North Carolina Brewers are Trying to Overhaul Their Beer Industry

Austin Ray

THE GIST
With support from the state’s brewers, North Carolina lawmakers have filed a bill that would dramatically loosen regulations pertaining to distribution, taproom sales, homebrewing, and more. Speaking Tuesday at a press conference, State Rep. Chuck McGrady (R-Henderson), one of the bill’s sponsors, said the legislation is designed to help North Carolina catch up with the times. 

“Alcoholic Beverage Control laws pre-date the existence of the craft beer industry in North Carolina,” McGrady said, per NC Beer. “We have outdated state laws standing in the way of a growing industry that is bringing jobs to every part of the state, and we need to fix that.” 

The bill, HB 500, represents a much more sweeping effort than was introduced just last month, in both its aim and scope.

WHY IT MATTERS
If passed, HB 500 would essentially overhaul a number of beer industry regulations. It would clarify language to allow for crowler sales at the retail tier, explicitly authorize tastings during brewery tours, enable breweries to sell beer produced by other companies at their taprooms, and much more.

“These common-sense reforms will put our independent craft brewers on an even footing with international corporate beer,” says Margo Metzger, executive director of the North Carolina Craft Brewers Guild, per NC Beer, “and give them a real shot at success.”

But the most critical change in the proposed legislation pertains to franchise agreements. For starters, the bill would allow breweries to self-distribute up to 200,000 barrels per year, demolishing the current cap of 25,000 barrels. Furthermore, it would allow “small” breweries—defined here as producing less than 200,000 barrels, thanks to the adjusted cap—to terminate agreements with wholesalers at any time “without good cause.” At that time, the two sides would negotiate “fair compensation.” If the two sides can’t agree on fair compensation within 12 months, it would go to arbitration.

It’s here where things get a bit interesting, because, as we reported just last month, the state introduced a similar-but-much-more-timid legislative effort that aimed to raise the self-distribution cap to 100,000 barrels—half the current ask. That bill said nothing about contract terminations, but wholesalers were still opposed. So as you can imagine, the latest bill, which would only serve to loosen restrictions more dramatically, isn’t exactly sitting well with the middle tier.

“[T]he brewers and their bill sponsors did not seek any advice, input or comment from the NC wholesaler community prior to filing this bill,” Tim Kent, executive director with the Beer & Wine Wholesalers Association, tells Beer Business Daily. “Suffice it to say, we are opposed.”

It’s highly unlikely that brewers get everything they want as outlined in the bolder legislation. The opposition is too powerful. But hey, if you demand the world, negotiations might start in more comfortable territory.

—Dave Eisenberg

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Craft Beer Modernization Bill Filed in NC Legislature [NC Beer]