N.C. Brewers Sue to Free the Brews


North Carolina brewers currently face a self-distribution cap, which means that once they get to 25,000 barrels of production per year, they are required to sell their beer through a wholesaler. (R Street's Jarrett Dieterle previously wrote about this law here). The North Carolina beer community attempted to secure legislation raising the self-distribution cap, but ultimately the bill died in the state legislature. Now the brewers are back, and this time they are bringing a lawsuit to overturn the cap, as reported in the Washington Post:

Once a North Carolina brewer sells about enough beer to fill an Olympic-size swimming pool in any given year, state law says it must hand over distribution to another company. Attorneys for two growing craft breweries argued Tuesday that’s unconstitutional.

Lawyers for Olde Mecklenburg Brewery and Noda Brewing Co. filed a lawsuit in 2017 after failing for years to get state legislators to change the beer distribution law — a change opposed by beer wholesalers who represent one of the state’s most powerful political interest groups.

The Charlotte breweries claim the law is unconstitutional because once they’ve sold more than 25,000 barrels in a year, they’re required to give up pricing and sales control of their products to middlemen for virtually as long as their beers are brewed. Brewers hitting that limit must sell everything to a wholesaler, which then sells to stores or taverns

“This is an economic protectionism scheme designed to enrich one private party at the expense of another; a private party that contributes millions of dollars in campaign contributions to this General Assembly,” attorney Andrew Erteschik said....

Erteschik said the law violates constitutional provisions allowing people to enjoy the fruit of their labors by barring breweries that become successful from choosing whether to keep delivering their own beer through their own networks or making a business decision to outsource that work to others....

Read the rest here.




Walmart wins challenge to Texas alcohol retailing laws


Texas has several laws governing the issuance of alcohol retailing permits, including a restriction preventing publicly traded corporations from obtaining a permit and a rule limiting the number of permits one entity can hold in the state to five (albeit with a consanguinity exception for certain family-owned entities). Walmart brought a constitutional challenge against these laws--on both Dormant Commerce Clause and Equal Protection grounds--and a federal judge just handed down a ruling striking them down. ABC reports:

A federal judge has blocked a Texas state agency from withholding from Wal-Mart licenses to sell liquor by the bottle.

In a 50-page ruling signed Tuesday, U.S. District Judge Robert Pitman of Austin, Texas, concurred with Wal-Mart's constitutional challenge to the Texas Alcoholic Beverage Commission refusal of licenses for retail liquor sales.

More here

The court's full opinion can be found here.

How the Craft Spirits Boom Is Creating Middle-Class Jobs


R Street's Kevin Kosar has written before about how the craft spirits industry should be recognized as a key source for creating the types of blue collar manufacturing jobs that policymakers often emphasize. Now several other commentators have picked up on the theme, including two Bloomberg View columnists. Noah Smith writes:

[C]raft beer offers one small way in which an enterprising, hard-working individual can bootstrap themselves to the middle- or upper-middle-class and accumulate some capital, without moving to the big city or getting a degree from a top school. It’s one tiny step toward creating an American version of what Germany calls its “mittelstand” -- a network of small businesses that anchors the middle class and spreads economic activity to outlying regions...

More here.

Smith's fellow columnist Justin Fox had a similar piece, as well:

One of the fun things I discovered looking through the jobs data released by the Bureau of Labor Statistics last week was that, during a generally impressive stretch for manufacturing employment growth, "breweries, wineries and distilleries" was among the industries leading the way.

This wasn't a one-year fluke, either. Over the past seven years, the breweries, wineries and distilleries sector has been adding jobs at an 11.1 percent annual rate, compared with 1.7 percent for nonfarm payroll employment as whole...

Read the rest here.


Latest Effort to Reform Maryland Beer Laws Ends With a Whimper


Maryland has been ground zero for a heavily contested battle over beer laws, pitting craft brewers against distributors and other vested interests in the state. Last year, in the wake of the controversial "beer bill" (HB 1283), a task force was convened to study the state's beer laws and suggest changes. The task force, which was spearheaded by Maryland Comptroller Peter Franchot, unveiled a sweeping legislative package earlier this year that would have significantly liberalized Maryland's beer laws. Alas, according to the Baltimore Sun, the task force's proposed legislation has been killed in committee:

The hopes of Maryland’s craft brewers for sweeping changes to the state’s beer laws flattened Friday like an open beer left out too long as a legislative committee rejected Comptroller Peter Franchot’s “Reform on Tap” initiative.

Unhappy with Franchot’s bold venture into policymaking, a House committee voted 17-4 against a bill the Democratic comptroller had been pushing for months as the best way to fix what he viewed as flawed beer regulations approved last year by the General Assembly.

The panel then compounded the repudiation by passing a measure seeking to examine whether the comptroller’s office should retain its role as the state’s alcohol regulator.

Franchot’s proposal sought to lift various restrictions on Maryland’s brewers, including curbs on the amount of beer they can make and sell directly to the public. While the limits rankled the state’s burgeoning craft brewing industry, other sectors of the alcoholic beverage industry defended the regulations.

Franchot issued a statement calling the rejection of Reform on Tap “more business as usual in Annapolis.”

“The corporate beer lobbyists did their job and got their money’s worth,” he said. “Our independent craft brewers ... have once again received the message that our state’s leaders are fundamentally hostile to their line of work.”

Read more here.


After series of scandals, Texas liquor agency pursues reforms


Last summer we covered the series of scandals that rocked the Texas Alcoholic Beverage Commission. Now, fast forward to 2018, and the agency is debuting new leadership and a revamped approach to regulation, according to the Texas Tribune:

Five years ago the Texas Alcoholic Beverage Commission spent more than $10,000 in taxpayer money to send four employees to Honolulu to attend a national liquor conference — complete with open bar, golf tournament and a “luau under the stars.” 

This summer, the National Conference of State Liquor Administrators is again holding its annual meeting in Hawaii — Waikoloa Beach to be exact — but there won’t be an official delegation from the TABC. In fact, the state’s alcohol regulators won’t be sending anyone to any liquor conferences outside Texas anytime soon.

The agency got its out-of-state travel privileges yanked last year by a Legislature angered over spending controversies and regulatory excesses, exposed in a series of investigative reports published by The Texas Tribune. When the smoke cleared, seven top agency honchos were gone and the TABC board had hired a retired Army general, Bentley Nettles, to clean up the mess...

Now, nearly a year later, even some of the TABC’s most vociferous critics say a wholesale change in leadership has produced a reformed agency that no longer triggers fear and loathing at the very mention of its name.

“The transformation that has taken place already under General Nettles’ leadership is hard to overstate,” Texas Craft Brewers Guild Chairman Josh Hare said in a thank-you note to Gov. Greg Abbott. “We have seen nothing other than a hard shift toward a business and consumer-friendly approach to business.”...

Read the whole article here.

Georgia Could Be Latest State to Expand Sunday Sales

Just off the heels of Indiana repealing its Sunday blue law, Georgia could be on the brink of passing a "brunch bill" that would expand on-premise alcohols sales to Sunday morning. According to the AP, the bill would allow restaurants and wineries to serve alcohol starting at 11 a.m.:

A proposal to allow Georgians to purchase alcohol at restaurants and wineries on Sunday mornings is headed to the governor's desk.

House lawmakers voted 97-64 on Monday to allow on-premise consumption to begin at 11 a.m. on Sundays.

If the bill is signed into law, earlier sales would have to be approved in local referendums.

Gov. Nathan Deal's spokeswoman declined to say whether the governor intends to sign the measure.

GOP Rep. Meagan Hanson of Brookhaven says earlier sales would generate an additional $11 million in state and local tax revenue.

Off-premise sales, such as those at supermarkets, would remain illegal until 12:30 p.m. on Sundays...

Read more here.




Opponents Continue to Fight Michigan's Half-Mile Liquor Rule Reform


Last year, Michigan's Liquor Control Commission repealed the state's anti-competitive "half-mile rule," which prohibited liquor stores from operating within a half-mile of each other. Incumbent liquor store responded by trying to get the state legislature to overrule the Commission's decision, although these efforts have so far failed to clear the state House. According to the Detroit News, opponents of the reform are now trying to use the courts to block it:

A long-running battle over Michigan’s prohibition against liquor stores operating within a half-mile of each other is back in court as existing small business owners try to stop the state from eliminating the distance requirement.

Michigan Court of Claims Judge Stephen Borrello in January temporarily blocked plans to rescind the liquor store rule after the Associated Food and Petroleum Dealers sued the state for a second time. Borrello is set to hear arguments in the case on March 19.

Eliminating the rule would cause “irreparable harm” to thousands of liquor store owners who “have invested substantial sums, time and sweat” to obtain state licenses with the expectation a competitor could not open next door, according to the lawsuit.

The complaint seeks to keep the four-decade-old rule in place while the Michigan House considers a Senate-approved bill that would write the 2,640-foot distance requirement into state law.

But the Liquor Control Commission says the rule squashes competition and is seeking to dismiss the case. Attorney General Bill Schuette’s Office argues the state followed proper protocols for rescinding the rule...

Read more here.



Kansas Could Legalize Self-Service Beer Bars

Self-service taps at craft beer bars are becoming all the rage among beer aficionados, but some states still don't even allow them. Kansas is one of these states, but according to the Lawrence Journal-World, this could soon change:

Kansas is one of the few states that prohibit self-service beer taps at bars and clubs, though a bill under consideration in the Legislature could finally allow patrons to be their own bartenders.

Behind the bill is a trio of Topeka entrepreneurs who are aiming to open a new downtown bar, the Brew Bank, that would feature a wall of self-serve beer taps boasting the best offerings from local breweries. The Senate Federal and State Affairs Committee had a hearing on the bill Tuesday but didn't vote on it.

The idea proved popular with city business leaders, who named the Brew Bank the $100,000 winner of the Topeka Top Tank Competition, a contest searching for business ideas to revitalize downtown Topeka.

While self-service wine taps are legal in Kansas, the team discovered that wasn't the case for beer...

Read more here.

Delaware Latest State to Consider Lowering the DUI Threshold


Delaware lawmakers are considering a bill that would lower the state's drunk driving threshold from .08 BAC to .05. This proposal comes on the heels of Utah's recent decision to lower its threshold to .05--a move which triggered a significant backlash and was even opposed by the founder of Mothers Against Drunk Driving. WDEL has the story from Delaware:

House Bill 320, if passed, would change the blood alcohol concentration (BAC) required for driving under the influence arrests from .08 to .05, a legislative measure aimed at reducing drunk driving and the fatalities that they cause.

In Delaware, nearly 60 percent of alcohol-related traffic fatalities involve drivers with BACs of 0.15 and above, while only about 2 percent of traffic deaths involve someone with a BAC between the legislation’s targeted interval of 0.05 and 0.08, according to ABI [American Beverage Institute].

Sarah Longwell, Executive Director of ABI, said the legislation would hurt the hospitality industry because social drinkers will feel that extra drink will lead to a DUI, and then other people won't even be able to have one drink because of their weight.

"The .05 limit is so low that it would essentially mean a 120 lb woman would be in a position of being arrested after a single drink," said Longwell. "It's going to have a tremendous chilling affect on moderate, social drinkers who otherwise would have gone out to happy hour dinner, split a bottle of wine with their spouse. At this point, splitting a bottle of wine with your spouse would put you absolutely in a place where you would get arrested if you drove home." ...

More here.

Why Beer Could Get More Expensive Under Trump’s Tariff


As previously noted, the Trump Administration's recently announced tariffs could have a real effect on the alcohol industry. The Wall Street Journal reports on how the aluminum tariffs could lead to higher beer prices:

"President Donald Trump’s planned 10% tariff on aluminum imports could hit America in its beer gut.

Beverage makers, including Heineken, Molson Coors Brewing Co. and Coca-Cola Co., who use aluminum cans had warned Mr. Trump last month of increases in production costs if the tax were imposed. Some of those costs are likely to be passed on to consumers, according to analysts. The Beer Institute, a trade group, said Thursday the tariff would amount to a $347.7 million tax on brewers and result in the loss of tens of thousands of jobs.

“Businesses don’t assume cost increases, they pass them on to consumers,” said Nico von Stackelberg, a consumer-goods analyst at Liberum.

More than half of the beer produced annually in the U.S. is sold in aluminum containers and is traditionally marketed to cost-conscious consumers. Cans of Natural Ice, known as “Natty Ice,” are staples of cash-strapped college students and Bud Light has become a symbol of working class America, which is a key part of Mr. Trump’s political base.

Cans are cheaper and easier to ship than bottles and they protect against ultraviolet rays, reducing the risk of beer going stale, or skunked.

The tariffs could also hurt craft beer. Part of the reason artisanal brew is increasingly sold in cans, producers say, is that aluminum offers a good surface for colorful, effective branding..."

Read the rest here.

R Street's Trade Policy Counsel Clark Packard signed a letter along with other leading trade policy experts speaking out against the tariffs