Craft beer compromise kicks the can on direct sales

Wholesalers force small brewers to forego their fight to kill the ‘three-tier’ system.

Well, that was fast. Just 10 days into the legislative session, Georgia’s craft brewers struck a deal with alcohol wholesalers to regain a right they had lost at the end of last year: The ability to sell beer to consumers as a “gift” for going on a brewery tour. But the fix came with an even bigger cost: A one-year moratorium on the fight for direct sales.

On July 1, 2015, when the “Beer Jobs Bill” went into effect, craft brewers could finally charge different amounts for tours based on how much beer—up to a six pack—a customer wanted to take home. The bill was the first step in a larger fight to let brewers sell beer onsite to consumers, a right enjoyed by almost every other state in the United States, save for Mississippi. But out of nowhere, the state’s Department of Revenue last September issued a memo with “clarifying language” that said brewers couldn’t base the price of tours on how much beer would be “gifted.” And those who violated the order would potentially lose tasting room privileges. Frustrated craft brewers, some of who invested thousands of dollars into tasting rooms, returned to square one as the memo rendered the new law meaningless.

The DOR’s actions angered some of the state’s top lawmakers. Before the 2016 legislative session began, House Speaker David Ralston and Senate President Pro Tem David Shafer called upon the agency to correct the problem it had caused. “If they don’t, we may have to,” Ralston warned. For a while, a bitter beer battle inside the Gold Dome seemed all but inevitable.

But the fight ended before it truly started. As part of the compromise between the Georgia Beer Wholesalers Association and the Georgia Craft Brewers Guild, the DOR plans to restore the Beer Jobs Bill’s original intent. To do that, the agency will issue new rules to let brewers sell tours at varying price points again, host special events, and use social media to advertise deals. In addition, DOR officials will also allow third-party groups to sell tour tickets and allow food to be sold at breweries.

If craft brewers were enthusiastic about the deal, though, they weren’t making it known. Multiple brewers either didn’t return calls or declined to chat on the record. Nancy Palmer, executive director of the GCBG, only sent along a very brief statement: “An agreement with the governor’s office and legislative leadership for regulatory fixes to the brewing industry has been reached. We look forward to quick implementation.” On a GCBG conference call this afternoon, Eventide Brewery CEO Nathan Cowan called for brewers to “fall back” following the deal. “It’s David versus Goliath,” he added.

Meanwhile, wholesalers were quick to express their enthusiasm, in part because craft brewers promised to stop pushing for direct sales until 2017. In recent months, the GCBG had pressured lawmakers to do away with the state’s “three-tier” system, which requires a distributor for the sale of beer and liquor. Though no bill had been filed yet, state Rep. Ron Stephens, a Savannah Republican, was working on a measure to allow craft brewers to sell beer directly to consumers, sell food on their premises, and even open as many as five “tasting rooms” across the state.

“We’re thrilled about the compromise and thank our brewer partners and the Guild for working to make this happen,” GBWA spokesman Martin Smith told the Atlanta Journal Constitution. “It took both of us.”

So where does that leave Georgia’s breweries now? If a current lobbying effort by Mississippi brewers is successful, Georgia will be the only state left without direct sales, leaving us stuck with a distribution model as old as the Prohibition for at least another year.