News: CJ Exclusives

Craft breweries ask legislature for additional freedom to distribute

Distributors want to maintain control over small but growing breweries

Todd Ford, co-owner of NoDa Brewery in Charlotte. (CJ file photo)
Todd Ford, co-owner of NoDa Brewery in Charlotte. (CJ file photo)

Todd Ford, along with his wife, Suzie, invested their entire 401(k) toward a nascent brewery in a part of Charlotte once known for textile mills and for the homes of those who worked in them.

Several million dollars later, after years of failed and successful recipes, of struggle and, finally, of success, the Fords opened a second facility, in a building and grounds real estate developers had left behind.

The Fords stood at a podium Tuesday morning, in the front of a room in the Legislative Building jam packed with brewers, distributors, lawmakers, and journalists.

Todd Ford had a simple question: Why does the state penalize the brewers who have invested the most?

The Fords, founders of the NoDa brand — short for North Davidson — were part of a contingent of brewers who attended the meeting of the Alcoholic Beverage Control standing committee. They were there to talk about House Bill 500, which, foremost among the provisions, would lift the so-called cap on brewers and allow them to distribute no more than 200,000 barrels of beer each year. Current law caps that limit at 25,000, meaning brewers reaching that threshold must procure a distributor, who acts as a middle man and, along with the retailer, is part of the three-tiered distribution system.

At least three North Carolina craft breweries — Red Oak in Whitsett, and Olde Meck and NoDa in Charlotte — are approaching the 25,000-barrel threshold. The brewers, Carolina Journal has reported, want to continue control over their distribution and plan to halt growth if the law isn’t changed.

Rep. Chuck McGrady, R-Henderson, a primary sponsor, called parts of the current law for the state’s more than 200 brewers “arcane.”

Distributors, though, say the system works well and is crucial in satisfying consumers’ wants and needs. The respective distributors say H.B. 500 places their businesses, many of them family owned and operated, at serious risk. They point out the entire portfolios of 12 wholesalers in North Carolina don’t add up to 200,000 barrels, or 66 million bottles.

They told lawmakers about their large investments in trucks, in people, and in warehouses. They told the crowd the risks of passing the bill outweigh the rewards, saying the measure is an “absolute killer” and a “disturbing” piece of legislation.

The latest tact by distributors to derail the bill is a product of a move by Rep. Jamie Boles, R-Moore, who introduced House Bill 480 last week. That bill, as filed, would require the ABC Commission and Department of Revenue to ensure distillers and brewers comply with state tax laws and require that certain brewers submit an annual report to the ABC. The move comes amid contradictory reports of a state Department of Revenue email that intimated more than 20 percent of North Carolina Brewers were failing to fully comply with state tax laws.

The distributors who spoke Tuesday were using the Revenue story as evidence some brewers aren’t paying their taxes, and that distributors ensure taxes are applied, and paid on time.

Tim Kent, executive director of the N.C. Beer and Wine Wholesalers Association, said H.B. 500 opens the barn door the size of a football field toward allowing big brewers such as InBev and MillerCoors to swoop in and take advantage of North Carolina brewers and, in effect, the laws passed specifically to help the state’s craft beer industry.

North Carolina has some of the most lenient beer laws in the South, which, as a whole, is struggling to play catch up with much of the rest of the country.

NoDa products comprise just 1 percent of the Charlotte beer market, said Todd Ford.

“Quite honestly,” he said, “it’s the best of the worst, and we should aim higher.”

McGrady said the House ABC committee will take up the bill again next week when legislators return from the Easter break.