Intoxicating Liquor Laws in Hawaii and the Industry
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INTOXICATING LIQUOR LAWS IN HAWAII AND THE INDUSTRY HAROLD L. WATTEL Dean, School of Business Hofstra University Hempstead, Long Island, New York PATRICIA K. PUTMAN Associate Researcher Legislative Reference Bureau Report No. 2, 1969 UNIVERSITY OF HAWAII Honolulu, Hawaii 96822 Price $3.00 This report on Intoxicating Liquor Laws in Hawaii and the Industry has been prepared in response to a legislative request for a comprehensive review of Hawaii's Intoxicating Liquor Law. It became evident that some of the more significant questions to be considered in a study of Hawaii's intoxicating liquor laws were centered on or closely related to matters that are basically of an economic nature. The Legislative Reference Bureau is fortunate in that Dr. Harold L. Wattel, Dean of the School of Business at Hofstra University, a recognized authority on the economics of the liquor industry, agreed to undertake the conduct of that portion of the study dealing with economic aspects. Chapters V to XI1 are his contribu- t ion. The report traces the history of liquor and liquor laws and their administration in Hawaii, analyzes the complexities of the economics of each level of the liquor industry, examines the liquor market and what is known of the patterns of liquor consumption, surveys liquor laws and economic experiences nationally, and con- cludes with a number of suggestions for legislative consideration in the format of a suggested recodification of Hawaii's Intoxicating Liquor Law. Members of the Bureau staff who assisted. in the preparation of the report are Wayne Minami, Annette Miyagi, and as a legislative intern, Marvin Ching. Acknowledgment is here made of the generous cooperation in pro- viding advice and information to the Bureau on the part of liquor commissioners, executive secretaries and staff members of the liquor commissions, and representatives of the liquor industry. Herman S. Doi Director January 1969 TABLE OF CONTENTS Page i i I . INTOXICATING LIQUOR IN HAWAII. HISTORICAL DEVELOPMENTS ...................... The Commodity in Hawaii from Captain Cook through Prohibition and Repeal ......... Legislative History of Hawaii's Intoxicating Liquor Law Since Repeal ........... Session Laws. Special Session 1933 ...... Session Laws of 1935 ............. Session Laws of 1937 ............. Session Laws of 1939 ............. Session Laws of 1941 ............. Session Laws of 1941. Special Session . :. Session Laws of 1943 ............. Session Laws of 1945 ........... Session Laws of 1947 ............. Session Laws of 1949 ............. Session Laws of 1951 ............. Session Laws of 1953 ............. Session Laws of 1955 ............. Session Laws of 1957 ............. Session Laws of 1957. Special Session .... Session Laws of 1959 ............. Session Laws of 1960 ........... Session Laws of 1961 ............. Session Laws of 1963 ............. Session Laws of 1965 ............. Session Laws of 1966 ............. Session Laws of 1967 ............. Summary ................... I1 . ALCOHOLIC BEVERAGE CONTROL.. OBJECTIVES . THEORY. VARIETIES ....................... 111 . THE ADMINISTRATION OF HAWAII ' S INTOXICATING LIQUOR LAW ....................... Brief Survey of State Administrations .... Hawaii's Administration; Administrative Law Concepts .................. Evaluation of the Administration of Hawaii's Intoxicating Liquor Law ........ iii Page IV. ANALYSIS OF CHAPTER 159. REVISED LAWS OF HAWAII 1955: SELECTED ISSUES ................. Minors. Intoxicating Liquor. and the Law ... License Classification .............. Advertising .................... Commission Authority Over Licensees and Others: Enforcement Administration ....... V . INTRODUCTION TO THE INTOXICATING LIQUOR INDUSTRY .... Intoxicating Liquor Types ............. Federal Taxation of Intoxicating Liquor ...... Hawaii Taxation of Intoxicating Liquor ...... Hawaii's Production of Intoxicating Liquor .... VI. ECONOMIC ASPECTS OF ALCOHOLIC BEVERAGE MANUFACTURING . A Concentration of Facilities ........... Plants and Capacities ............... Production Costs ................. Brandchoice ................... Prices ...................... Importing ..................... VII. INTOXICATING LIQUOR WHOLESALING AND JOBBING ..... VIII. RETAILING OF INTOXICATING LIQUOR ............ IX. INTOXICATING LIQUOR CONSUMPTION PATTERNS ........ Alcoholic Beverage Consumption in Hawaii ..... The Effect of Income ............... The Effect of Sducational Attainment of Family Head ................. Effect of Occupation of Family Sead ........ Effect of Ethnic Origin .............. X . THE ECONOIvlICS OF CONTROL ................ Page XI. CONSUMERS. PRICES. AND THE STATE ............ 190 The Problem .................... 190 prices and Control ................ 191 Resale Price Maintenance ............. 194 The Effect of Repeal of Resale Price Maintenance on Alcoholic Beverage Prices ... 200 Influence of Reduced Prices on Consumption .... 204 XI1. SELECTED ECONOMIC PROBLEMS AND SUGGESTED SOLUTIONS ... 215 statistics .................... 215 The ~conomicControls of Administration ...... 219 The Commission ................ 219 Fees and Taxes .................. 220 Fees ..................... 220 Taxes .................... 223 Diversion of Intoxicating Liquor Sales in Hawaii . 228 Industry Problems ................. 233 Distillers. Vintners. and Brewers ...... 234 Wholesalers ............... 236 Retailers ................ 239 XI11. SUGGESTED RECODIFICATION OF THE HAWAII INTOXICATING LIQUOR LAW ....................... 242 Chapter -, ~ntoxicatingLiquor Control Law ... 242 Summary .................... 296 FOOTNOTES ....................... 299 Appendix Return of Tax on Wines. Liquors. Alcohol and Distilled or Rectified Spirits ...... Page Tables Statutory Statements of Basic Purposes of Alcoholic Beverage Control ............... 34 Selected Topics Relating to Liquor Laws-- Monopoly States ..................... 45 Selected Topics Relating to Liquor Laws-- License States ..................... 48 Selected Topics Relating to Liquor Laws-- All States ....................... 52 Comparison of Selected Factors in the Administration of Alcoholic Beverage Control, By State ....71 Intoxicating Liquor Laws Regarding Minors ........ 92 State Control Over Advertising of Intoxicating Liquor . 118 Intoxicating Liquor Production, Hawaii, 1934-1964 ....136 Hawaii's Share of Alcoholic Beverage Production ..137 Per Cent of Value of Shipments and Employment Accounted for by the Largest Companies in Alcoholic Beverage Production, 1958, 1954, and 1947 .......139 Acquisitions of the Four Largest Distillers, 1933-1964 ........................141 Facilities Operated to Produce Alcoholic Beverages, Selected Fiscal Years, 1934-1964 ............142 Insurance Values of One Gallon of Kentucky Bourbon Aged in Eew Cooperage, Selected Ages for Selected Years, 1957-1964 ........................ 144 Number of Brands of Whisky Types, and Price Ranges, Pennsylvania, 1947, 1962, and 1964 .......146 Retail Prices of the Nation's 18 Leading Brands of Whisky in 48 Markets, Autumn, 1963 ...........149 Page Federal and Average State Tax Rates, Distilled Spirits, 1947-1964 . 152 Selected Measures of Price Changes, Distilled Spirits Industry, 1947-1964 . 153 Alcoholic Beverages Imported into the United States, 1964 . 154 Firms Federally Qualified as Wholesalers of Liquor and Beer, Hawaii, 1960-1964 . 158 Retail Licenses for Sale of Distilled Spirits . 161 Locally Issued Liquor Licenses, Hawaii, 1964 . 163 Census of Business, Retail Trade in Packaged Alcoholic Beverages, Hawaii, 1963 . 165 Liquor Retailing, Hawaii, 1958, 1963 . 166 Apparent Consumption of Distilled Spirits . 170 Apparent Consumption of Distilled Spirits and Absolute Alcohol Per Capita of Population, Ten Leading States, U.S., 1962 . 172 Index of Per Capita Distilled Spirits Consumption, Hawaii and the Continental United States, 1847-1950 . 173 Per Capita Consumption of Alcoholic Beverages, United States and Hawaii, 1960-1964 . 175 Selected Measures of Aggregate Growth in Hawaii, 1950- 1963 . 176 Per Cent of Respondents Who Bought Alcoholic Beverages by Income and by Types, Honolulu and Oahu, 1953 and 1960 . 178 Family Expenditures for Intoxicating Liquor, Honolulu, New York, San Francisco, Washington, D.C. and Urban United States, Dollar Values and Percentage of Total Expenditures, 1960-1961 . 179 vii Page Intoxicating Liquor Expenditures, Selected Cities and Urban United States by Years of Education of Family Head, 1960-1961 ................. 181 Intoxicating Liquor Expenditures, by Years of Education of Family Head and Family Income, Urban United States, 1960-1961 .................... 182 Intoxicating Liquor Expenditures, by Occupation of the Head of Household, Selected Urban Areas, United States, 1960-1961 .................... 184 Expenditures for Intoxicating Liquor, by Occupation and Ethnic Origin, Urban United States, 1960-1961 ....185 Expenditures for Intoxicating Liquor, by Occupation and Ethnic Origin, Selected Urban Areas, 1960-1961 ...186 Liquor Tax Base, Tax Rate, and Collections, Hawaii, 1945-1966 ........................ 188 Retail Prices of Selected Distilled Spirits, New Hampshire and Pennsylvania, January 1965 ..193 Status of Resale Price Maintenance Laws, License States, 1966 ......................196 New Admissions to the Hawaii Alcoholic Clinic and the Hawaii State Hospital, 1955-1964 .......... 208 Arrests for Drunkenness, and Driving While Intoxicated, Honolulu. 1955-1964 ................... 209 Drinking Involved in Traffic Accidents Related to Severity