On the Craft Brewing Compromise, and What Could Come Next

As Charlie reported yesterday, craft brewers, beer distributors, and the Department of Revenue were able to come to an agreement that allows the brewers to offer tours at varying prices to accommodate the type of beer that will be provided at the end of the tour. While that was the intent of the final version of Senate Bill 63, a Department of Revenue ruling in September appeared to reinterpret the law by requiring all tours to be sold at the same price.

The craft brewers were not happy, nor were their customers. Joining them were Lt. Governor Casey Cagle and House Speaker David Ralston, who the AJC reported, were involved in urging the compromise that got the brewers what they thought they had when the bill passed last March.

Speaker Ralston said the compromise removed the obstacles to the craft brewers being able to do business as intended by the legislature in SB 63. He also asserted the role of the General Assembly in setting policy:

We have a General Assembly here that’s elected by the people, and when the enact policy, and establish policy through legislation, and I think the bureaucracy ought to honor that rather than attempting to rewrite it. I thought that was sort of a taking of legislative authority, and I felt very strongly about that.

After the Department of Revenue issued its September ruling, craft brewers debated several strategies, from suing the Department of Revenue to trying to pass new legislation this session. Getting new legislation passed would have been difficult–Ralston told reporters that while he wouldn’t have stopped it, the legislation probably wouldn’t be resolved this session–and a lawsuit, despite the likelihood of winning, would be an unwanted expense.

State Representative Michael Caldwell of Woodstock, who was involved with negotiating the agreement with the brewers, is hopeful that more progress can be made in upcoming legislative sessions to reduce the regulations he feels hamper the growth of the craft brewing industry. In an exclusive statement to GeorgiaPol.com, Caldwell said,

I’m very glad to see that our brewers will be returned the rights they were granted under SB63 last year. The ball is moving forward, but even after this deal our state remains nearly dead last in the nation when measuring regulatory environments for growth in brewery jobs. On average an out-of-state brewery is two and a half times as profitable as a Georgia brewery, and we continue to leave thousands of new jobs on the table.

There are many of us who would have liked to have seen significantly more progress this year in freeing these entrepreneurs to further invest in Georgia. I am thankful to see continued support out of our Speaker and members of the House in this endeavor. This is not a debate that is limited to a single legislative session, and I look forward to continuing our work to limit government and to give these Georgia business owners the opportunity they need to be competitive with those in sister states.

On the possibility of ultimately eliminating the three tier beer distribution system, Speaker Ralston urged slow but steady progress.

From time to time, people have introduced measures that would do that. When the time is appropriate, we may have a discussion about that. Change happens sometimes incrementally, and my objective was not to tackle that issue at this time, but simply to allow us to go back to where this General Assembly intended for us to be at the end of the 2015 session.

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The craft brewery issue reminds me of the Tesla issue from a couple years ago. Eventually Tesla (and Tesla only) was allowed to sell directly to the public. To protect Ga. car dealers, other car manufacturers were not included. Similarly, to protect liquor wholesalers, craft breweries also have a government restricted business model. Will we see changes to craft brewery regulations? Yes, but these changes will be small and take several years though it is good that our legislators are talking about the issue. Ideally breweries would allowed to sell unlimited amount of product. It seems that a state that… Read more »