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It’s back: Costco’s weapon to win ‘whiskey and Wheaties’ war

Give Costco’s lawyers some credit: They may have a found a way to finally be able to sell tequila and turkey burgers in the same store.

The answer may involve its food courts — turkey provolone sandwich, anyone? — and repealing the state’s obscure, 24-year-old “Restaurant Rule.” And already, Costco’s critics are calling it an “end-around” of Gov. Rick Scott.

Still, if the membership warehouse retailer persuades the Department of Business and Professional Regulation (DBPR) to strike that rule, it could finally win the “whiskey and Wheaties” battle.

Costco, which does “not have a PR or Media department,” did not respond to a request for comment.

Bills have been filed since 2014 to remove the 82-year-old requirement, enacted in Florida after Prohibition, that hard liquor be sold in a separate store. Beer and wine already are sold in grocery aisles in the Sunshine State.

Costco, along with Walmart and Target, has pushed to remove the ‘wall of separation.’ Publix, for it because of its investment in its many separate liquor stores, and independent liquor store owners have fought to keep the status quo.

Last year was the closest that supporters got to a victory, with legislation barely passing both chambers.

But Scott vetoed the measure, saying it’d be a job killer for small businesses, many of whom would likely get bulldozed by the big-box stores’ superior selling power.

Now, the GrayRobinson law firm, which represents Costco, thinks it’s found the Achilles heel.

Costco “is licensed as both a retail alcohol dealer and restaurant at over 100 locations throughout Florida,” wrote its lawyer, GrayRobinson’s D. Ty Jackson, in a letter to regulators.

The state held a workshop last month in Orlando to “update and clarify the items permitted to be sold.”

State law says licensed vendors “can sell anything … that is ‘customarily sold in a restaurant,’ ” but doesn’t define what that means “despite being in use for more than 80 years in the Florida Beverage Law,” Jackson wrote.

DBPR’s Restaurant Rule does define items “customarily sold,” including “ready to eat entree items” and “hot or cold beverages.”

That’s not fair, Jackson wrote, saying the rule “impermissibly purports to limit the items that can be sold” and should be repealed.

In fact, the department isn’t even following its own guidance, he suggested, having granted liquor licenses meant for restaurants to “entities that sell items beyond those identified in the (restaurant) rule.”

They include “golf country clubs, casinos, movie theatres … bowling alleys and senior living complexes.” GrayRobinson also said the vetoed bill involved package store licenses and not the “consumed on premises” licenses used by eateries and bars.

In contrast, William Hall, a Jones Walker attorney representing Publix, ABC Fine Wine & Spirits, and the Florida Independent Spirits Association (FISA), told regulators that Costco’s effort “is nothing less than an end-around of the governor,” referring to his veto last year.

“Now, Costco seemingly wants the (state) to believe that (last year’s bill) and all of the other legislative wrangling on that issue was meaningless,” he wrote in his own letter. “Costco asserts that, by simply repealing the Restaurant Rule, the (state) can allow what the governor’s veto precluded.

“The purpose of rule-making is to interpret statutes, not to get around laws that a party does not like. The (state) should reject this attempt to use rule-making to usurp the legislative process.”

FISA President Chris Knightly — who represents small, independent liquor stores — added that “Costco’s true intent for these actions are to sell hard liquor on their grocery shelves,” according to a transcript of the Orlando workshop, held by DBPR’s Division of Alcoholic Beverages and Tobacco.

The big chains are trying to do through “legal loopholes … what their previously failed legislative efforts have not been able to accomplish. This is another attempt to bypass the appropriate governmental process,” said Knightly, co-owner of Knightly Spirits in Central Florida.  

“Allowing big-box stores to sell liquor would decimate the viable industry of independently owned liquor stores,” he went on. “ … The greed of a few corporations should not demolish these small businesses, which are the backbone of America.”

DBPR, however, reports to Scott. Though he is term-limited this year, he’s still in charge till the next governor is sworn in on Jan. 8. 

The department “is going through the rule-making process and receiving public input on this topic,” Scott spokeswoman Mara Gambineri said in an email. “The Governor expects them and every agency to follow Florida law.”

Written By

Jim Rosica is the Tallahassee-based Senior Editor for Florida Politics. He previously was the Tampa Tribune’s statehouse reporter. Before that, he covered three legislative sessions in Florida for The Associated Press. Jim graduated from law school in 2009 after spending nearly a decade covering courts for the Tallahassee Democrat, including reporting on the 2000 presidential recount. He can be reached at jim@floridapolitics.com.

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