The Illinois Liquor Control Commission today, in a landmark decision, voted 4-2 to allow Anheuser-Busch to maintain a minority ownership interest in Illinois distributor City Beverage.
The seemingly controversial vote goes against a citation issued by the Commission’s own legal counsel claiming A-B and its wholly owned subsidiary, Wholesaler Equity Development Corporation (WEDCO), violated the Illinois Liquor Control Act.
The legal division argued that WEDCO’s 30-percent stake in City Beverage violated the Act because the “Craft Brewer Act” – which was signed into law in 2011 – prohibits a brewer from owning a distributor.
But the Commission disagreed.
We’ll provide further comment and any corresponding documents when they are made available.
An attorney for Anheuser-Busch did say, during the October 1st hearing before the Commission, that they would NOT seek to increase their stake in City Beverage if the Commission allowed them to retain their 30-percent interest.
Despite that assurance we feel confident in saying this decision by the Commission closes out this chapter of the City Beverage saga but certainly not the book.
Insiders have been telling us for months that this issue, regardless of what is decided today, is destined for a courtroom. And, frankly, we wouldn’t be surprised to see A-B’s army of lobbyists make some quiet noise in Springfield during the legislative session this spring either.
In the meantime, grab a beer, sit back and stay tuned.
A statement from Gary Rutledge, Vice President and General Counsel North America for A-B, just landed in our inbox.
We are pleased the ILCC has upheld the law and its longstanding practice of allowing Anheuser-Busch to own an interest in a licensed distributor. A-B has made significant long-term business investments in Illinois based on the law, which is reflected in today’s decision.
A-B is a welcome neighbor who invests in communities in which we do business through our involvement in local organizations and charities and our efforts to promote alcohol responsibility, while providing good-paying jobs.
GuysDrinkingBeer has obtained a portion of the ILCC’s order regarding City Beverage. In it, the Commission challenges the Illinois General Assembly to address the issue of brewers owning distributors.
C. In addition, however, the Commission respectfully requests that the Illinois General Assembly consider the issue of whether to amend the Illinois Liquor Control Act to clearly redefine the historic three-tier system of alcohol regulation in Illinois as it applies to allowable ownership interests so as to prevent cross-ownership among tiers; and
D. The Commission Respectfully requests that the Illinois General Assembly consider the issue of whether at amend Section 6-4(a) of the Liquor Control Act to include Non-Resident Dealers and Brewers to the list of entities prohibited from holding more than 5% ownership interests in a distributor and importing distributor such that all entities in the first tier are treated similarly with regard to allowable ownership interests in distributors.
The Commission also noted that it made its decision based on A-B’s assertion that it would not seek to increase its ownership interest in City Beverage or seek an ownership interest in another Illinois distributor.
Today’s ruling is subject to judicial review.
Below is a statement from the Illinois Liquor Control Commission on their decision:
Liquor Commission Statement on AB/City Beverage LicensureCHICAGO – In a ruling released today, the Illinois Liquor Control Commission upheld the longstanding 3-tier system of licensing and regulating the liquor industry in Illinois. At the same time, the Commission recognized a lack of clarity in the Illinois Liquor Control Act as to whether cross-tier ownership restrictions on wineries and distillers in the law also apply to brewers.In refusing the revoke the licenses of our distributors owned by City Beverage Illinois, LLC, the Commission noted the lack of clarity in the Act addressing City Beverage’s specific situation. City Beverage LLC is partially (30% interest) owned by Wholesaler Equity Development Corporation, which is, in turn, owned by the same holding company that owns Anheuser- Busch LLC, the St. Louis brewer.Under the Illinois Liquor Control Act of 1934, as amended, wineries and distillers are specifically prohibited from owning, either directly or through affiliates, more than a 5% interest in distributors, but that prohibition is not applied to brewers.This matter has been in dispute in Illinois for more than 2 ½ years. Acting Liquor Commission Chairman Steve Schnorf said, “I have no illusions that today’s ruling will permanently end this disagreement among various members of the Illinois liquor industry. However, the Commission is very comfortable that it has correctly applied the law as it currently stands to this matter.”