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A pint of politics

Battle over self-distribution leaves a bad aftertaste


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You may not be politically inclined, but if you enjoy NoDa's Hop Drop 'N Roll, Olde Mecklenburg's Copper, Red Oak's eponymous flagship or Wicked Weed's Freak of Nature, pay attention. You're about to get a swift, unpleasant kick in the pint glass.

In past years, the North Carolina Brewers Guild motto referred to us as "the state of Southern beer." The N.C. Beer & Wine Wholesalers Association recently pointed out we have "the most permissive craft beer laws of any Southern state." These days, these two sides, former allies in the 2005 fight to raise the ABV limit from 6 percent to 15 percent, couldn't be further apart on two bills that recently failed in the N.C. General Assembly.

At the heart of recent contention is HB 278, which would have allowed an increase in the amount of beer that North Carolina-based breweries can sell themselves. Today, that limit sits at 25,000 barrels of annual production; HB 278 would have increased that amount to 100,000 barrels. After that state-mandated limit is hit, the brewer is forced to turn over all rights to their own products to a third-party distributor (not to mention up to a 30 percent cut of the gross). It's important to note that only N.C.-based breweries are afforded the self-distribution privilege; distributors handle any out-of-state brewery offerings.

Most local breweries willingly sign up with a distributor long before they approach that limit, but the four I mentioned earlier (Charlotte's own NoDa and Olde Mecklenburg, plus Greensboro's Red Oak and Asheville's Wicked Weed) are swiftly approaching this artificial limit using networks of their own creation, and are fighting the state's mandate tooth and nail.

What exactly does this mandate mean for you, the Charlotte-area craft beer consumer?

Frankly, the "beer on everyone's lips," those offerings from NoDa, will stop flowing completely before they hit that glass ceiling. A post from NoDa owner Suzie Ford laid out the problem they face with the status quo: "we'd be forced to hand over our business to a distributor and have no choice but to lay off 9-plus employees. Instead, we would choose to stop at 24,999 (barrels), keep our valued employees and control our own business, sadly not growing until the law changes."

Olde Mecklenburg will likely begin its 2016 by making painful cuts in the brewery's reach, as they attempt to stay under the law's grasp. Ryan Self, director of sales at OMB, laid out the challenges they face: "We would have to start looking at bars and restaurants that have supported us for years, and making real choices about who gets to sell our beer and who doesn't. [These are] restaurants with a proven track record of demand for our beer, who are asking for our beer, who can't serve it to their customers because state laws are so anti-small-business. If it sounds ridiculous, it's because it is."

HB 278 died in the N.C. House's Committee on Alcoholic Beverage Control on April 30, without even being considered. Committee chair Rep. Jamie Boles lists his largest outside campaign donor as the N.C. Beer & Wine Wholesalers Association, benefiting from donations totaling $7,500 in the 2014 election cycle. In total, the anti-HB 278 group gave $186,475 to 103 individual candidates in the last election cycle.

The bill was not ready to go quietly, however; a wholesaler-generated website describes the death rattle thusly: Bill sponsor Rep. Michael Speciale (R-Craven) filed a "discharge petition" around 3 p.m. on April 29. Speciale needed 61 signatures in order to bypass the House ABC Committee and bring HB 278 to the floor for an immediate vote. Speciale's petition received only 21 signatures (18 percent of the 120 members) by the effective deadline of midnight, while two additional members signed the petition following that deadline.

Distributors play a vital role in enabling out-of-state brands to be readily accessible across North Carolina. It's neither cost- nor time-effective for an out-of-state brewery to learn the intricacies of a foreign beer market, and it just makes sense for them to utilize a distributor's resources. But what about a brewer that makes deliveries to local accounts down their own street? I find it difficult to believe that a switch can simply shut off at a mandated production threshold, and suddenly these same small businesses become incapable of handling their own products.

Thirteen states in the U.S. have no self-distribution cap, and another 12 have a cap higher than North Carolina's. We must ask ourselves: is it enough to be the best in our region, as the wholesalers insist, yet still cause harm to local small businesses, or could we be better?


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