Nebraska brewers have banded together to fight what they’re calling a “job killer” of a bill introduced in January. LB 632 aims to, among other things, do away with a provision that allows breweries in the state to operate up to five retail locations where the company doesn’t also manufacture beer.
In theory, the bill is meant to solidify the three-tier system separating brewers from wholesalers and retailers, while protecting the state from lawsuits from out-of-state companies. In practice, brewers contend it would simply handicap their ability to expand and cap the number of jobs they’d otherwise be able to create with fewer restrictions.
WHY IT MATTERS
Incidentally, the language being threatened now only passed last year in LB 1105. In a post decrying the current legislative effort, Empyrean Brewing of Lincoln wondered aloud, why fix what isn’t broken?
“During the prior three years, numerous industry groups and legislators worked together to [deregulate] certain aspects of the market to allow craft brewing to grow. And that’s exactly what happened,” the company wrote in a blog post earlier this month. “[E]stablished breweries expanded and opened new taprooms. These breweries have invested millions of dollars into the local economy and created hundreds of jobs. This is the perfect example of a policy working.”
Empyrean isn’t alone, as numerous breweries have made themselves available to local media in the state to denounce the idea of doing away with a provision that has barely had the chance to dry on the parchment. The gist of the argument is a familiar one to anyone who pays attention to beer, particularly the myriad regulatory brawls that break out across the country on the regular: by minimizing restrictions on how brewers operate, they can expand and thus create jobs. And as all proper arguments made in 2017 do, it comes with a hashtag: #DontKillOurCraft.
The Nebraska Craft Brewers Guild did not respond to request for comment as of press time. But speaking with WOWTV News, Kim Kavulak, with Nebraska Brewing Co. and the state’s guild, said, “We’re not entirely certain of the motivation behind the introduction of this legislation.”
State Sen. Tyson Larson sponsored the original bill that freed up the lane to market. He’s also the same senator taking whiteout to the rulebook now. But he’s quick to clarify: if passed, brewers could still open separate locations—they would just also have to produce beer on the premises.
As for the motivation, there are a couple reasons. He says one of the major problems rests on an “unspoken agreement” regarding the last update that assured brewers would wholly own the subsequent retail operations they opened. This matters, he says, because Nebraska does not allow self-distribution for breweries.
“Essentially, if you don’t wholly own the location, then you’re self-distributing to a place that isn’t completely yours,” he tells GBH. “When that was brought to their attention, they didn’t like being told that.”
In making his argument, he also invoked Granholm v. Plead, the Supreme Court case that ruled laws in New York and Michigan allowing in-state wineries to ship direct to consumers while prohibiting out-of-state wineries from doing the same were unconstitutional. He worries an out-of-state brewery could bring about a lawsuit challenging why they can't sell beer in Nebraska the same way. In essence, such a hypothetical lawsuit would hinge on an out-of-state company wanting to come in and open a similar retail outlet and being stonewalled.
GBH noted that a number of states allow for breweries to operate taprooms without any production component and haven't dealt with out-of-state breweries picking a fight. He responded, “That doesn’t mean Nebraska shouldn’t operate [independently] or protect this state from a costly lawsuit possibly.”
But that might happen regardless. As Empyrean warned earlier this month, “This bill strips away existing rights that will likely lead to litigation against the state and impose a liability on the state coffers.”
Update: Late last night after we'd published this story, Tom Wilmoth, co-founder of Zipline Brewing Co. and president of the Nebraska Brewers Guild, responded with the following statement:
“Our official position is [that] this bill is a job killer. It will curtail the expansion of the craft beer industry and impair our ability to invest in our communities, in agribusiness that supports our industry, and in manufacturing that supports our work.
This bill was negotiated in secret without any input from the affected licensees despite all our efforts to work collaboratively with our ABDN ‘partners’ and despite the fact that the newly created Craft Brewers Board is specifically tasked with looking at issues like this.
This bill strips away existing rights that will likely lead to litigation against the state and impose a liability on the state coffers.”