Did a misinformation campaign kill this year’s liquor licensing cleanup compromise?

Author: Jared Wright - March 8, 2017 - Updated: March 9, 2017

A bartender pours a brew. An legislative effort in the Colorado Legislature to clean up a historic liquor licensing compromise bill passed in 2016 died a dramatic and surprise death in the state Senate Monday, and many lobbyists who were the original architects of last year's compromise are crying foul, saying there was a subversive misinformation campaign being run by a fellow lobbyist. (Bruce Ely /The Oregonian via AP, File)
As a bartender somewhere surely was pouring a brew, a legislative effort in the Colorado Legislature to clean up a historic liquor licensing compromise bill passed in 2016 died a dramatic and surprise death in the state Senate Monday. Meanwhile, many lobbyists who were the original architects of last year’s compromise are crying foul, saying there was a subversive misinformation campaign being run by a fellow lobbyist. (Bruce Ely /The Oregonian via AP, File)

A legislative effort to clean up last year’s hard-fought and widely bipartisan liquor licensing reform compromise died a surprise and dramatic death in the state Senate Monday. According to proponents, Senate Bill 143’s demise by a narrow 18-17 vote was almost entirely due to misleading information, flat-out lies and a convolution of the process by a “mystery” group of clients and their lobbyist, Jason Hopfer — claims he says are patently false.

This year’s bill was not designed to be contentious, according to its sponsors and advocates. It was aimed only to clean up a few oversights in last year’s last-minute Senate Bill 16-197, which was passed to allow grocery stores like Kroger, Safeway, Walmart and Target to sell full strength alcohol by obtaining liquor licenses over a phased-in 20-year period. The move headed off as many as five initiatives that were headed to the November 2016 ballot, where many believe the well-funded big box stores would have taken it all and left little for the smaller liquor businesses to survive.

The SB 197 compromise last year was considered by most to be a major success considering how late in the 2016 session it was passed. It received sweeping, bipartisan support in both chambers, passing the Senate on a 31-4 vote and the House 57-7. The bill was then signed into law by Gov. John Hickenlooper in June 2016.

But the compromise bill’s success wasn’t total perfection; the last-minute legislation wasn’t without its oversights. So a similar group of stakeholders to last year’s coalition set out to fix those mistakes. That’s where this year’s SB 143 comes in.

According to members of that coalition, one item that was overlooked in last year’s bill was a regulation that controls the minimum age to work as a tavern server. Under prior Colorado law, an 18-year-old working as a waitress or waiter in a restaurant with an attached bar or in a sports bar could serve alcoholic beverages made at the bar to customers seated at tables in the restaurant. That law was mistakenly stricken during last year’s rewriting of the liquor code, potentially putting thousands of jobs held by youth at risk. SB 143 sought to correct the situation by putting the exemption language back in.

Calling this year’ cleanup bill a vital piece of legislation to complete 2016’s historic liquor legislation, Micki Hackenberger, a lobbyist representing the Wine and Spirit Wholesalers of Colorado and one of the original architects of the 2016 compromise, told The Colorado Statesman after SB 143’s death in the Senate that the intent of last year’s bill was certainly not to put 18-year-olds out of work.

“Liquor enforcement hadn’t promulgated their rules yet on that, and they said we need to fix this, because obviously they knew that wasn’t the intent to fire every 18-year-old working in a bar or in a restaurant,” said Hackenberger. “So we’re not quite sure what’s going to happen to all those people in college towns working right now as servers,” she added.

Another issue Hackenberger said must be fixed deals with Electronic Benefit Transfer, or EBT, card holders such as Medicaid patients. Current law does not allow EBT cards to be used at liquor-licensed establishments. If grocery stores with pharmacies — like Kroger, for example — were to become liquor-licensed grocery stores, customers would not be able to use their EBT cards to shop in those stores under current law. Hackenberger said a statutory fix is needed to make sure those Medicaid patients and other EBT card customers are not negatively affected by last year’s law rewrite.

The major roadblock to those fixes that seemed to come out of nowhere, Hackenberger says, was a misinformation campaign that descended into a chaotic Senate floor re-debate over last year’s bill rather than the actual legislation being offered up this year. “The general misinformation was about whether Walmart was involved last year or whether they weren’t,” she said. “Obviously we wouldn’t have had a liquor bill last year if Walmart wasn’t involved. They’re the ones that pulled the funding from the ballot issue and came to the negotiating table. But there were so many important things in the bill that people aren’t even addressing, primarily the age of tavern servers.”

The Colorado Statesman investigated these claims of a subversive misinformation aimed at derailing SB 143 by reaching out to a number of stakeholders involved in this year’s bill, legislation that proponents like Hackenberger say was designed for one and only one purpose, to fix the glitches in last year’s SB 197.

The ‘lies’

You lie! No, it wasn’t exactly a repeat of South Carolina U.S. Rep. Joe Wilson’s State of the Union admonishment of Barack Obama — different circumstances, different time, different place. But the age-old charge of dishonesty and misleading hearts and minds in politics was leveled in the Colorado General Assembly throughout SB 143’s rough and tumble path to its death in the Senate, and Hopfer and his “mystery” clients seem to be taking the brunt of the blame.

Bill proponents claim Hopfer took advantage of the emotionally charged nature of alcohol bills to sow discord on the measure — which should have otherwise been noncontroversial — on behalf of his client’s “isolated interests.”

Some senators cited concerns that SB 143 was a bill seeking to expand licensing to Walmart stores, something they said they had heard was not included in the original legislation.

“You know this is an example of people’s failure to even understand the debate,” Hackenberger says. “The debate that happened on the bill was more or less a rehash of last year’s liquor bill and whether that was good or bad, it wasn’t really about 143, other than they kept saying, ‘and now we’re going to let Walmart in.’ Well, Walmart was already in. They were part of the discussion last year.”

But was Walmart really already “in?”

The Statesman reached out to Wal-Mart Stores Inc.’s public affairs representative Josh Phair who said the retail giant was not only in, but was one of a handful of key players to originally come to the table in the 2016 negotiating process.

“We were the only grocer for a while that thought the compromise was the right way to go,” said Phair, “so for us to negotiate a bill that benefited our competitors but not us, that just doesn’t pass the laugh test.”

Phair acknowledged there was a clarifying amendment passed in the Senate Business, Labor and Technology Committee Feb. 13, could have been one source of legislators’ confusion on SB 143. That amendment corrected a technical mistake in last year’s SB 197. The original language mistakenly created an unintended problem for stores like Walmart and Target.

That problem, according to state regulators, essentially locked Walmart and Target stores out of the process of obtaining new liquor licenses — mistakenly so — even though they were two of the major interested parties who helped negotiate the deal to drop the November ballot initiative in the first place.

“I think nobody can believe that a company the size of Walmart or a company the size of Target could make a mistake as to [SB 197’s] application or their ability to avail themselves to the opportunity of 197, said Collon Kennedy, Walmart’s lobbyist at the Capitol. “So, low and behold, the liquor enforcement division states that we don’t have the qualifying license to be able to obtain the additional benefits of 197.”

But Phair contended the majority of the confusion came out of a misinformation campaign.

“There were definitely several mistruths that were highlighted during the debate,” Phair said. “One is that there was never an intention for Walmart to be included in the license expansion portion of the bill. That is not true. Everybody at the negotiating table — I was there — everybody at the negotiating table intended for Walmart and Target to participate in the slow, gradual expansion of licenses over the next 20 years. That was always the intention. So anybody that says that we were just supposed to get beer is not telling the truth or doesn’t know what they’re talking about. So that’s one myth that was pushed both in the chamber and outside during conversations. And so that’s obviously something we need to get cleared up.”

Kennedy agreed. “The reality is, the level of purposeful confusion and in this instance lies, can make a complicated issue very difficult,” said Kennedy. “With a strategy of creating chaos, even if there’s not an ounce of veracity to it, it can be very successful, and it showed that.”

Kennedy laid the blame for the “purposeful confusion” and “lies” at Hopfer’s feet, an oddity, Kennedy said, given that Hopfer was a supporter of SB 197 in 2016.

“Jason [Hopfer] previously represented 7-Eleven in previous amalgamations of the liquor issue in previous sessions. I think Jason parted ways with 7-Eleven after the passage of 197, for why I can’t answer that.”

Hopfer said his firm, JLH Consulting and Public Affairs, was approached last year by “multiple liquor stores,” including Applejack Wine and Spirits in Wheat Ridge, CJ’s Liquor in Longmont and Molly’s Spirits in Lakeside to assure that there is a “level playing field,” something they contend they do not have under the 2016 compromise.

But Applejack Wine and Spirits isn’t just any liquor store, it is a mega-store — one of the largest liquor stores in the United States. Led by CEO and President Jim Shpall, the company was cited in 2005 as “the largest volume single beverage alcohol store in the U.S.”

Hopfer says he simply helped lawmakers in the Senate understand what SB 143 would accomplish or fail to accomplish and then let senators make their own decisions.

“The basic gist is, I educated members to what the bill actually did,” Hopfer told The Statesman, though he said he didn’t care to walk back through the whole process.

Responding to the claims leveled by Hackenberger, Phair and others, Hopfer added, “I’m not really interested in litigating their claims. The fact is they tried to run a bill that they claimed was a consensus bill without really telling legislators what was in it. We informed legislators what was in the bill. My clients were opposed to that. It’s just more sour grapes from folks who are not adequately representing the liquor industry. If they were, our clients would not come to us.”

But last year’s process, of which Hopfer was part of, was unique — and far less dramatic. In the final hours of the 2016 legislative session, an effort led by former Sen. Pat Steadman, D-Denver, and Reps. Dan Nordberg, R-Colorado Springs, and Angela Williams, D-Denver, spurred lawmakers to come together to pass sweeping reform to the state’s liquor licensing code. Senate Bill 16-197 upended the state’s post-Prohibition regulatory scheme and opened the door to “big-box” grocers like Kroger, Safeway, Walmart and Target to carry alcoholic beverages on their shelves through allowing them to acquire licenses over a slow, phased-in approach. The legislative move was aimed to head off a coalition of those same big-box businesses from placing a well-funded all-or-nothing initiative on the Nov. 2016 ballot, a campaign spearheaded by organization Your Choice Colorado.

Hopfer, at the time, was representing his client, 7-Eleven Convenience Stores — in support of SB 197.

Jeanne McEvoy, the executive director of the Colorado Licensed Beverage Association says she represents the large majority of small liquor stores in Colorado while Hopfer’s clients — members of “an LLC, not an association” — are a select few, large stores. “They’re not a bona fide association, McEvoy said. “If they were they would be a 501(c)(4) or (6). I guess they don’t want the IRS responsibility of being an association.”

McEvoy continued, “Jason is not very forthcoming with who his members are, but if you want to see my list of 1,320 liquor stores who belong to my association, I’d be glad to share it with you.”

What’s more, she said, “Applejack is the Disneyland of alcohol, for adults! The grocery stores are at least going to minimize their stock; they have to sell everything else. They’re not going to stop selling Coca Cola and replace it with beer. It would take Walmart 10 years or more to make the kind of money that Applejack does. Applejack’s mission is to dominate the market, and they can do that if they get a whole bunch of stores. Liquor stores that I counted on have decided that their bottom lines are more important than what happens to little mom and pop liquor stores in the state, but let’s not talk about SB 199, that’s their baby, not mine.”

Hopfer’s organization is supporting Senate Bill 199, sponsored by Sens. Andy Kerr, D-Lakewood and Tim Neville, R-Littleton, which would grant locally owned liquor stores the ability to amass as many licenses as liquor-licensed drugstores — the classification that major grocery chains fall in — as opposed to a smaller number of licenses they can acquire under current law reflecting last year’s compromise legislation.

This, McEvoy says, would be disastrous to her thousand plus small member stores across the state.

But Hopfer says it’s simply a matter of fairness. “We’re supporting Sen. Neville’s bill to bring parity to the number of licenses that liquor stores can have with Safeway and King Soopers,” Hopfer told The Statesman. “Our members are concerned with their ability to compete when they can only get four licenses over 20 years when Kings Soopers or Safeway will have 20, potentially.”

On the other side of the glass from the lobby, while SB 143 failed to make it out of the Senate and over to the House where state Rep. Dan Nordberg, R-Colorado Springs, was the sponsor, he told The Statesman he has a message he wants to deliver to his Senate colleagues on their failure to see the importance of the legislation.

“With all the confusion from the lobby, I fear my colleagues forgot why we passed compromise legislation last session … to avoid multiple ballot measures, which would upend our liquor code and place small mom and pop liquor stores out of business,” said Nordberg, a sponsor of both last year’s SB 197 and this year’s legislation. “SB 143 was the continuation of that process and its failure to pass the Senate marks a major step backwards. I’m hopeful that once the dust settles, we can get back to work on finding an agreeable solution.”

Stakeholders on both sides of the issue are now reformulating their plans, but they make one thing clear, they all want legislators to hear the truth about what the future holds for licensed liquor retail stores — and for young college kids trying to work in sports bars in Colorado right now — it’s a big question mark, and that’s got to change.

“Until Jason Hopfer steps up and tells the truth about who’s in his organization, who he’s representing and what they want and why they killed our bill,” said McEvoy, “it’s going to be difficult for the majority of liquor stores in Colorado to have a clear future.”

Jared Wright

Jared Wright

Jared Wright runs the business side of Colorado Politics, including circulation, advertising and marketing. He started as CEO and Publisher of the Statesman in 2015 and served as editor-in-chief for the journal during part of that time. He has worked in politics at both the state and federal levels, serving on a U.S. Congressman’s staff and working in government affairs in the private sector. Wright was elected to the Colorado House of Representatives in 2012 and served as member of Colorado’s 69th General Assembly from 2013-2014. He is also a writer, photographer and cartoonist.