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Beer’s next battleground: the state legislature



Until recently, buying beer at a brewery in Georgia was an experience unlike anywhere else in the country. When I visited Scofflaw Brewing Co. in Atlanta in August, for example, I couldn’t buy beer directly from the folks working the bar; I had to pay for a tour of the ginormous-for-its-age brewery, which would then entitle me to a “complementary” pint glass and up to six tastings of draft beer, or an equally “complementary” six-pack to take home. It was … weird.

And this was not a process unique to Scofflaw. Until September 1, every brewer in Georgia who wanted to get beer into the hands of people who visited was forced to operate this way. The reason? A law. Due to creative interpretations of the structure of the three-tier system by state legislators, brewers in the Peach State were required to sell all the beer they produced through a distributor; no onsite draft or package sales allowed. But brewers devised a way around the law: The wacky system of charging for tours and giving away beer as a parting gift.

“It’s been kind of this really weird workaround where, for all intents and purposes, we’re selling people beer,” says Jonathan Baker, co-founder of Monday Night Brewing in Atlanta. “We’re just selling it to them in this one increment, and we have to provide a tour along with it. We know nothing except for that; that’s how the world operates according to us. Whenever we visit other states, we’re like, ‘Oh my gosh, this is so weird. I can just buy beer at the bar! And I can buy five beers!’”

Things are different now. Senate Bill 85, signed into law in May and put into effect September 1, enables Georgia’s breweries to sell pints across the bar with no limit on consumption, and up to to 288 ounces—a full case of 12-ounce cans or bottles—per person per day to take home. The law change will have a major impact on breweries’ bottom lines: Georgia Craft Brewers Guild executive director Nancy Palmer told me that, in her talks with legislators, she presented them with data that said breweries in the states surrounding Georgia—all of which allow onsite beer sales—are an average of 2.5 times more profitable than breweries in the Peach State. (The simple move away from giving away pint glasses as part of the “tour” is a huge improvement on its own; one brewery manager told he expected the reduction in glassware costs to save him about $1,000 a week.)

While many hands in the beer industry are wrung over the machinations of so-called “big beer,” there may be a case to say that the larger enemy of a craft brewer’s success isn’t based in Belgium, or South Africa, or the Netherlands. It can be found within the state capitol.

Laws that limit a brewery’s growth and success, to some extent, exist in every state in the country. Some are more detrimental than others: In Rhode Island, beer is taxed while wine and spirits aren’t, and breweries can only sell 288 total ounces of beer to go and 36 ounces for on-premise consumption to each customer. West Virginia caps the ABV of any beer sold in the state at 12%. In Texas, breweries can’t sell their beer to-go, but brewpubs can. Indiana law says that if drinkers want cold beer, they can only buy it from a liquor store or a brewery; grocery and drug stores must sell room-temperature beer. And of course, Utah’s draconian 4% alcohol limit for draft beer is still firmly dug in. (The state also just approved lowering the legal blood alcohol limit for drivers to 0.05%—the lowest in the country.)

While many of these laws are quite old—vestiges of Prohibition or puritan religious beliefs that failed to account for how the alcoholic beverage industry might grow and change over time—some are newer, and even more sinister. Take Texas’ House Bill 3287, a controversial piece of legislation passed into law in June that caps a brewery’s taproom sales at 5,000 barrels a year and requires breweries producing more than 175,000 barrels per year to essentially buy their own beer from a distributor for sale at their own on-premise taprooms. Lawmakers claim the bill was meant to protect craft brewers from vertical integration by macrobrewers, but local brewers say it actually discourages their own growth.

If small brewers are going to continue to grow and succeed, it’s going to be through common sense changes to archaic laws such as these. And there’s reason to be enthusiastic: Brewers nationwide are making slow and steady progress with legislators. In July, retailers in Minnesota finally gained the ability to sell alcohol on Sundays and brewers in Mississippi became able to sell beer directly to consumers in their taprooms. Lawmakers in Wisconsin proposed legislation in August that would double the annual production cap for brewpub permit holders from 10,000 barrels to 20,000 barrels and bump the number of locations a brewpub could operate from six to 12. Montana’s breweries, which were not allowed to operate taprooms if they produced more than 10,000 barrels annually, won a similar fight. Their production cap jumps to 60,000 barrels in October. (Taprooms will still be limited to serving 48 ounces of beer per customer and will be forced to close at 8 p.m., however. Baby steps.)

“I think this is a bellwether to the tipping of some of these laws across the country,” Palmer says. “We’re seeing large groups of brewers with a significant amount of influence really educating the public and legislators about the economic impact of what they do as far as tourism and revitalizing downtown areas and all that. What we’re seeing is a real wave that’s moving through legislatures in response to this.”

For their part, brewers in Georgia are thrilled about the law change and the effects it could have on their businesses as well as on the state. Many have begun investing in new locations and equipment; Chris Herron, CEO of Creature Comforts Brewing Co. in Athens, says his brewery has extended hours and hired around 20 new employees to prepare for the influx in business. Because the new law enables smaller breweries to eschew distribution and focus on taproom sales, Herron says he also expects more tiny, hyperlocal breweries to open, which will lift up communities statewide.

“We have about 84 breweries in training,” he says. “If you do some quick math there as far as the impact those breweries will have on the real estate market, tourism market, and employees, this law is already making an immense impact in the state of Georgia—particularly because a lot of these breweries are going to be in small, rural towns that could use the lift of a local brewery in the market.”

It seems so simple to those on the outside: The fewer barriers the have to their success, the better breweries—and the communities they’re in—do. But inertia is a force as powerful as any in nature, and keeping the status quo is a lot easier than upending it. Time will tell if the brewers’ guilds, breweries and, inevitably, the consumers themselves, have the energy and focus to keep up the fight.


Zach Fowle is DRAFT's beer editor. Reach him at zach@draftmag.com.


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