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January 29. 2013 10:44PM

Foes say plan to hype nano brews is unconstitutional

CONCORD - Legislation to encourage the State Liquor Commission to feature New Hampshire-brewed craft beers in four of its outlets was termed unconstitutional by a lobbyist for wine and liquor distributors.

Robert Blaisdell, representing the New Hampshire Wine and Spirits Brokers Association, said Tuesday that the proposal might not survive a constitutional challenge in light of high court rulings in similar cases.

A bill heard by the House Commerce and Consumer Affairs Committee would legalize the sale of beer at state liquor stores and set up a pilot program to feature New Hampshire craft-brewed beer at the state stores in Hampton and Hooksett.

Blaisdell argued that allowing only beer brewed in the state to be sold at state-owned shops violates the rights of out-of-state manufacturers under the Constitution's commerce clause.

"States cannot treat an in-state interest better than out-of-state interests," Blaisdell said.

He quoted a high court ruling in a case involving wine distribution in Michigan and New York that said "mandating different treatment of in-state and out-of-state economic interests that helps the former and burdens the latter" is unconstitutional.

The justices struck down laws in the two states that let in-state wineries sell directly to consumers by mail while denying the same right to out-of-state firms.

Bill sponsor Robert Cushing, D-Hampton, said the measure was carefully drafted to meet its intended purpose of helping the state's fledgling, but growing, craft beer industry.

"It is narrowly focused to four limited-access highway liquor stores," Cushing said. "We don't want to get it into a place where the New Hampshire Liquor Store monopoly is competing with local stores."

The trade group representing grocers also opposed the measure. New Hampshire Grocers Association President John Dumais said that beer is more of a grocery item than a liquor store item because it is often sold along with other products, unlike liquor, which is traditionally bought at stores that basically sell alcoholic beverages."

Grocers have been the sole seller of beer for the past 80 years, since the end of Prohibition," he said. "They're not just buying beer - there are a lot of associated items in their shopping baskets."

State Liquor Commission Chief of Administration Craig Bulkley said that without spending money on store upgrades, the state agency can't afford to give up more profitable store space to beer, which has profit margins less than half those on liquor.

"If we pull supplies of spirits and wine off the floor and replace them with beer, we would be cutting our profit margin considerably," Bulkley said.

In urging a favorable recommendation on the bill, Cushing said the intent is to focus the craft beer sales at top-selling highway stores that are more likely to attract visitors.

"We'd really be helping to brand the state as a brewing mecca," Cushing said. "We'd establish New Hampshire brands to people who would go home to their home state and who might say 'that's a nice case of beer I picked up in New Hampshire.'"

Nano brewery proposal

The committee also heard testimony on a proposal to allow nano breweries, which produce less than 2,000 barrels of beer per year, to sell samples of more than four ounces on their premises.

Supporters noted that current law allows a nano brewery to sell only four ounces of each beer they sell to a single customer, so a customer can buy 16 ounces of beer in four-ounce shots, but can't buy a pint.

The bill was opposed by Eddie Edwards, head of enforcement for the State Liquor Commission.

"There is a difference between sampling and consuming," Edwards said.

But Alex McCarthy of Earth Eagle Brewing of Portsmouth said there's no other way to introduce people to the limited supply of product from his tiny operation.

"When I'm only open four hours a day on the weekend, to sell a pint to a customer is not a hindrance," McCarthy said. "It will allow us to grow."

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