NEWS

By Michael Bologna

March 2 — Illinois's liquor and restaurant industries are calling on state lawmakers to halt a purportedly “punitive” enforcement program by the state's Liquor Control Commission (LCC) that imposes fines in cases where restaurants, bars and liquor retailers benefit from social media advertising provided by liquor distributors and manufacturers.

The industry is calling for action on a bill (H.B. 3237) that would amend the so-called “value clause” of the Illinois Liquor Control Act of 1934. The proposed law would overrule the LCC's current restrictions on certain types of social media advertising promoting beer, wine and spirits. Illinois could become the first state in the country to address the issue.

“Our liquor laws do not reflect a robust social media world,” state Rep. Sara Feigenholtz (D), who sponsored the measure, told Bloomberg BNA Feb. 27.

Feigenholtz said the bill would also end a punitive enforcement scheme targeting the hospitality industry. Under current law, she said the LCC can “randomly” assesses fines against restaurants and bars described in social media messages by beer, wine and spirts companies. Liquor distributors and manufacturers can also be fined under the law.

The proposed law modifies provisions of the control act that seek to prohibit liquor distributors and manufacturers from giving anything of value to retail liquor licensees. The bill would add language specifying that distributors and manufacturers may furnish free social media advertising to liquor licensees if the social media advertisement doesn't contain the retail price of any alcoholic liquor.

Liquor Control Opinion 

Bob Myers, president of the Associated Beer Distributors of Illinois, said the legislation responds to a 2013 opinion and memorandum by the LCC that addressed emerging patterns of liquor promotion and advertising over social media networks including Facebook, Twitter and YouTube. The opinion found some social media messages constitute “free advertising,” something of value under the control act.

Myers said this perspective has caused the LCC to monitor social media channels and assess penalties for certain types of messages benefitting a specific retailer.

By way of example, Myers pointed to violations in which a craft brewer touts events over social media featuring its products at a specific bar or restaurant. Similarly, violations might ensue when a beverage distributor tweets about a wine-tasting event at a specific retailer.

“We don't necessarily deem this to be something of value because the tweet or the post is actually free,” Myers told Bloomberg BNA March 2. “This would eliminate the unnecessary citations that my members and the craft brewers and others are receiving from the Liquor Control Commission,” which he said generally start at $500 each.

Myers said the issue is gaining attention with liquor authorities and beer, wine and spirits companies across the country. The National Conference of State Liquor Administrators discussed the issue of social media advertising at its 2014 annual meeting. Myers noted, however, that Illinois could be the first state to address the issue through legislation.

Commission Has No Official Position 

Terry Horstman, a spokesman for the LCC, said the agency hasn't taken a position on the bill. He said the commission will examine it as it gains momentum in the Illinois General Assembly this spring.

Horstman, however, disputed the notion that the LCC had developed a random or punitive enforcement scheme around social media advertising.

Horstman said the commission does monitor social media. Violations revealed through this process, however, generally involve the state's “happy hour” laws, which prohibit certain types of liquor promotions by licensees.

“The Liquor Control Commission does look at social media plugs and we do issue violations when we see them,” Horstman said. “The things that constitute violations generally go off of the happy hour laws.”

To contact the reporter on this story: Michael Bologna in Chicago at mbologna@bna.com

To contact the editor responsible for this story: Michael O. Loatman at mloatman@bna.com