The House Alcohol Beverage Control Commission discussed a bill this morning that would raise the cap on how much beer breweries can sell before they must go through an independent distributor.
The morning committee meeting included testimony from the N.C. Craft Brewers Guild, Craft Freedom, a group of brewers in favor of raising the ‘’barrel cap,” Charlotte’s NoDa Brewing Company, the N.C. Beer & Wine Wholesalers Association, and the Christian Action League. No vote was taken. The committee will revisit the bill next week, said Representative Chuck McGrady, bill sponsor and committee chair.
Currently, North Carolina brewers who sell no more than twenty-five thousand barrels of beer each year can get their own wholesaler permit and sell their own beer. Beyond twenty-five thousand barrels, they need to go through a wholesaler. These wholesale agreements are exclusive and can cost breweries revenue.
House Bill 500 would raise the barrel cap to two hundred thousand barrels per year and let breweries get out of distribution contracts when they see fit.
Margo Metzger, executive director of the Craft Brewers Guild, said HB 500 would allow the state’s craft beer industry to “grow and thrive.”
“This bill could go a long way in helping us continue to be the leader in the South,” she said.
Todd and Suzie Ford, owners of NoDa Brewing Company, said North Carolina’s current cap penalizes the most successful breweries.
“North Carolina has some of the best beer laws in the Southeast, but quite honestly it’s the best of the worst,” said Todd Ford. (According to Carolina Journal, NoDa’s production is approaching the current cap, along with two other breweries).
He stressed that he isn’t against independent distribution, but that it doesn’t always make sense for breweries to go through a third party. “It should be our choice and not be a state mandate,” he said.
Critics of HB 500 say the proposed cap of two hundred thousand barrels is too large and would discourage competition. Ford said the amount represents about 3 percent of the beer consumed annually in North Carolina.
The Wholesalers Association has come out against HB 500, saying the bill would benefit a few breweries at the risk of others and endanger the distribution industry.
“Be careful what you ask for,” Tim Kent, executive director of the Wholesalers Association, said Tuesday. “The legislation that has been put before you gives opportunities to outside entities that may not have the best interests of North Carolina brewers or distributors at heart.”
The group must be getting nervous, though. On Monday, it resorted to attacking North Carolina craft breweries for not paying taxes, a point that was repeated in Tuesday’s meeting.
The Reverend Mark Creech, with the Raleigh-based Christian Action League, also spoke against the bill, calling it “disastrous” to alcohol control efforts. The current third-party distribution system, he said, “prevents overly aggressive marketing” that lands alcohol in “the wrong hands.”
McGrady said his bill to give beer the same treatment as wine in North Carolina. The barrel-cap provision is getting the most attention in the nine-page bill, which also seeks to clarify several existing laws for breweries, home brewers, and distributors.
(You can read the full bill here.)
The bill explicitly states that breweries can give samples to customers and participants in a brewery tour and lets breweries, wineries, and distilleries use off-site storage. It allows home beer and wine makers to take their brews to competitions. It allows a brewery to sell alcoholic beverages other than its own beer as long as it has the right permits and lets North Carolina breweries receive beer from out of state (for example, from another of its own production facilities) and sell it to an in-state wholesaler.