Beer, Wine and Cronyism

I rarely follow the ins and outs of liquor permitting in the Hoosier state (or elsewhere, for that matter). To be candid, I consider the complex web of restrictions governing the sale of alcohol to be an unfortunate “leftover” from America’s more Prohibitionary times and impulses; aside from reasonable restrictions on sales to minors, I see no legitimate reason for most of these rules.

However, a lawyer friend suggested I read the court order recently issued in the case of “Spirited Sales v. Indiana Alcohol and Tobacco Commission.” It was an eye-opener.

The take-away lesson will confirm the suspicions of both cynics and libertarian-minded citizens: arcane and excessive regulatory processes can be manipulated if you have friends in high places. (And I might note that with the loss of  reporting on local government agencies, the manipulators have become bolder.)

The 50+ pages of the Marion Superior Court’s order detail how favoritism and cronyism benefitted competitors of Spirited Sales, whose parent company is owned by shareholders of Monarch Beverage, a beer and wine wholesaler.

Spirited Sales had applied for a liquor wholesaler’s permit. The rules (for some unknowable reason) prohibit beer and wine wholesalers from also being liquor wholesalers. The permit was denied, ostensibly due to the “common ownership” of Monarch and Spirit’s parent, although the Court noted in excruciating detail the reasons that the companies were clearly separate under relevant law–and more separate than at least eleven cases in which the Commission had awarded permits to affiliated entities.

The court acidly noted that the only opposition to the permit came from the company’s competitors: No alcoholic beverage producers, retailers, persons interested in public health or morality, no persons concerned about collection of taxes, and no public officials opposed the permit.

Just the competitors.

Despite the clear impropriety, those competitors were allowed to take part in the proceedings as if they were parties; and they had numerous “inappropriate and concerning ex parte communications with the Commission,” which the Court meticulously listed.

The Court also listed all of the ways in which the hearings deviated both from the rules and from the way other hearings were conducted–unexplained delays, refusals to provide information to which the petitioners were entitled,  acceptance of “evidence” offered by competitors, refusal to allow Spirited to cross-examine competitors’ witnesses, and much more.

So–why? What explained this highly inappropriate treatment of a petitioner?

Evidently, people on the Governor’s staff “harbored animosity” toward Monarch and its President, and freely communicated to the Commission their desire to see the petition denied. Several of those discussions are referenced in the Court’s order, and they display a shared intent to deny Spirit the benefit of the impartial hearing to which they were entitled, and a smug satisfaction in their ability to (forgive the language) screw them over.

After ruling that the denial had been “arbitrary and capricious” and that Spirited was entitled to its permit, the Judge wrote

 this Court considers the relationship between members of the Commission, staffers of the Governor’s office, the Hearing Officer, and the Remonstrators as evidenced by emails submitted to the Court, to be disturbing and inappropriate…Such discussions challenge the integrity of the application process and raise questions about the Commission’s willingness to serve all citizens of Indiana equally, fairly and without bias.

This is precisely the sort of cronyism and influence peddling that undermines the rule of law, and gives rise to the belief that “it isn’t what you know, it’s who you know…”


  1. This is what happens when the party in power is too long in power. As Lord Acton said, “Power tens to corrupt and absolute power corrupts absolutely.”

  2. Does anyone know what happened to this investigation?

    Tony Cook |
    Mar 29, 2016
    “A special prosecutor has been appointed to look into allegations that Monarch Beverage, the state’s largest beer distributor, illegally funneled more than $1.5 million in campaign contributions to some of Indiana’s most powerful elected officials.


    “House Speaker Brian Bosma and the House Republican Campaign Committee that he leads have received more than $200,000 from Vision Concepts over the past 15 years. The Indiana Republican Party has received more than $100,000. Then-Gov. Mitch Daniels received more than $117,000. And Gov. Mike Pence received more than $84,000.”

    Do you suppose Gov’r P was upset he got less than Bosma??

  3. I read about this also and it should be noted that Mitch Daniels and his staff were doing all they could to stop Monarch. It started long before Pence was in office. Pence and his staff just continued the illegal behavior.

    When there is proof of ex-parte communication and other illegal dealings by government officials and their staffs, why are they allowed to keep their jobs? I realize that CEOs, CFOs and other high level company execs get away with illegal dealings all of the time, but why is it allowed by elected officials and their appointed staffs?

  4. I think you’ve uncovered reason #1 for our arcane and culturally obsolete alcohol laws. They allow influence to be peddled. That’s the #1 reason some people become politicians.

  5. Indiana, the last state to not allow alcohol to be sold on Sunday. That is except when you’re at a restaurant and then you can drink all you want, you just can’t take it home with you.

  6. It is wrong but not unusual for influence to be exerted from high places to regulatory processes. However, if wrong, that is no argument for its continuation. I note with interest that the court found that people who were concerned with minor drinking and the ethical side of the process were not represented, so there was hardly a ground swell for right and wrong. From what I can determine from the court’s finding, it was merely a money brawl between certain actors along with a mix of politics from on high. Disgusting! Heads should roll – but they won’t – much as on Wall Street where felonious bankers pay a chump change fine and go their way free of the threat of jail. More than disgusting!

  7. It isn’t all that simple. It never is, is it?

    The reason for the arcane laws is that 1) people tend to drink themselves to death, so in the interests of the public health, given the fact that total prohibition failed, it was at one time considered wise to make it somewhat more difficult to obtain alcohol than bread, and 2) the state wanted a choke point in the trade to collect it’s taxes (the point of wholesale distribution). So then for whatever reason (no one remembers for sure, but perhaps there were good reasons or perhaps there was a truckload of corruption or probably both) beer was set up differently than wine and spirits. Beer is ruled by “franchises,” which means that Monarch beverage, being the dominant beer supplier in this area, has total control of its supply relationships and would actually have to be paid for its franchise to release one. There are no franchises with wine and spirits, so those suppliers can go to any wholesaler at anytime (free market, in essence). So spirits and beer were kept separate (wine is much smaller in total value). So if Monarch can sell spirits, but they still enjoy the beer franchise system that effectively locks everyone else out of the beer market, then will indeed have a profoundly unfair advantage in the market. And this is worth a LOT of money, folks.

    I am not a fan of Daniels or Pence, and for sure there is plenty of ugliness in the sausage factory, but there are reasons for the way things are. Let’s leave raging against the machine from a position of ignorance to the Trumpies.

  8. It also occurs to me that the loss of an investigative press not only means we are not uprooting corruption, it also means the people have no chance to understand the nature of the way things really are, thus when they do seem to be uprooting corruption they may in fact instead be misled to fight the battles of others. An ignorant population is easily manipulated.

  9. Yesterday, I made a post on this blog concerning Clout. Clout can be used in both directions approval of legislative, or regulatory processes or the denial of the same processes. Clout can exist rather openly when you have the totally useless “Newspaper” like the Indianapolis Star. The Star has devoted it’s diminished resources to Sports, Sports, Sports, and some festivals. The Opinion pieces in the Star are just that opinion which requires no investigative journalism.

    Beth, I also wondered what happened to the story you mentioned.

    There are activists that for years have questioned the neutrality of our Utility Regulators. If you watch cable TV, there are programs about people flipping houses, our water company here has flipped a few times.

    Ahh, Cable here in Marion County another case of Crony-Capitalism and Clout.

  10. Over it:

    Thanks for the extra information you provided. However, illegal dealings are still illegal and should not be allowed.

    The opposition players in this game were trying to protect their own income and they committed illegal acts to do so. Their personal motivation should not allow them to overrule the law. Elected officials should not be engaging in such overtly illegal activity and I believe they should be held accountable with some form of punishment or the loss of their jobs.

  11. Beth:

    A special prosecutor says he has found no evidence that one of Indiana’s largest beer distributors improperly funneled more than $1.5 million in campaign contributions.

    Former Indiana Inspector General David Thomas was appointed earlier this year to review allegations against Monarch Beverage. The Indianapolis Star reports that Thomas said in a Wednesday report that he won’t bring any criminal charges against the company.

  12. Aging Girl, greetings. If you are having dinner or not even eating there, you can take home a bottle of wine from a vineyard or a jug of beer from an establishment that brews their own beer. I love right across the road from Rock Bottom and I can go there on Sunday and buy and carry home what is called a growler. 1/2 gallon of beer. Come join me for a beer. Irvin BAA

  13. I think that is a crafty strategy. You undermine areas which the public sees as “sinful”, and where many members of the public believe the stinkers have it coming to them. Then when you have that down, you move up the ladder, thus boiling the frog slowly increasing the temperature. Pretty soon, the mafia controls everything and people wonder why. People don’t seem to understand that laws were written for everyone, not just the ones you don’t like.

  14. My first husband worked at Monarch Beverage 1956-1957 when it was located downtown; he got the job through close friends of my family. There was at that time something undercover, hush-hush, about actual ownership of Monarch which I never understood. Seems it was something about my family friends who hired him being the owner of a neighborhood tavern for many years and his brother an attorney with political connections. The attorney was later a judge. Being young and naive I didn’t understand but got the feeling I shouldn’t ask questions. I was surprised when Monarch Beverage became a major distributor.

  15. Irvin, you’re right…I think I have heard that that amount is allowed on Sundays to leave the establishment. I love/live for beer too but had to give it up for my wheat allergy. And here I am with access to the best wheat beer in the world, ugh. 🙂

  16. For the record, the Special Prosecutor found no evidence that Monarch was breaking any state law. In fact, the prosecutor noted than many of Indiana’s most upstanding companies, including the Indianapolis Motor Speedway, and many of Monarch’s competitors handled political contributions in the exact same manner. All “within the law.” According to the special prosecutor.
    And guess who convinced Terry Curry to ask for a special prosecutor? The SAME cartel of cronies that twisted the Daniels administration into denying Spirited Sales a permit. This is an all-out war on the free market, to line the pockets of a handful of people. By the way, check who was representing some CARTELmembers, and whose relative was working on Daniels staff during this period.

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