Lawmakers set to propose bill to raise craft beer distribution cap in North Carolina

Red Oak Brewing, along with Craft Freedom, backs a bill that could change distribution laws that have stood for more than a decade

Eamon Queeney—North State Journal
Red Oak Brewery owner Bill Sherrill explains how the brewery will expand at its Whitsett campus into a public beer hall and garden with a gift shop and even an art gallery

WHITSETT, N.C. — Bill Sherrill stands next to a nearly 3,000-square foot building known as the Beer Hall towering over Interstate 40/85. The roof and building itself are as unique as the beer that Sherrill distributes as the owner of Red Oak Brewery.The concrete is laid. The roof is attached to massive beams stemming from the entire block of land Sherrill owns. It all leads to a gift shop that slowly arches upward toward and empty plot of land. That’s where the art exhibit is expected to go.All of this stands behind a constantly changing digital billboard that reads “Free craft beer, contact your legislator,” “Freedom to grow and compete a ‘Right'” and “Free enterprise: Freedom to compete without state regulation.”Let’s just say subtlety isn’t Sherrill’s strong suit.As one might imagine, his stance on raising the distribution cap in North Carolina is fairly stern. Red Oak, along with Olde Mecklenburg Brewery, Raleigh Brewing, NoDa Brewing and several other breweries, restaurants and bottle shops support the movement known as Craft Freedom.What it comes down to for Sherrill, quite simply, is guaranteeing that his product is up to his standards.”Our product is unfiltered, unpasteurized, no chemicals, no preservatives, it’s a live product and it needs to be kept well,” Sherrill said. “We rotate and clean the lines every two weeks. A lot of the wholesalers say they do, but I can tell you if we had our salesman here now … they would tell you that they go in these places and the yeast is coming out of the spigot. That’s just terrible.”The way the law in North Carolina works currently is when small breweries reach a sales limit of 25,000 barrels per year, all sales and delivery must be turned over to a wholesaler. Located just outside of Greensboro, Red Oak has the capacity to well exceed those numbers and keep the quality at a premium.The 25,000-barrel cap puts N.C. behind 31 other states that have either higher caps or an unlimited self-distribution law. It’s a harrowing statistic for a state that currently has 192 total breweries — the eighth most in the United States — and a fledgling craft beer industry that has more companies on the horizon.House Representative John Hardister (R-Guilford) believes there shouldn’t be a cap, but said if there is one, it should be drastically higher. He’s hoping to see the cap move to at least 200,000 or more, but the goal is to become 24th state in the country without a limitation on distribution for craft breweries.”The reason why we believe it will work this time is because craft beer is more organized,” Hardister said of the bill. “There is now nearly 200 craft breweries in the state. They’re making their voices heard. They’re educating the community and legislators. The time has never been better than right now.”Hardister didn’t mince words when discussing his reasoning for backing the bill.”It’s the right thing to do, and I think that’s very simple,” Hardister said of proposing a bill to change the distribution cap. “Bill [Sherrill] ought to have as much control over his company as possible. If you look at the cap — right now it’s 25,000 a year — I don’t even think there should be a cap, honestly.”But if we’re going to have one, it should be a lot higher than 25,000.”Hardister isn’t the only one who believes there should be change in the state. The Craft Freedom movement has backing from Americans for Tax Reform, The John Locke Foundation, The Civitas Institute and the National Federation of Independent Businesses. All four are non-profit, free-market organizations.Grover Norquist, president of ATR, released a letter to lawmakers earlier this month calling the cap a “glaring example of harmful regulation that inflicts economic harm while serving no purpose other than pure protectionsm.”Gargantuan projects like the one Sherrill is heading at Red Oak aren’t rare, either. Olde Mecklenburg owner John Marrino has plans for a $7 million brewing facility in Cornelius. Both breweries have defied the odds of the cap while others — like Sierra Nevada and Wicked Weed — have moved to distributors to pump out their product.Sherrill doesn’t blame other breweries for moving to distributors, but he also doesn’t understand the push to force him to do so if he exceeds an archaic regulation.”I’m not doing anything wrong. I’m not doing anything illegal,” Sherrill explained. “I want to be legal and I don’t want to worry about it.”Companies like Red Oak are brewing enough beer to exceed the cap, but they can’t distribute it.”Brewing and selling in a year are two different things,” Sherrill said. “Those tanks are all filled with beer. … On December 31, the tanks were filled with beer, but we hadn’t sold a drink.”So what happens to all of the construction around the Red Oak plant if a bill isn’t passed soon?”Hell, I don’t know,” Sherrill said with a laugh. “I’ll be working for you, I guess. And I can’t write worth a damn.”In 2009 when Red Oak began bottling beer, the company had 18 employees circling the machines. Today, Red Oak has more than doubled its employees with 47 overseeing the Whitsett enterprise. Two weeks ago, resumes were requested for a sales/delivery employee.It’s a trend seen all over the state with the growth of breweries bringing in more employees to keep up in the fast-paced beer industry.Following the tour of the Beer Hall, gift shop and plot of land for the art exhibit, Sherrill took our group to the huge tanks where the brewery’s three beers are contained. Next to the tanks of beer sits an area around the size of a football field that remains empty.”That’s where we’re planning to put 16 more tanks,” Sherrill said. “If all goes well.”