Legislative Reform Used to Entice Out-Of-State Brewers

Maybe taxes are too high. Maybe the quality of water is too low. Maybe the rules and regulations that govern the alcohol industry are too stringent. Whatever it is, it’s in the way of the welcome mat. And at a time when communities are wooing out-of-state craft brewers looking to build new facilities, that means individual states are facing pressure to change regulations that present obstacles to the industry.

As evidenced by the necessary accommodations listed in Stone Brewing’s request for proposals (RFP) for a spot to plant its east coast facility (the brewery is based out of Escondido, Calif.), these projects are no small undertaking. That said, the returns enjoyed by the obliging state are expected to be bountiful, as Stone anticipates generating hundreds of millions of dollars annually over time. To get their slice of the pie, a number of states have pushed —  or are continuing to push — for legislative changes that would create a more brewer-conducive atmosphere, either for Stone or for other breweries that may look to expand in the future.

Alabama State Sen. Dick Brewbaker sponsored SB 439 in an effort to appeal to Stone. His bill, which ultimately failed, would have exempted brewers that produce at least 25,000 barrels from specific rules within the state’s three-tier system, a loophole that would have allowed Stone to run its desired World Bistro & Garden Restaurant on-site.

“We haven’t done very well attracting any larger concerns,” said Brewbaker. “You know, we’re always as legislators trying to either do one of two things: Either get existing industries to move where they are to Alabama – and we’re a low tax state – or to get companies that are expanding to pick Alabama as a potential site.”

He said that for Stone specifically, the prospect of being a tourist attraction was very important to the company, so the proposed bill was rooted in accommodating that desire.

“What we’ve got to do is make sure we don’t have laws that impede on their business models,” he said. “To me, from my point of view, breweries are a very attractive industry, especially the modern ones that are being built now. They are relatively labor intensive, they’re environmentally friendly, and they have impact beyond just employment because of the agricultural connections.”

Brewbaker’s bill wasn’t the only piece of legislation that stemmed from the desire to court Stone. In South Carolina, the aptly dubbed “Stone Bill” seeks to change the definition of a brewpub in the state. Currently, any brewery that serves food is known as a brewpub, with production limited to 2,000 barrels per year. Since production at Stone’s World Bistro & Garden Restaurant would likely far exceed that, the bill seeks to up the production limit to 500,000 barrels.

“A brewery can create an unlimited amount of beer and distribute its product, but not serve food. A brewpub can serve food, but its beer production is limited to 2,000 barrels per year and restricted from distribution. That means Stone cannot both distribute its beer and create a beer garden and restaurant for tourists,” said Senator Sean Bennett, the primary sponsor of S. 1230, in a release.

In an op-ed endorsing the bill, editors at Greenville Online wrote, “The law probably can’t be changed before Stone decides where it will put its new brewery, but the change could pave the way for other opportunities that could create jobs and benefit the state’s tourism industry.”

While those two bills were inspired directly by Stone, even legislation born of simply trying to improve the beer landscape in general can alter the perception of brewers as to whether they may be good places for brewers to come grow their business.

Jeff Muir, communications director with Tennessee’s Blount County Partnership, a business development organization that supports existing business in the area and recruits others, explained how the state’s recently amended beer cap helps to put Tennessee on a more even keel with places that boast beer friendly reputations.

Tennessee’s 5 percent alcohol by weight cap was recently lifted to 8 percent in the state, though the law isn’t expected to go into effect until January, 2017.

“It helps the state, it helps us locally here. It gets us closer to what our surrounding states are,” he said.

“It’s not quite to the level of what a North Carolina or a Georgia are,” he added, but “It shows we’ve been progressive in helping change the beer laws in the state.”

Muir added that it’s important to work with legislators while championing the needs of outside businesses that might be considering Tennessee.

“We have the ability to help make things happen in the legislature, to help push things through that will be more beneficial to [craft brewers],” he said. “If they have something specific that Tennessee doesn’t offer or has restrictions on, we’re more than happy to get out there and beat the drum for their cause.”

Not all efforts revolve around legislatures, he added, as selling a specific area to brewers is of equal importance. As such, the Blount County Partnership has created a website dedicated entirely to inviting a high production brewer from out of state to come do business in the shadow of the Smoky Mountains, touting its location, beer culture, and environment as incentive.