States Go After Soda and Beer Sales

Author: Heidi Hjerpe Date: July 01, 2014

As the debate continues over New York’s soda ban, Florida attempts to regulate craft beer sales.

UPDATE: Soda Ban Defeated.

New York City’s “soda ban” hasn’t gone flat. But its shelf life may be nearing an end.

In March 2013, a state Supreme Court judge ruled New York’s legislation limiting the size of certain sugary drinks—also known as the “soda ban”—was unlawful. Just four months later, the State Supreme Court's appellate division affirmed the decision.

The small victories are cause for cautious optimism. As the case continues to make its way to the Court of Appeals in Albany, NFIB has joined other industry groups in filing another amicus brief asking New York’s highest court to uphold the ruling. 

In its brief, NFIB asserts that consumers should be able to exercise their personal freedom to choose the products they consume. In turn, small business owners should be able to make an honest living by providing consumers with the products and services they want. The soda ban, which the New York City Board of Health asserts constitutes anti-obesity legislation, effectively negates these freedoms with little chance of achieving The Board’s purported objective.

“The ban is an irrational response to the problem of obesity. Banning 16-ounce sodas will not solve the problem of obesity,” says Karen Harned, executive director of NFIB’s Small Business Legal Center. “The legislation succeeds only in taking decisions out of the hands of consumers and causing undue hardship on small business.”

Soda Ban Puts Business Owners at a Disadvantage

Indeed, if upheld, the arbitrary nature of the soda ban would raise troubling issues for small business owners, ultimately putting them at a severe competitive disadvantage. For example, the ban inexplicably covers only some food service enterprises—such as street carts, restaurants and movie theaters—while excluding others such as supermarkets, certain bodegas, pharmacies and gas stations. This means that while a food cart is barred from selling a 20-ounce soft drink, a convenience store on the same block is not.

“Government should not be allowed put these kinds of restrictions on a legal product. This level of intrusion is an affront to small business owners,” Harned says.

In addition, the effects of the soda ban could be ubiquitous. “Other states are watching New York. If this ban is successful there, similar bans will come up in other areas,” Harned says. Other cities considering this type of ban include Philadelphia, Washington, D.C., Los Angeles, and Cambridge, Massachusetts. The Court of Appeals in Albany, New York, heard oral arguments on the soda ban in the city’s appeal on June 4.

Florida Fights to Regulate Craft Beer Sales

This kind of portion restriction legislation could be on the rise. Florida, home to a burgeoning microbrewing industry, is looking to restrict the sale of growlers, an industry standard for craft brewers nationwide.

It all started when craft brewers tried to close a loophole that prohibited them from selling 64-ounce growlers directly to customers as they were able to do with 32-ounce and gallon-size containers.

Jen Gratz, owner of Fort Myers Brewing Company in Fort Myers, Florida, says that 47 states sell and fill 64-ounce growlers, so customers often come to her store with empty bottles and assume the brewery can fill them. “We’ve had some customers from out of state actually get angry at us for not filling the 64-ounce bottle. They simply don’t believe that this nonsensical regulation exists.”

Efforts to close this loophole backfired. Lawmakers backed by the Florida Beer Wholesalers Association attempted to pass legislation in the state senate that would require craft brewers producing more than 2,000 kegs per year to sell their canned and bottled products through the state’s established system of beer distributors. Since a large number of microbrewers meet the 2,000-keg standard, nearly the entire industry would be put at a disadvantage.

The final version of the legislation that passed in the state senate would legalize 64-ounce growlers and allow craft brewers to sell bottles and cans on their premises, limiting sales to no more than 20 percent of a brewery’s production. Breweries with fewer than 2,000 kegs would face no restrictions. While this is more favorable than the previous iteration, it still hinders the success of small breweries in the state.  

“Proposals like this give small and independent craft breweries no incentive to grow their businesses,” NFIB/Florida Legislative Director Tim Nungesser says. “NFIB defeated the most damaging portions of these anti-small business and anti-competition efforts during legislative session this year, but there’s little doubt that the fight will continue in 2015.”

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