number DOR needs to set the division on a successful path,” he testified. “The alcohol industry deserves to have the funds they generate provide service and protection for them. These funds should not continue to lapse into the general fund, as the industry already pays many other general fund taxes.”

Barca said it bore repeating that all the program revenue generated by the proposed permit fees on the alcohol industry should be used to provide quality customer service to the permittees.

“DOR does not want the alcohol industry to have to wait months for alcohol beverage permits because the division does not have adequate staff to process permits,” he testified.