As lawmakers began hearing what would be hours of testimony on Gov. Dannel P. Malloy’s liquor reform package, the governor himself talked about how “ghastly” and “unfair” the current system is to consumers.
For too long, the liquor industry has been a “regulated and protected industry” Malloy said Tuesday morning. He questioned why a bottle of liquor would cost $21.99 in Massachusetts when same bottle costs $29.99 in Connecticut.
“Progress is made by compromise,” Malloy said. And despite his reputation for being rigid about his proposals he said he’s “always willing to compromise for the greater good.”
While Malloy discussed the bill with reporters at an unrelated event, the General Law Committee began an hours-long hearing, which at its height was attended by around 900 people, according to the Capitol Police.
Consumer Protection Commissioner William Rubenstein defended the governor’s liquor reform proposal against claims it will hurt small package store owners at a Tuesday public hearing.
Rubenstein was the first speaker of more than 100 who signed up to testify. He said the state’s liquor sellers will be able to adapt to Malloy’s proposed changes, which includes the sale of alcohol on Sundays.
But small package store owners have said that other provisions, including allowing larger stores to get a bulk discount and eliminating minimum pricing, will make it difficult for them to compete.
On Monday, Malloy compromised on his original proposal to eliminate the minimum pricing requirement all together, revising the bill’s language so that vendors cannot sell more than five items beneath their acquisition price.
But he said insisting on a minimum price makes the product more expensive for consumers.
“It is absolutely outrageous that people expect the citizens of Connecticut to pay that kind of premium. But even more disturbing is that it is driving jobs and sales from our state,” he said.
Rubenstein expressed confidence businesses will succeed under the changes.
“I have faith in our package store owners. They’re good business owners. They know how to compete. They know how to compete with each other,” he said.
Rubenstein said different types of sellers offer different services. For instance, some small stores are successful because they are located in an urban area and within walking distance of residents. Other stores may specialize in offering a broad wine selection, he said.
“Each of these select different ways in which they decide to come to market. They exist competitively side by side. I can go into a large package store in my town and buy for price or I can go into a small wine store and get the service and expertise I want,” he said.
Rubensein said he was happy to learn that Carroll Hughes, head of the Connecticut Package Store Association, dropped his opposition to the Sunday sales aspect of the bill.
He said that neighboring states that have moved to selling on Sundays over the last five years have not seen stores go out of business. The number of stores remains identical to the number before selling on Sunday was legal, he said.
“They have not lost a single permittee in terms of numbers in those states,” he said.
Stan Sorkin, president of the Connecticut Food Association, gave statistics that the number of permits remained level in several states before and after legalizing Sunday sales.
“Someone has to look at the data and realize competition is good for consumers,” he said.
Lawmakers questioned Rubenstein about Malloy’s proposed medallion system for licensing package stores. In order to open apply for a permit, anyone looking to open a package store would have to purchase a medallion from an existing store owner.
Some have expressed concerns that larger stores like Stop & Shop or BJ’s could buy up medallions as smaller stores are put out of business. Rubenstein said the state would try to ensure the medallions are used to actually run liquor stores.
A medallion would revert back to state ownership if a holder of a medallion does not apply for a permit within six months of buying it.
“If you buy a medallion, we want you to come forward promptly and apply for a permit,” he said.
Hughes called the medallion system a mixed bag when he testified before the committee. Because there are towns with fewer liquor stores than are allowed by law, when the system goes into place there will suddenly be a lot of medallions on the market, he said. That means they won’t have much value.
“If I dumped a load of diamonds in this room and dumped truckloads down the Berlin Turnpike . . . Do you think diamonds would have any value?” he asked.
Charles Bowe, owner of Grand Wine & Spirit Shop in Groton, said the medallion system makes him nervous because it could allow another liquor store to be built in the same plaza where his store is located.
One of Hughes’ biggest concerns was Malloy’s plan to allow food stores to open more package stores over time. Currently they can open two liquor stores, but only if they do not sell beer inside the grocery stores. The governor’s bill would eventually allow them to run six.
“It’s not helping me that you’re putting new competitors in business,” he told the committee.
While Malloy said he reduced the maximum number in the name of compromise, he said cap doesn’t make sense.
“Tell me in what other industry that the largest competitor is limited to only being three times as large as the smallest competitor. Tell me what other industry in America where that takes place,” he said.
Others were encouraged by the proposal to allow convenience stores to sell beer. Kevin Curry, manager of Danby’s Service Stations in Meriden, said that change would help small businesses. He said out-of-state customers are always shocked when they learn convenience stores can’t sell beer here.
“I can’t tell you how many times someone would get off the highway from out of state and ask for beer, and we have to tell them we can’t sell beer in Connecticut,” he said.
But more people selling alcohol puts more strain on the government agency charged with overseeing the industry. Lawmakers questioned Rubenstein about how his department would oversee liquor sellers open for additional hours without increasing his staff.
He said his department has gotten increasingly good at what it does.
“We’ve found ways to provide the oversight on a random basis and based on intelligence we have,” he said.
Hughes said he had a hard time believing that, given that the bill likely will lead to an increase in the number of businesses selling alcohol.
“All do respect to Mr. Rubenstein, but he’s putting 2,000 in business maybe more, and he’s telling me he’s going to take care of it with the same amount of oversight as he has now?” he asked.