2022-03-14 00:00:00 - Joint Committee on Consumer Protection and Professional Licensure

2022-03-14 00:00:00 - Joint Committee on Consumer Protection and Professional Licensure (Part 2 of 2)

SHOW NON-ESSENTIAL DIALOGUE


ROB MELLION - MASS PACKAGE STORES ASSOCIATION - Thank you, Chair Moran, Chair Chan and thank you members of the joint committee of the JCP for the opportunity today and provide information on why there is a 21st century of beverage retail reform. What I hope to do right now is to explain to you what this is, why it's here and what we're trying, the history of it and why it needs to proceed. So as you are well aware, the Mass Package Stores Association represents locally-owned retailers of beer, wine and spirits. Retailers who are based outside of Massachusetts are not part of this association and those retailers based outside of Massachusetts have tended to be large corporate interests, which is why they're not part of our association.

The primary objective of mass packets is to sustain local retailer retail of beer, wine and spirits across the state. One way that we do this is in support of the state's three-tier system, this is a system that is pro-economic, it is pro marketing, it is pro taxation, it is a system that is in support of local retail because it is a system that was created to monitor and regulate local retail. Actually, one reason why we have this ballot question is because of the changes to the retail landscape influenced by large corporate interests seeking to take over the marketplace and that really is what this question is all about.

It is about the survival of main street retail in Massachusetts and304 that is because they're under attack, you know, that they're under attack308 because you have seen the 100 plus bills that have been heard by this very committee and the additional 100 bills that are in other committees that collectively deregulate the retail tier of alcohol beverages in Massachusetts. Who is behind these bills? It's large corporate interests, they've been doing this, not just this legislative session, this has been going on for three consecutive legislative sessions and now they're really going for it good because we have multiple bills doing the same thing on all different issues.

It has been said by some opponents that this ballot initiative is radical or it is discriminatory, it is nothing to the sort. Anyone who understands the 21st amendment357 recognizes that the retail sale of alcohol is something that is controlled within the states and that this ballot initiative is not discriminatory based on the 21st amendment. The dispelled initiative creates an additional 18 licenses for out of state interests who have been seeking unlimited licenses for 20 years as a compromise. When's the last time you heard of an association creating an option for somebody else that gives them what they want, that's what this thing does. At the same time, it reduces the number of all alcohol licenses down to seven instead of nine because we never should have gone to nine in the first place.

This is the only three-tier405 state in the United States that allows up to nine licenses, the other three-tier states, 21 of them only allowed between three and five licenses. We're the outline on the number of high licenses. This ballot initiative additionally bans the self-checkout of alcohol. Any organization that is trying to promote self checkout of alcohol is in a sense promoting illegal sales of alcohol because you need a human being to stop illegal sales and that's what we're saying, we're taking a human being out of the equation. This bill bans self-checkout of alcohol by preventing sales to minors, preventing sales, that could be second party sales, which eventually lead to sales to minors, preventing sales to intoxicated people.

That's what451 self-checkout opens up the453 door to do. This ballot initiative additionally, will make a fine applicable to all459 sales of retail, not just alcohol sales because the face of the landscape of alcohol retail has changed with these large corporate chains that have entered into the marketplace of Massachusetts, which is not the case in many other states, they're too big to be regulated and475 we need to up the fine.

SHOW NON-ESSENTIAL DIALOGUE


MELLION - Just very quickly, Chair Chan.493 It's important for people to understand though, to understand this question, you need to understand the history of this thing very quickly, this is a result of repeated attempts by large corporate504 interests to take over the marketplace. We have seen it for two decades now with ballot initiatives, so again, anybody saying that this is about initiatives are going to lead to more ballot initiatives, that's a false narrative because in 2006 there was a ballot initiative campaign, in 2011, there was an attempt at a ballot initiative that led to a compromise that actually turned out to be ineffective because it was unenforceable.

In 2019, there was a ballot initiative campaign by a couple of farms that was blocked and a couple536 of farms tried to come back again in 2021 with a new ballot initiative campaign that led to the introduction of H 318 heard before this committee, there's another bill H 319 that leads to unlimited licenses in addition to 318. There's also H 414, which creates up to 18 full liquor licenses That were introduced by the...

REP CHAN - Mr. Mellion, I do appreciate you explaining basically the committee's job on our past hearings, I stated at the beginning of this hearing that this committee has heard already similar bills prior to dispel initiative, there's a reason why I said that at570 the beginning of the hearing.

MELLION - I'm saying this also because I know too that the press is listening to this as are hundreds of other people who are listening to this presentation as well and for them, it's the first time that they are hearing.

SHOW NON-ESSENTIAL DIALOGUE


MELLION - In summary, we ask that this ballot question proceeds to the voters and with that, I yield to another person on our panel Ryan Maloney who is president of Mass Pack and also the owner of Julio's liquors in Westbrook.

SHOW NON-ESSENTIAL DIALOGUE


RYAN MALONEY - MASS PACKAGE STORES ASSOCIATION - I'm hoping that there are questions because I would be happy to answer any questions about this ballot initiative and does it spell any misnomers of what it is trying to do and what it is the intention to do and what it actually does. So I have no problem with that. You know, as Rob said, this is preserved the mainstream and to be quite frank with you any Massachusetts Association, not in favour of this ballot initiative is not in support of local retail. Local retail is enforceable, and local retail is connected to the community. What we're having here is Tina, me, we're operating within a system for a regulated substance and not to take that seriously is a grave injustice, not only to public safety but to what everybody else in this industry already does.

We are the gatekeepers of a regulated product and I think we're losing track of that. We've been able to work in very finite and very tough regulatory issues that we need to adhere to, to operate our businesses. And we found a way to do that. Now, we're having people stepping in and saying, we don't want to adhere to any of that, we would like to do it our way because we can make more money that way and that's really what's driving this, to say that we need to, we need to compromise, we need to do all the stuff that. As Mr. Mellion said, this is probably one of the only ballot initiatives you'll ever get.

That is not entirely self-serving because we have asked and we've looked inside ourselves and said, what can we compromise on, which is why there's 18 beer and wine licenses, seven of which, by the way, everybody's grandfather that has more, so far no one does but to do that, you start getting into more than this and you start getting into the point where people, especially on the retail level can now control the marketplace. So I welcome any questions that the committee has on this and I'll be happy to answer them because there's been a772 lot of false information that's all of a sudden being thrown out there.

SHOW NON-ESSENTIAL DIALOGUE


TINA MASSENA - WINE CONNECTION - My name is Tina Massena, I am the owner and operator of wine connection in the North Handover, Massachusetts and I'm here today to also bring my support to this bill. You know, someone who's been in this business since I'm the third generation, we're looking to do this The fourth generation. I'm literally on the main street and, I've noticed over the last five years that things are becoming more and more difficult to try to run a business and what I see is large corporations coming in and trying to make changes to be able to take us out and that has been very distressing.

I mean, while I've welcomed it, I have been able to manage through it and at the same time we've thrived through it and especially Covid, which has really brought a lot of these issues to the table where I would tell you that858 we were one of859 the first to do curbside pick up in this area and we didn't have a website, we managed, we serve the public. But the thing that really I think I get into this and I start looking at is when I think I see things like self-checkout, I shake my head for someone who's been in this business all my life and had to deal personally with people that have issues with indulgence, that there is no way a machine would ever be able to talk that person through, stop that transaction from happening and you know, having to deal with the police, they're very emotional situations.

I see these things and I say to myself, I know that these904 guys talk about this as poison pills, but I have to tell you when they go in and they start changing the field in their favour to the small businesses, I call this death blows because that's exactly what they're out. I have to now live under their changing rules when we've been doing a great job all925 these years and I too927 would welcome any questions, I'm here to answer, I've been in this business a long time, I've seen a lot of things and I've survived a lot of this.

SHOW NON-ESSENTIAL DIALOGUE




SEN MORAN - Mr. Chair, I have just a quick question to the entire panel, what is the argument for folks who might appreciate the one-stop shopping of the sort of large box store type of974 situation, especially in the time we have here with moving to more efficiencies with transportation and all of that. What is the best argument there, please?

MELLION - Moran, the answer to that argument is that they already have it. Proponents try to make it like this is local retail, trying to block others from their business, that's not the case. Everybody in Massachusetts is allowed up to nine licenses1018 right now, what this ballot initiative is going to do is it's going to allow food stores to get up to 18 beer and wine licenses, doubling the number of licenses that they currently have across the state. So they already have I,t now they're going to be able to double it as a result of passing this ballot initiative. This ballot initiative is just about fair play, that's it. You're allowed up to eight, you're allowed up to nine licenses, we're going to go down to seven, but grandfather none and allow up to 18 licenses across the state minus liquor licenses. That is far more than what any other three-tier state in the United States offers.

MALONEY - Can I just talk on that point for a second. You don't1068 have to carry alcohol, alcohol is a luxury. So you have all these places that want to have one. Stop shopping. I don't have a problem with that. I don't think anybody has a problem with that. If they want to have a license, they're more than willing to have one. But you need to take that regulated substance seriously and under what we have right now, if God forbid something that1091 I do, I shut down 95% of my businesses alcohol because I am the alcohol business. I was designed my license was designed after prohibition to be the only retailer that would be set up to sell alcohol, other people have now come into this space, which I don't once again, I don't have a problem with, but now you have to take it as seriously as I do.

If there is something that happens there, why shouldn't the entire entity of the store be held accountable? We had a committee meeting not too long ago when they talked about tobacco and1132 the convenience store representative basically said, no, it should only apply to cigarettes. Well, how are you if it only represents a small portion of your business and you're only going to get find a very small portion of that and you1147 can operate on your own?1148 Is the penalty really going to change your behaviour? I don't think so, but if you say it does everything as it does with alcohol stores now, then you're going to take that process seriously because your livelihood is on the line just as it is with mine every day. So I think that one-stop should be a convenience factor, but it should not1175 be safely removed.

SHOW NON-ESSENTIAL DIALOGUE


REP LEBOEUF - So to the panel, just out of curiosity. So in my district I have a supermarket that has a liquor section. I know it's a different license1201 and they have different hours and different things. How would this ballot question affect establishments that have that particular arrangement?

MELLION - So first off, they have a section 15 liquor license, just like any other store has section 15. So for that retail operation, if they're part of a chain, their chain would be able to have up to because there are food stores to be able to have up to 18 locations across the state instead of just nine. I think that this thing will do.

MALONEY - If it actually is a separate entity operating inside the store, then there would be under the same regulations that we are now. Does that make sense?

LEBOUEF - I think it does, thank you so much for the clarification.

SHOW NON-ESSENTIAL DIALOGUE




CHAN - I got a brief question given the new census, county Massachusetts and liquor licenses for both retail and on-premise restaurant establishments to get like licenses for alcohol, obviously some communities have received new licenses under the quota system this fall. I suppose the question is how much dynamic change will there be regarding more retail stores as a result of it? Or you know, obviously, there's evaluation associated with the licenses and of course, we're still living in this weird covid world that obviously there's another dynamic right there.

MALONEY - Can I just say that when I think that there's going to be more licenses available because of a population, but a lot of people don't understand is basically if we look at historically, what the consumption of alcohol is in Massachusetts, the pie has not really changed that much so there is a sort of a finite pie of who drinks in Massachusetts. So, what eventually happens is everything sort of evens out since is just dividing the pie into more and more pieces. So now who can survive, right? In my town of Westboro, there are five licenses within a five-mile of radius, actually, it's more than that, there's seven. We're always looking at one person going out of business every time a new place opens, we look at one person going out of business.

Why? Because1347 this town can only support or sells only so much1351 alcohol and not everybody will survive that process. So there will be more licenses sort of out there under the quota system but you have to be very careful because, in only one given area, that's why it's been tied traditionally1365 to the population so that everybody has a shot at a survival rate.

CHAN - So I get it. Basically, one of the major arguments regarding this is regarding market share, not necessarily just market share of individual stores, but the availability of customers in the whole understand some of you guys have border state stores but I mean, in general speaking, you know, there's only so many people who go around in any size community life from. So the economics of will have to iron itself out over time.

MELLION - So what we have seen, particularly in the last1403 couple of legislators has been the growth in the number of licenses in the state and this legislation, we have got about 57 home rule petitions in addition to the population changes that are increasing licenses as well, but we've seen the outcome of this when we transferred from 5-9 licenses in that time, what we have seen is in 2019, we saw 216 license transfer, local stores transferring out their licenses, large1435 corporations taking those licenses. In 2020, we saw that number decrease to 206, but still over 200. In 2021 we saw again almost 200 licenses transfer. This year, we're just in March and we've already seen 30 license transfers this year alone.

What we are witnessing is over 1000 licenses that are transferred out. Those are small businesses that are giving up their licenses and it's the large corporate interest like go pasta, the targets, the BJ's, the Walmarts, they're the ones getting these licenses, they're the ones who are1478 getting them and as a result, what we're seeing across the state, it is literally a transformation of what is retail for alcoholic beverages. We're becoming a chain store1490 state as a result of these increases and licenses that are going on.

MALONEY - Can I take a little bit over that, since we're becoming a chain store, these bigger corporations don't like the way the rules are made up and now they want to change them to better fit their business models. So hence you're having almost 200 different changes coming1527 down the pike in front of you in the committee here to change how things are done to bring efficiency and hence market share to the licenses that are already being gobbled up.

CHAN - I see where you're going with that. I mean, the difference of economics between the package store versus so-called one-stop shopping is very different and the increased number of licences will create a stress on the existing businesses there but ultimately, at the end of the day, it's whether or not, you know, people can, you know, withstand and survive the consumer demand that's out there to begin with.

MALONEY - But Mr. Chairman were also making sure that they're basically adhering to the same regulations that have actually worked here in Massachusetts to keep safety and regulated product in control.

SHOW NON-ESSENTIAL DIALOGUE




RYAN KEARNEY - MASS RETAILERS ASSOCIATION - HB 4377 - Chairman Chan, Chairman Moran and members of the committee, thank you for the opportunity to testify today. I would like to be1610 recorded in opposition to House 4377. While we support marketplace reforms, expanding alcohol licensing caps, there are significant concerns with this imbalance and discriminatory proposal. Specifically, the provisions introducing the current all alcohol beverage license cap from 9 to 71630 and the provision seeking to apply the current fine in lieu of suspension calculation to all retail sales. On the alcohol caps, It was a decade ago that this legislature made the decision to increase the single entity cap 29 to allow for increased market competition and consumer choice.

This multi-year process of incremental increases finally hit, its kind of apex in 2020 which got us up to the nine licenses. This proposal1654 represents a direct conflict with that legislative decision uh and the reduction to seven would represent a regression law taking the market back here. So 2016 to be specific when that all licensed scalp was at seven. Regarding the fines, we consider this to be overreach and a blatant attempt to stifle competition for licenses from businesses offering a wide array of products beyond alcohol such as gas, groceries and other essential products. The current law ensures fairness and equal treatment across all similarly situated license holders as penalties either.

And just to take a step back to clear their the licensing authority can issue a suspension and they cannot issue a fine. What we're talking about here is a fine in lieu of that suspension. So you've been suspended, you're potentially been fined and now you're buying yourself out of that suspension. Under the current law, all similarly situated individual individuals would have to pay that fine based on their alcohol sales and their alcohol sales own. That creates is a nexus to the product is regulated and it also basically breaks down to a per-unit cost, that's equal across all license holders to now switch the approach to apply to all retail sales. It provides no nexus and it would create a bifurcated penalty system for treating similarly situated licenses differently.1733

This is unjustly punitive in our opinion, and it's only towards some set of license holders who will see disability, higher fines. And for many, it's going to get to the point where they will not have the fine in lieu of suspension as a viable option because it would just be too costly for them compared to what they would be able to make in selling alcohol during those two suspension days. This isn't just about large retailers, a1756 small bodega on Main Street That has 50% alcohol and 50% retail goods is going to have their fine doubles immediately. If this thing were to go into place if they wanted to get out from underneath that suspension and again, for other similarly situated licenses, they're not going to have this opportunity to just be, it would be too costly.

In closing, I'd like to indicate to the committee that there's clearly an interest in expanding caps here. Unfortunately, we consider this to be a punitive approach, uh a punitive approach and therefore, you know, are opposed to it. We do believe that somewhere in between, there is a reasonable middle ground that should at least be explored but we do understand that the nature1793 of this as a ballot initiative may not lead to such negotiations, but we would implore the committee to take an unfavourable action on this particular piece of legislation. And with that, I would be happy to answer any questions the committee might have.

SHOW NON-ESSENTIAL DIALOGUE


CHAN - So let's talk about the penalty mechanism for one moment. That is an issue that's coming before the committee multiple times regarding equal treatment. Now, we do understand that the package stores are predominantly alcohol sales1829 of light anyway, have a minority of other products. Conversely, the argument from supermarkets in the past week supermarkets only because it's still the last group to do a valid question. And the argument is that because of consumer convenience and that they should still be only penalized only regarding alcohol sales, even though it's a minority of their product as1855 a result, the pain associated with the suspension is different.

So, back to another analogy, This restaurants, if you've got a bar that is predominantly bar and it's still 90% alcohol sales, but you got a restaurant which is 75% food sales, you know, but we can't shut down that hole restaurant under suspension, you know, why can't we do that in a retail level as well that we do restaurants and bars?

KERNEY - So in the restaurant situation, typically what we've seen is that they will shut down for the suspense for suspension. They can viably if they wanted to open up the restaurant and continue to serve food, but they're a restaurant and people are expecting that they're going to get alcohol services with that. And so it's more by default that they choose the suspension rather than the finer liue. In fact, they could payout that they want to pay it out on the alcohol piece, if they to apply it to a non um alcohol purchase doesn't seem to make sense to us. If that's the regulated item, if also, if all similarly situated license holders are treated in the same manner and under the same standards, I1917 don't see why a1918 restauranteur should have to pay a higher per alcohol sale fine than in alcohol steel, a pure package short seller would have to do, it doesn't seem to be, it1928 doesn't seem to be a correlation between the, I guess the punishment fits the crime.

CHAN - The public example I used was bars versus restaurants which the bar in this case for the package and the retail store would be the restaurant. That's the analogy I'm using for people who kind of1946 figuring out what I'm getting at here. You know, the logic, of course, is that if the package story is also close, even though as a minority sale of non-alcohol products, there is an adverse effect in the store despite the values majority alcohol. Conversely, if you're a retail store, you know, just shutting down the alcohol component, you know, it doesn't adversely affect the remaining store sales, which is a disparity of equality between the two entities, even if a retail store that it was up to 20% food sales far from any real supermarket or convenience store level.

I mean, you know, they could lose they lose that 20 % sale as well. So, I mean, you talk about equitable penalties despite the scaling of what percentage of sales of alcohol or other product. I mean, equitable penalties imply equal treatment and total impact for the business.

KEARNEY - Yeah, so I guess my pushback to that Mr. Chairman would again be these fines um for if you take the to similarly situated licensees, those fines are2020 going to be baked into the price of their alcohol sales and I don't know, it's not clear to us why a restauranteur who is trying to, to also take the risk of selling food or a gas station who takes the risk of selling gasoline should somehow have to pay more to2037 get themselves out from2038 under a suspension, then, uh, an alcohol seller, that's a package store that does2043 not take the risk and, and, and, and off of those other lines, that's their choice to become an alcohol package store only. I feel like it's bad policy for us to penalize folks who2052 go out and expand the footprint of their business and, just so also happen to sell alcohol.

CHAN - The suggestion of making is really a level of risk. As you just pointed out, if you assume the risk of a controlled substance as part of your business, you assume the risk to the entire business.

KERANEY - Understood.

2069 CHAN2069 - I mean, we're already days of bath bombs that can be in stores and those are really drugs, convenience stores assumed the risk that was selling basically Narcotic, we banned bath bombs like seven years ago. So obviously if the story continues to try to sell those products, you've got a real problem coming to you for obvious reasons. So again, I mean, you're talking about equity issues. I mean, we, this community is very interesting equity issues, putting aside the sort of issue and Mr.2097 Mellion's concerns regarding all these home repetitions, which it's a whole different conversation folk. You know, we are obviously interested in how these arguments are being presented and that's what we're doing here today.

SHOW NON-ESSENTIAL DIALOGUE


EDWARD COOPER - TOTAL WINE - Yes, Mr. Chairman and Madam Chair, thank you for the opportunity. I think a lot has been said already,2135 I think that our position is that we would like to expand the number of caps and would stand with the folks at the Retail Association of Massachusetts on that but I think that this is not the right way to go about it. So with that, thank you for your time and attention.
SHOW NON-ESSENTIAL DIALOGUE

© InstaTrac 2025