OKLAHOMA CITY — An Oklahoma Supreme Court referee heard oral arguments Thursday in a challenge to a law that will alter the state’s alcohol distribution system.
The Institute for Responsible Alcohol Policy and others filed suit against the law created by Senate Bill 608, which will require alcohol manufacturers to make their top 25 brands available to all wholesalers in the state.
The Alcoholic Beverage Laws Enforcement Commission, which recently adopted rules to implement the law, which becomes effective Aug. 29, and Gov. Kevin Stitt, who signed the bill, are named as defendants.
The suit alleges that the recently passed measure runs counter to a state question voters approved to modernize the state’s alcohol laws. State Question 792 provided that a manufacturer may sell to any wholesaler, but it did not require it, according to the legal challenge.
That measure amended the Oklahoma Constitution. It is mainly known for allowing grocery and convenience stores to sell strong beer and wine.
Manufacturers provide spirits to wholesalers, who in turn provide the products to package or liquor stores, convenience stores, grocery stores, restaurants and bars.
Robert McCampbell, arguing for the petitioners, said a constitutional amendment passed by voters trumps a bill passed by the Legislature. He said the Legislature does not have the discretion to adopt a different distribution system.
The defendants are asking the court to nullify some of the provisions approved by voters, McCampbell said.
SB 608 forces manufacturers to sell to every wholesaler in the state, even those who are the least efficient, McCampbell said. That would mean manufacturers could not be in charge of quality control measures.
“This is a simple case,” he said.
Mithun Mansinghani, solicitor general for Oklahoma Attorney General Mike Hunter, said the Oklahoma Constitution is skeptical of consolidated corporate power and strongly disfavors restraints on trade.
The Oklahoma Legislature has the right to pass laws governing alcohol distribution, Mansinghani contended.
Two main distributors have divided up the market and are not competing, he said.
Bryan Hendershot of Tulsa and Boardwalk Distribution Co. were allowed to intervene in the case. Hendershot was a big supporter of Senate Bill 608. He owns Boardwalk Distribution, the state’s third-largest alcohol wholesaler.
Thomas Wolfe, an attorney representing Boardwalk and Hendershot, said SB 608 only tweaks the existing law and that the Legislature has the ability to correct anti-competitiveness. He said the petitioners have the exclusive right to the top 99 brands sold in Oklahoma.
State Question 792 did not tell voters that it granted manufacturers special rights or that the Legislature had no right to intervene, he said.
Less supply and higher prices are good only for the petitioners, not for the public, Wolfe said.
Kyle Rogers, an Oklahoma Supreme Court referee, is expected to issue a report to the court.
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