North Carolina Fight for Self-Distribution Goes Back to Square One

Austin Ray

THE GIST
North Carolina lawmakers have scrubbed the key language from a piece of proposed legislation that initially aimed to dramatically raise the self-distribution cap in the state. As a result, the bill, HB 500, would still loosen restrictions imposed on breweries, but has essentially been neutered of the most important component for which brewers have been fighting. Wholesalers are calling the eviscerated bill a “positive step” for the industry. Brewers, meanwhile, furious over what they’re calling “backroom politics,” are exploring their legal options.

WHY IT MATTERS
Even stripped of its heart, the bill would bring about positive changes for the state’s brewing industry. Language to alleviate regulations on crowler sales, brewery tastings, contract brewing, and more are still present. But by one of the legislation’s key sponsor’s own admission, as reported by Charlotte Magazine, the bill is still a “shadow of its former self.”

That’s because, as nice as some of those other changes might be, the primary reason the state’s beer industry at large was standing behind this bill was to update self-distribution laws. As first introduced, the bill sought to grant breweries that produce up to 200,000 barrels of beer per year the right to self-distribute, up from the current cap of 25,000 BBLs. Now, without that language, the bill does nothing to reform franchise agreements, leaving the industry at a standstill.
 
As for how things unraveled here, it seemed the bill didn’t have the votes, thanks to what the Charlotte Observer referred to as “the political strength of wholesalers.” There does seem to be some discrepancy, however, over why, exactly, proponents and opponents never came to the table together to negotiate and land on any sort of compromise.

On one hand, the Observer reports that there was “virtually no effort to compromise, from, say, the 200,000-barrel cap to 100,000 barrels or less.” Representatives from Craft Freedom, though, tell GBH this is a “total lie,” adding the group’s own lobbyist reached out “numerous times but they refused to talk.”

None of this is lost on lawmakers. Having seen the dispute over whether brewers ever actually invited wholesalers to the table, Republican State Rep. John Ray Bradford held a press conference with Craft Freedom this afternoon, during which time he publicly and unequivocally called for negotiations. This is of particular importance to Bradford, as his district stands to lose out on a major expansion project spearheaded by Olde Mecklenburg of Charlotte.

“I’m here today to invite you to my table. Because [in] Cornelius, we stand to lose a big project,” he said, speaking to the wholesale tier. “We hope you send your most reasonable person into the room, and I think if we get into the room and sit and look at this issue we can work through it.”

GBH has reached out to the North Carolina Beer & Wine Wholesalers Association to ask if it would accept the invitation. We’ll update this post when we hear back.

Update: “Of course, I am always happy to speak to Representative Bradford and welcome the opportunity to include Mr. Marrino [of Olde Mecklenburg Brewery],” Tim Kent, executive director of the North Carolina Beer & Wine Wholesalers Association, tells GBH. “It’s worth noting we were never approached prior to the 200,000-barrel bill being filed. Now, the other side seems anxious to talk.”

Regardless, if brewers can’t get it done legislatively, they're ready to get litigious. Here's John Marrino, owner of Olde Mecklenburg, in the Observer: “I’m not sure the General Assembly is the best avenue to ensure the success of the micro-brewery industry in North Carolina.”

State Rep. Bradford is hoping it doesn’t come to that.

“I don’t have closed fists,” he said Monday, in hopes of bringing both sides together. “I have open arms right now.”

—Dave Eisenberg

READ MORE
NC craft brewers lose battle to big distributors: ‘It’s backroom politics’ [Charlotte Observer]
Craft Freedom Continues Fight After House Bill 500 Change [Charlotte Magazine]