SQ 780 SQ 781
SQ 780 and 781 are a two-pronged approach to criminal justice reform. First, SQ 780 reclassifies certain low-level offenses, like drug possession and property offenses under $1,000, as misdemeanors instead of felonies. Reclassifying these offenses triggers savings from reduced prison populations, decreased costs, and avoided increases in corrections spending.
Second, SQ 781 returns those savings to local governments to invest in rehabilitative programming tailored to the needs of their communities. Addressing the root causes of crime through mental health care, substance abuse treatment, and education and job training programs has a proven track record of increasing public safety more cost-effectively than locking people up for low-level offenses.
But to get into even more detail, the current law mandates that out-of-state distributors sell to all Oklahoma wholesalers at the same price and without discrimination. It also requires that these distributors sell to Oklahoma wholesalers at the lowest price that they sell the same product to any adjoining state. Current law also allows any Oklahoman who has been here for at least 10 years and has no felonies to open up a wholesaler and compete. As a result, we currently have 7 different wine and spirits wholesalers in Oklahoma and even more beer wholesalers. And they all fight for my business and the business of almost 700 other retail package stores constantly. I then fight for the business of every consumer in and around Moore as do the other 9 liquor stores in my city as well as those in Norman and nearly every other town in Oklahoma with at least 2,000 people in it. You know, capitalism
An important aside…there is currently two really big distribution companies in America: Republic National Distributing Company & Southern/Glazers. They represent families of products that include almost all of the most popular brands. My best estimate is that they represent about 85% of the wines and spirits sold in Oklahoma.
What SQ 792 does is change the word “shall” to “may” when addressing how distributors sell their products to Oklahoma wholesalers. The statute (SB 383) that passes with SQ 792 also removes the mandate that distributors must sell to wholesalers at the lowest price that they sell in adjoining states. So now distributors can contract with wholesalers to make them the sole provider or their family of products. It’s conceivable, and would be perfectly legal, for every single distributor to contract with ONE wholesaler in Oklahoma if they so desired; giving that ONE wholesaler complete and total price control over every drop of alcohol in our state. Realistically, the two big national distributors will each contract with separate wholesalers for their family of products thus creating a system where two wholesalers, selling products unique to themselves, can set price, selection and service at their leisure while representing 85% or more of the wine and spirits sold in Oklahoma.
But it is even more insidious than that! Because SQ 792 inexplicably (there’s actually an explanation but I would probably be found dead if I speculated) allows these out-of-state distributors to purchase up to 50% of the in-state wholesaler who thy have already contracted with to be the sole representative of their family of products. So, in essence, SQ 792 allows out-of-state distributors a monopoly at the distributor/wholesale level for the huge family of products they represent.
This means that instead of wholesalers competing for the business of retailers in price, selection and service, retailers are now at the mercy of wholesalers in all three areas because we would only be able to buy all of the most popular products from just one guy. This lack of competition at the distributor/wholesale tier inevitably trickles down to the consumer. So instead of me paying $17 for a 750ml of Jack Daniels (at a current markup of 6% at wholesale tier thanks to competition) then marking it up to about $20 to sell to the public, I have to buy it at whatever price the ONLY guy selling it sets (e.g., $20) and then sell it to the public for $24. In other words, if retailers have to pay more, consumers have to pay even more than that more since retailers need to maintain their margins to pay employees and keep the lights on.
My opponents will tell you that this “franchise” system is the same in other states and they don’t suffer from inflated prices but that’s not true. There are other states with a franchise system that have similar prices to what we currently have in Oklahoma but those states have laws that help protect the price at retail in other ways and/or they are in markets where the volume is so huge that distributors and retailers are willing and able to offer deep discounts. Oklahoma is not a huge alcohol market. Implementing a franchise system here along with protections for existing wholesalers and enabling out-of-state control adds up to increased prices for all of us.
I appreciate you asking and hope that I have provided enough info. If not, I am happy to delve into it further.