The craft beer industry has been on a tear, boasting a 17% rise in sales last year and continued growth expected going forward. Lately, it looks like a big surge is on tap not only for craft breweries, but small businesses that make wine and spirits as well.
Like elected officials in virtually every state, Michigan Governor Rick Snyder has been an outspoken proponent of local businesses. Snyder even created something called the Office of Regulatory Reinvention a couple of years ago. It may sound like just another bureaucracy, but in fact its goal is to eliminate the red tape that snags entrepreneurs. In early 2013, a government newsletter was circulated boasting that the ORR had successfully helped to eliminate 1,000 regulations in Michigan since the office was opened. Apparently, most of these regulations were obsolete or pointless, and they were eliminated because they were burdens to local businesses.
Lately, Governor Snyder and the Michigan Liquor Control Commission are pushing for reforms that would make it easier for local businesses to make and sell craft beer and other alcoholic beverages. The Detroit News listed a few of the ways that small businesses could be helped by the proposed changes:
Allowing small wineries to offer tastings and sell their creations at farmers’ markets through special permits.
Letting microbreweries making up to 30,000 barrels of beer a year sell to wholesalers, to retailers and directly to customers in limited amounts.
Permitting smaller distilleries to sell limited amounts of their liquor directly to bars, stores or restaurants.
Elsewhere in the country, Prohibition-era laws that affect mom-and-pop alcohol manufacturers—and perhaps scare some aspiring entrepreneurs from starting up businesses—are also being targeted as outdated and overly burdensome.
In Texas, which welcomed 25 new craft breweries last year, state officials are currently considering legislation that would allow breweries to sell beer directly to the public (rather than through a distributor), and also allow brewpubs to work with distributors that would help sell their products in liquor stores and restaurants. “The aim of this [package of] legislation is to make it a little more fair for breweries in Texas and get the code up to date with the modern craft beer industry,” said John Januskey, founder of New Republic Brewing, based in College Station, according to the Texas A&M newspaper. “All the rules that we’re under primarily are still left behind from prohibition or from just after prohibition.”
New Hampshire passed legislation in 2011 that makes it easier for especially tiny brewers—or “nanobreweries”—to operate. Among other things, the law lets brewers that produce less than 2,000 barrels per year get a brewers license for $240, rather than the usual $1,200. According to the law, nanobreweries are also now allowed to sell their beer without the usual requirement that it be sold in an establishment that offers food as well. Seven nanobreweries have opened since the law, sponsored by Mark Warden, a Republican state representative from Manchester, was passed. “The craft beer industry has been exploding,” Warden said to the Boston Globe. “We’re just trying to support it.”
Forces are at work trying to give a boost to craft beer at the national level as well. As the New York Times reported, craft beer supporters are pushing for Congress to pass the Small BREW Act, which would cut the federal tax paid by smaller breweries in half.
Unsurprisingly, larger brewers such as Anheuser-Busch InBev, which wouldn’t see a tax break, view the legislation as unfair and oppose it.
But it’s not just Big Beer that’s against aiding small alcohol-producing entrepreneurs. Phillip J. Cook, an economics and public policy professor at Duke University, told the Times that he thinks beer is currently too cheap, and that it’s a bad idea to cut taxes on any alcoholic product, no matter if it’s made in a giant factory or the basement of a mom-and-pop business. “The taxes that are included in the price of the beer do not begin to pay for the social costs of drinking,” he said.
Mike Tobias, director of a nonprofit lobbying group called Michigan Alcohol Policy, which is pushing for an increase in state excise taxes on beer, seems to agree. “Every day people are dying as a result of alcohol-related accidents and diseases,” Tobias told the Detroit News. “Research is very clear: The more outlets you have, the more problems you have.”
That’s one reason why the group says it is opposed to measures such as allowing wine sampling and sales at farmer’s markets in Michigan. “By allowing sales at farm markets, Michigan is creating an additional alcohol outlet and unnecessarily expanding access to alcohol at family friendly venues,” the group said in a statement. Also a concern: Lifting the ban on alcohol at farmer’s markets would be “a risk to local businesses” that sell alcohol too.