RALEIGH In 2005, House Bill 392 was signed into law by then-Gov. Mike Easley, ending the 6 percent alcohol by volume restriction on beer made or sold in North Carolina. In the 11-and-a-half years since, the craft beer industry has grown to nearly 200 breweries across the state.Several of them and their supporters now want another North Carolina law changed. In 2003 the state legislature raised the cap on the amount of beer a brewery can produce without signing on with a wholesale distributor to 25,000 barrels (the equivalent of more than 6 million bottles of beer). The group, operating under the banner of an organization called Craft Freedom, now wants the cap raised even more.”The whole thing is really about free markets and fairness,” John Marrino, owner of Olde Mecklenburg Brewery and one of the driving forces behind Craft Freedom, said. “We built a business here, we built a brand from nothing and the state tells us at 25,000 barrels we have to transfer the owenrship of that brand to another private company and lose all our access to market, giving up the sale and distribution rights.”But Tim Kent, executive director of the North Carolina Beer & Wine Wholesalers Association, said the push to raise the cap is a power play by a few breweries, like Marrino and OMB, who would benefit from a raised cap and have lobbied for a change in the legislation since the ABV law changed.”This is the same bill that has been introduced every two-year legislative session since 2005,” Kent said. “And it’s an effort by a handful of breweries to change the law and give themselves a special privilege at the expense of everybody else in the industry.”Rep. Michael Speciale (R-Beaufort) introduced House Bill 67 earlier this month with bipartisan support to raise the distribution cap to 100,000 barrels. Marrino said Craft Freedom, while supporting Speciale’s legislation, is not behind the bill and has plans to present legislation of its own in the next month or so. Speciale did not return a phone call regarding his legislation.”My business model is, and always will be, to be a local brewery,” Marrino said. “We want to stay in the Charlotte region of North Carolina. For me, I don’t need a distributor and I don’t want one. I sell in a 40-mile radius and I’m perfectly capable of taking care of my customers directly.”But Kent said changing the laws to benefit just a few breweries would hurt both smaller and larger brewers.”Ninety percent of all brewers produce 7,000 barrels or less,” Kent said. “All of those brewers can already self-distribute, but it’s unfair by the same token to all of the mid-size and larger brewers who already work with distributors and have operated in good faith with the laws of North Carolina.”Kent said breweries often weigh the benefits of whether or not to use a distributor at around 5,000 to 7,000 barrels of production, and pointed to Winston-Salem’s Foothills Brewing as one brewery who benefited from signing on with a distributor. Kent said Foothills went from making less than 10,000 barrels in 2011 and has grown to 42,000 barrels since signing with a distributor.Wicked Weed Brewing in Asheville recently opted to sign on with a distributor but is in favor of a hike in the distribution cap.”This law change will not directly affect Wicked Weed as we have already signed over all of our distribution rights for the state,” Ryan Guthy, owner and head of sales for Wicked Weed, said in a statement. “With that said, Wicked Weed is a huge supporter of self-distribution laws. We as a company believe that all breweries in N.C. should have the right to self-distribute as much beer as they choose. For us, signing with wholesalers was the right choice.”Marrino said distributors do bring value to breweries like Wicked Weed that want to expand their footprint, but forcing those that have grown near the 25,000-barrel limit like OMB, which produced more than 21,000 barrels last year to sign with one shouldn’t be mandated by the government.”At 25,000 barrels, I’m not even 1.5 percent of the Charlotte beer market,” Marrino said. “I’m still a rounding error in North Carolina and I’m not even 1.5 percent of Charlotte, nevermind North Carolina.”Mitch Kokai, senior analyst at conservative think tank the John Locke Foundation, thinks the open market, not the government, should dictate whether or not signing with a distributor is right for breweries.”Some businesses are going to find it’s great working with a distributor, others will say, ‘No, what we need to have is something in which we get to maintain our own business model and we just grow it,'” Kokai said.But Kent counters that “North Carolina already has the most permissive craft beer laws of any state from Virginia to Texas,” and distributors have already made “hundreds of millions of dollars” in financial investments based on the current laws.”Consumers have more choice, more variety, more options than they’ve ever had before in the beer aisle. So the truth is this is really working,” Kent said of the current law.Marrino said Craft Freedom’s supporters want choice as well to not be forced to sign with a distributor at an “arbitrary” prodcution level.”We basically have two decisions: we either have to stop growing which is what I will do or we have to transfer ownership of our brand to somebody else and lose total access to market,” he said.
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