Here’s how the Illinois legislature’s proposed alcohol delivery bill is about to hurt small retailers, bars, restaurants and consumers in favor of special interests

Caleb Whitmer’s recent National Review article assessing the nonsensical and anti-consumer state of alcohol regulation poignantly concluded that:

“Government and business interests have animated the corpses of rotting temperance laws, ironically employing them to prop up some of the forces that the Prohibition movement was intent on knocking down. As a result, consumers pay more for alcohol, have access to less variety, and are more limited in where they can purchase it than they otherwise would be. Reasonable restrictions on alcohol are, of course, appropriate, but — at the risk of sounding pollyannaish — ideally lawmakers would craft those restrictions with reference to a common good greater than replenishing state coffers or protecting local liquor stores’ bottom lines.”

Rather than set about the interesting and voter-friendly task of coming up with a new and fair alcohol regulatory scheme, Illinois’s legislators are plowing ahead to help special interests restrict the rights of small business alcohol retailers such as bar, restaurant, and packaged goods stores and consumers with SB0054, a bill that would impact and (perhaps without really accomplishing it) regulate certain retailers’ rights to deliver alcohol to consumers.

The bill addressing home delivery (and curbside and other delivery) of alcohol in Illinois has already passed the state Senate and his currently pending in the House.

In its current and amended form, it:

• Establishes that entities licensed as “1A retailers” (more on this below) can make deliveries of alcoholic beverages but limits that right to 30 miles of their location in, or bordering, Cook county and for retailers outside those counties, to within 50 miles of their location.
• Establishes that online, telephone, third-party software, will be treated as sales by the retailer if made from the inventory of a licensed retailer (thanks Drizly).
• Allows a local liquor control authority to prohibit delivery by those retailers located within its borders, but oddly, and likely unconstitutionally, prohibits that same authority from keeping other retailers outside the borders of the authority’s jurisdiction from delivering to its residents.
• Specifically implies citizens of any municipality in Illinois have the right to receive deliveries from these “1A retailers”.
• Specifies that these “1A retailers” can make deliveries by curbside pickup, owner/officer/employee delivery, third party-contractor.
• Specifies that someone delivering alcohol under this statute needs to verify 21+ and not deliver to someone visibly intoxicated (Aside: where on earth did “visibly” come from? 235 ILCS 5/6-16 prohibits sales to “intoxicated persons” and the entirety of the Liquor Control Act makes no reference to “visibly” – just “intoxicated.” What’s with the change in standard for “delivery”? – Bills that aren’t consistent with the rest of an Act demonstrate the deplorable lack of research, time, skill, intelligence and effort of the drafter and create later issues for interpretation and enforcement).
• Specifies that deliveries must be made within the State of Illinois (not sure what this accomplishes or what the drafters thought or hoped it would accomplish as it creates a real constitutional problem – see below).
• Specifies that a delivery service cannot warehouse or maintain an inventory of alcoholic liquor. (Why keep wholesalers from getting in on the alcohol home delivery stream of revenue?)
• Has a carve-out from the 30/50 mile restrictions for in-state locally licensed internet only based liquor licensees who had licenses before the bill is passed.
• Invokes Article VII, Section 6, subsection (i) of the Illinois Constitution to declare this law a restriction on home rule powers to regulate delivery of alcoholic beverages to consumers in Illinois.

What’s wrong with all that you ask, dear reader…

Well, for starters – Illinois does not need an alcohol delivery bill as deliveries are already allowed and not restricted for any retailers except, perhaps, by local municipal ordinance.

The Illinois Liquor Control Act has explicitly granted the privilege of delivery to retailers for many years under 235 ILCS 5/5-1(d)

(d) A retailer’s license shall allow the licensee to sell and offer for sale at retail, only in the premises specified in the license, alcoholic liquor for use or consumption, but not for resale in any form. Nothing in this amendatory Act of the 95th General Assembly shall deny, limit, remove, or restrict the ability of a holder of a retailer’s license to transfer, deliver, or ship alcoholic liquor to the purchaser for use or consumption subject to any applicable local law or ordinance. Any retail license issued to a manufacturer shall only permit the manufacturer to sell beer at retail on the premises actually occupied by the manufacturer. For the purpose of further describing the type of business conducted at a retail licensed premises, a retailer’s licensee may be designated by the State Commission as (i) an on premise consumption retailer, (ii) an off premise sale retailer, or (iii) a combined on premise consumption and off premise sale retailer. Notwithstanding any other provision of this subsection (d), a retail licensee may sell alcoholic liquors to a special event retailer licensee for resale to the extent permitted under subsection (e).

That’s right – currently, a retailer can deliver throughout the state with no restriction unless a local municipality has imposed one for its territory. There’s no implementing regulation for this right – which is how this “delivery” issue should be dealt with (*cough* the Illinois Liquor Control Commission should propose a regulation *cough*) – just like every other statute – agencies provide regulation for interpretation.

This entire bill is a restriction on the right to deliver not a grant of a right to deliver, with the exception of the elimination of the right of a local liquor authority to regulate delivery. (Which, itself was already a ripe issue for a constitutional challenge as well as a challenge to the authority of local liquor license authorities as there were already open questions as to whether they could restrict deliveries from outside their borders either because they lacked that authority under the Illinois Liquor Control Act; they lacked the right to infringe on lawful commerce when the parties agreed that the “sale” took place on the premises of the out-of-town retailer; or they lacked the authority to impact a third-party delivery arrangement where a consumer paid for delivery and, in essence, delivered it to themselves (that last one still isn’t addressed here, btw. – e.g. What about the contractual relationship where the parties agree, pursuant to the UCC and through contract, that the seller is simply passing the alcohol to the hired deliverer contracted by the “consumer” and not the retailer?).)

So, how are Illinois’s bars, restaurants, small liquor stores and liquor consumers getting hurt and what’s left unanswered?

Let’s start:

• Bars, restaurants, and liquor stores that don’t have large state-wide presences through multiple outlets are now restricted in their ability to deliver to customers – big chains and distributors win because of these location restrictions.
• Consumers are prohibited from getting a specialty item that may be in Chicago or Bellville, but not in Rock Island as a Bellville or Chicago store can’t deliver to Rock Island. (NOTE: the term “Ship” is still allowed by 235 ILCS 5/5-1(d), and is not addressed by this statute, so arguments that a shipping service or shipment through third-party carrier occurred rather than a delivery might be a good defense and argument here. Also, if not intentionally left out, this failure to include “shipping” creates a loophole to this bill large enough to drive a “delivery” (oops! I mean “shipping” truck through) both for retailers and consumers. Yes, language matters, so if the bill really was meant to create a distinction and not address the act of shipping, then you’ve got to be shipping me that it has any purpose at all.)
• As we pointed out above, tying this entire bill and definition to something called a “1A retailer” is a GIANT MISTAKE MADE FROM LACK OF CAREFUL CONSIDERATION AND THOUGHT. The 1A retailer designation is not a statutory definition, it is not a regulatory definition, it is NOTHING and has no meaning. It is simply a number assigned in a non-statutory and completely arbitrary and discretionary manner by the Illinois Liquor Control Commission to a type of license. It can be changed on a whim and for no reason whatsoever or done away with or altered to reference some other form of license. “Retailer” is the term utilized by the Liquor Control Act, and as I pointed out above, the statute actually makes reference to three different kinds of “retail” licenses that the ILCC has the power to issue – on premise, off premise and combined (see 235 ILCS 5/5-1(d)). Those terms are what should be used here, not “1A retailer.”
• What about brewpubs? Under Illinois law and an initial clarification from the Illinois Liquor Control Commission, they are retailers granted the limited right to manufacture. As retailers, shouldn’t they be allowed to deliver? (unless of course we’re all hanging our hat on this “shipping” thing – in which case, forget I mentioned this).
• Is the restriction on territory meant to impact the current Lebamoff case where the 7th Circuit found issue with Illinois’s practice of letting in-state retailers ship around the state but not letting out-of-state retailers get licenses to ship to Illinois residents? If so, did no one notice that Lebamoff addressed shipping, and even noted that “local deliveries are different in kind from state-wide deliveries through a carrier.” e.g. SHIPPING. “the former delivery scheme is logically tied to an in-state presence (how else would the deliveries be accomplished locally?), while the latter form of delivery makes an in-state presence unnecessary.” See page 17 of the slip opinion.
• Seriously, was any thought given to the Lebamoff/Granholm/Byrd issues? The restriction to retailers delivering only in Illinois – keeping Illinois retailers from delivering into other states – not only exceeds the licensing authority of the State under the 21st Amendment, it is also a commerce clause violation – why is section (d)(3) even a part of this proposed bill?

I believe the point is made and hopefully this sparks some discussion as to why this bill is necessary or what on earth its purpose is.

If shipping is allowed state-wide, but deliveries are not, what’s the point?

Also, if deliveries mean shipping, then this bill is poorly crafted and seeks restriction through ambiguity and will not accomplish it as different terms are used in 235 ILCS 5/5-1(d). And the shipping term is recognized and utilized in 235 ILCS 5/6-29 for winery shippers, showing that where shipping is meant, shipping is used, and not delivery.

Additionally, the constitutional issues should be addressed.

The bill would limit the rights of consumers and small businesses to obtain alcohol that came into the state and has even gone through the three-tier system. Those businesses (usually in places with major populations like Chicago) with access to the limited quantities of rare product should be allowed to deliver it to Illinois consumers and consumers around the state should have the benefit of getting rare or limited alcohol beverages even though they don’t live in those places.