Documents have been filtering in to our inbox over the last few days, and we’ve been doing some research of our own, into the controversial decision Wednesday by the Illinois Liquor Control Commission to allow Anheuser-Busch to retain a minority ownership interest in an Illinois distributor.
Anheuser-Busch, through the wholly owned subsidiary Wholesaler Equity Development Corporation, has been holding a 30-percent stake in City Beverage since 2005. A new law, passed last year, called that ownership into question leading to a year-long debate that culminated in the six member commission dismissing a citation handed down by its own legal counsel in a 4-2 vote.
So why did the Commission vote to allow AB to retain its interest in City Beverage? For one – according to the Commissions Final Order, obtained by GuysDrinkingBeer and posted in its entirety below, commissioners voting in the affirmative didn’t find enough guidance in the Illinois Liquor Control Act (LCA) to determine if the amount of control Anheuser-Busch had in the day-to-day operations of City Beverage was a violation of the LCA.
It was revealed, during a hearing on October 1st and in prior documents, that A-B had what amounts to majority control of both big picture and daily happenings at the four City Beverage wholesalers. That control included the appointment of City Beverage board members and approval of managers as well as partial, if not full control, over the buying or selling of distribution rights, territories and brands for all City Beverage locations.
Commissioners also noted that while the LCA is clear on who can hold an ownership interest in a winery or distillery there is no clear-cut language regarding Non Resident Dealers (what Anheuser-Busch is) or brewers.
Distributor groups argued that the “Craft Brewer Act,” signed into law last summer addressed the ownership issue. And – in floor debate – bill sponsor State Representative Frank Mautino (D-Spring Valley), whose family owns a distributor, did say the legislation would prevent a brewer from owning a distributor. But those words were not explicitly included in the bill.
“While the Commission believes that upon passing the Craft Brewer Law the legislature may have intended to prohibit a brewer from owning a distributor, the Commission concludes that the actual language used in the Illinois Liquor Control Act and Craft Brewer Law is not sufficiently clear to warrant the conclusion that WEDCO’s [Wholesaler Equity Development Corporation's] 30% ownership interest in the City Beverage entities is unlawful,” the order states.
Commissioners concluded the Order by encouraging the Illinois General Assembly to address the above issue(s).
And Then There Were Two
The two “no” votes on the Commission issued a written opinion of their own.
The document, obtained by GuysDrinkingBeer and also posted below, states that Commissioners Amy Kurson and Bill Morris did believe the legislative intent of the “Craft Brewer Act” even though the LCA was not amended to explicitly exclude a brewer from owning a distributor.
The two took it a step further noting an absence of the language from the LCA is reason enough to prohibit the ownership interest. “Because there is no provision in the Liquor Control Act which allows the ownership interest at issue in this case, that ownership interest is prohibited under the Liquor Control Act,” the one page document states.
Coming Full Circle
In early May of this year, we reported on some interesting happenings amid suspicious timing at the Commission. As debate over this issue was ramping up, Governor Pat Quinn abruptly made an appointment to the Commission and re-appointed two other members.
Donald O’Connell and James Pandolfi were re-appointed to six-year terms and Cynthia Cronin Cahill was appointed to a post that had been vacant for months.
This came shortly after we learned Anheuser-Busch had stepped up its efforts to “improve its image” within the statehouse. At the time, A-B had over a dozen high-profile lobbyists from 10 firms working in Springfield, without any significant beverage industry legislation on the docket.
We then tried to connect the dots, what with the suspect timing of the re-appointments and the new appointment to the Commission and A-B’s increased lobbying efforts and concluded the article by saying:
If something does happen tomorrow regarding WEDCO and City Beverage attention should be immediately turned to the commission’s vote on the issue, if that is made public, and how Ms. Cahill, Mr. O’Connell, Mr. Pandolfi and Chairman Steve Schnorf voted.
Their votes may very well clearly connect these dots.
Six months later one could argue the dots have been connected. The “yes” votes on Wednesday came from Commissioner’s Cahill, O’Connell, Pandolfi and Chairman Schnorf.
And Now There Are Seven
One day after the Commission issued its ruling on the City Beverage case another vacant position was filled on the Liquor Control Commission.
Governor Quinn named Maria Saldana to fulfill a six-year term.
Saldana has served on the Illinois Tollway Authority Board, was president of the Chicago Park District Board and has served on the Metropolitan Planning Council, the Chicago Metropolis 2020 Executive Council, Scholarship Chicago and the Resurrection Project.
She also worked as an associate at the Chicago law firm Skadden Arps.
Skadden Arps is the firm that argued the City Beverage case on behalf of Anheuser-Busch before the Illinois Liquor Control Commission.