This one’s been brewing for a while.  Monarch Bev, Indy’s biggest beer distrib, has been trying to get legislature over several sessions to change state law that bars beer distribs from wholesaling liquor as well.  (Wine distribs can sell both, plus beer.)  Legislature hasn’t budged.  So Monarch went to fed ct in Oct.  Suit charges Indy law (only one like it in license states) that bars it from adding liquor license is an “anachronistic classification” going back to post-Prohibition era, is “entirely illegitimate,” has no purpose and violates equal protection rights under US Constitution.   Not surprisingly, wine and spirits distribs assn – representing heavy hitters like Southern Wine, Republic National and Glazer’s – has weighed in to defend law.  And distrib assn that represents AB wholesalers – Indiana Bev Alliance – supports wine/liquor distribs against Monarch, reports Indianapolis Biz Journal.  Why?  Monarch has MillerCoors in 69 of state’s 92 counties, IBA prexy Marc Carmichael told paper, and is statewide for some craft brands. “It’s a zero-sum game for the Legislature to make a change that dramatic because all it would do is shift business from some wholesalers to Monarch.”   Net-net: AB distribs don’t want Monarch getting even bigger/stronger.  Those distribs – 18 of ’em compete vs Monarch in its MC territory – much smaller than Monarch.

Wine/liquor distribs assn argues that Indy law does not violate Monarch’s equal protection rights.  Moreover, the beer/wine/liquor distribs “are not identical in all relevant/material respects” (i.e. beer distribs have franchise protection) and if ban overturned that would violate their equal protection rights.  What does state say?  In its very limited answer to Monarch’s complaint (details likely to follow), state alc bev commission denies Monarch allegations and insists Monarch rights haven’t been violated.  Indy alc bev laws are constitutional, ABC sez, “are rationally related to a legitimate government interest and are not discriminatory or irrational.”  

Monarch begs to differ, of course.  In complaint, Monarch said system goes back to 1935 when law first banned beer wholesalers from carrying liquor.  As it played out, in Monarch’s view, county politicians doled out beer licenses (capped in number) and state politicians doled out liquor licenses.  But “rewarding politicians and their patrons is not a legitimate governmental purpose,” Monarch argues.  What’s more, ban on beer distribs from carrying liquor: 1) does not protect retailers (other laws do that); 2) isn’t aimed at promoting competition, since wine wholesalers can sell liquor and there is “no relevant difference between beer and wine wholesalers”; 3) has “no effect on consumer behavior” or temperance since wholesalers don’t sell to consumers. 

Wine/spirits distribs assn counters that Monarch “actually seeks preferential treatment that would put Monarch in position to dominate the wholesale tier” of the Indy alc bev market, to detriment of its members. Howzzat?  Over last 80 yrs, “entirely different set of ground rules have developed” for beer and liquor/wine distribs, including franchise protection for beer, none for liquor.  Monarch win would create “uneven playing field” since it would be “entitled to compensation if beer brands it presently distributes moved” to a liquor house, while “Monarch would have no reciprocal obligation to compensate” liquor distrib who loses a brand. 

Meanwhile, a trucking co owned by Monarch is also suing the state, arguing that the same ban Monarch is challenging is illegally preventing it from providing transportation and warehousing services to liquor wholesalers.  That violates fed transportation laws, trucking co sez.