SC House advances legislation regulating spiked desserts despite industry concerns | News

COLUMBIA — The S.C. House of Representatives gave initial approval to regulations on the sale and distribution of alcohol-spiked food products, despite concerns the sudden change could put entrepreneurs in the burgeoning sector at risk of going out of business.

The House voted 66-35 to advance the bill March 30, leaving only a perfunctory third vote in the House before the bill advances to the Senate.

If passed, it would remove a loophole in state law that has allowed the proliferation of alcohol-infused desserts, like popsicles and ice cream, being sold in convenience stores and by mobile vendors. To date, South Carolina law has allowed alcohol to be used as an ingredient in food products, allowing it to avoid the level of oversight for products like beer, wine or spirits despite containing similar alcohol contents. 

Rep. Micah Caskey, R-West Columbia, told colleagues the bill was drafted at the behest of law enforcement and the S.C. Department of Revenue, which claimed the loophole created a legal gray area where they could not collect taxes or prosecute the sale of the products to minors. He said the bill was not to put sellers out of businesses, but to raise an important question about their businesses. 

“Am I in the business of selling popsicles? Or am I in the business of selling alcohol?” he asked on the floor.

Restricting business

The vote was not cleanly split on party lines, however.

Opponents of the bill included a coalition of Democrats and conservative Republicans like Rep. Stewart Jones, R-Laurens, and R.J. May, R-Lexington, who have typically taken more libertarian, pro-business policy positions. 

The bill’s critics claimed the legislation attempted to outlaw a disruptive industry that had created competition for establishments like bars and saloons, with some citing lawmakers’ past opposition to ride-sharing apps like Uber and Lyft in the mid-2010s and laws that allowed the growth of independent wine and beer manufacturers.

Others argued that the State Law Enforcement Division’s support for the bill was disingenuous, and that the state’s liquor laws were already more than sufficient to regulate the sale of alcohol-infused desserts to minors.

“Is SLED illiterate? Or simply refusing to do their jobs?” Rep. Todd Rutherford, D-Columbia, asked on the House floor during debate on the bill.

Rep. Cezar McKnight, D-Kingstree, called the bill antithetical to the American dream and said it was an effort by the government to stifle innovation spurred by “jealous” interests looking to take out their competition. 

“We need to remember this is the country that rewards the people that build the better mousetrap,” McKnight said.

“It’s not fair. It’s not right. It’s un-American,” he added. 

Wholesale manufacturers of alcoholic-infused desserts have also opposed the bill, saying that it drastically alters the way their products can be sold. Such a dramatic change in demand, they have argued, would have a significant impact on their bottom lines should grocery stores or convenience stores be banned from selling their products.

“If there are issues about how it’s sold in a retail environment, we’re willing to codify what we’re currently doing,” said Bob Coble, the former Columbia mayor and lobbyist for alcoholic ice cream manufacturer PROOF.  

A longstanding debate

The discussion over alcoholic desserts has reinvigorated a longstanding debate about the integrity of South Carolina’s three-tier system of wholesalers and distributors, as well as the persistent conflicts between brick-and-mortar businesses and mobile vendors in tourist-heavy population centers like Charleston and Myrtle Beach. 

Woody Norris, owner of the Charleston-based mobile vendor Booze Pops, has compared the current debate around his business to the opposition that emerged from large alcohol industry groups in the mid-2010s amid an overhaul of the state’s liquor laws to lure craft brewers to the state. Industry groups raised similar concerns during the 2021 session around efforts to attract winemaker E&J Gallo to the state, with critics saying at the time the legislation threatened small retailers who benefited from the distribution system that was already in place.

“They see us as competition or challenge to their control,” Norris said in an interview. “And that’s exactly what’s happening.” 

Representatives with the South Carolina Wine and Spirits Wholesalers Association and the Beer Wholesalers Association, who endorsed the bill, did not return numerous requests for comment about this year’s legislation. However, they maintain significant influence in the state’s politics, with the former accounting for thousands of dollars in political donations to lawmakers of both parties each year. 

Norris has since brought together a coalition businesses to oppose the bill, running an advertising blitz online and in newspapers like The Post and Courier to garner support for the industry. 

“It seems the large and insulated distributors, who have monopolies in the state and are controlled by Big Beer, can’t stand to see innovation,” the group argued on its website. “They certainly aren’t giving up that sweet protected cash cow that’s been carved into law for them.”

But distributors like Norris have also rankled local governments who have found themselves unable to regulate the businesses. In 2017, Charleston Mayor John Tecklenburg and the city’s police chief, Greg Mullen, wrote to the Department of Revenue arguing that state laws regulating the products were antiquated and needed updating.

And currently, the businesses operate outside of the purview of South Carolina’s alcohol permitting program, which gives local jurisdictions the ability to weigh in on whether a distributor like Booze Pops can keep its license.

“What’s happening is that the communities where these businesses are operating have no input,” said Rep. Spencer Wetmore, D-Charleston, one of the bill’s co-sponsors. “Try as I may to come up with baby steps to try and help businesses that have been operating under this loophole, we already have a system. They are welcome to play by the rules of that system.”