Opinion: Daily Journal

H.B. 500 left little but dregs for craft brewers

Provisions expanding self-distribution removed from legislation

CJ photo by Kari Travis
CJ photo by Kari Travis

Rep. Chuck McGrady, R, Henderson, tried hard to smile this week while presenting the plundered remnants of House Bill 500.

The bill, which at first carried much hope and optimism for beer brewers, ended looking much like a Kmart toy aisle on the last day of a going-out-of-business sale.

All the good stuff was gone.

“The parties on both sides of the bill got together at the direction of leadership and their own coalition and have come together to be supportive of H.B. 500, the new (Proposed Committee Substitute),” said McGrady, a primary sponsor.

The House voted 95-25 Wednesday night to approve the watered-down plan, which heads to the Senate.

“Politics is the art of the possible, and compromise is often a necessary part of the process,” McGrady said Tuesday in an Alcoholic Beverage Control Committee hearing.

Call it what you will, but reality says the brewers were simply outmanned and outgunned, disheartened by a process that often enriches only lawyers and lobbyists and leaves entrepreneurs on the outside of the debate, disappointed and pessimistic.

North Carolina’s brewers can produce no more than 25,000 barrels of beer before they must procure a distributor, a move brewers close to that threshold say unfairly inhibits growth, compromises their brand, and runs counter to the core tenets of a free market.

H.B. 500 would have raised that cap to 200,000 barrels, but the state’s distributors — who said the increase would place their own businesses in jeopardy — along with religious objectors who see alcohol as morally abhorrent — persuaded lawmakers to eliminate the provision.

“We’ve been at the table since day one, but you can’t negotiate with yourself,” said John Marrino, who owns Olde Mecklenburg brewery in Charlotte and has purchased a $3 million property in Cornelius, where he plans to build a second brewery.

The scant remains of the bill includes provisions that authorize tastings during brewery tours, gives brewery taprooms the option to sell other alcoholic beverages, and lets “farm breweries” in dry counties or cities sell their products on the premises. Farm breweries are breweries on agricultural land that use some of the grains or fruits grown on the property in their beer or cider.

One lawmaker even tried to kill that provision, Section 10 of the bill, which mirrors the rules letting wineries offer tastings and glasses in dry counties.

Rep. Pat Hurley, R-Randolph, tried a couple of times to push through an amendment removing the farm brewery provision, which calls for a public hearing before a local board can approve sales and tastings in a dry county.

“A public hearing and a governing body are not the same as a vote of the people,” she said Tuesday, referring to local referendums and residents’ choice of elected representatives in Raleigh.

“I think the vote of the people is still very important in North Carolina.”

The Rev. Mark Creech, executive director of the Christian Action League, routinely rails against any legislation that he perceives promotes the use of alcohol.

“May I pose this hypothetical to each of you, imploring you for your understanding?” he asked lawmakers Tuesday. ”You work hard to convince people that you are the right person to serve as their representative in the North Carolina House. You work hard to raise money. You campaign hard, then certain lawmakers in the North Carolina General Assembly put forward legislation that passed and overturned your election and handed the seat to your opponent.

“You pass this legislation with Section 10, in principle, that’s exactly what you have done. I implore you today to do unto others as you would have them do unto you.”

Fellow lawmakers pointed out the local boards and council are, too, elected by the people.

For now, brewers are disappointed, yet there’s little sense of despair. They haven’t conceded the issue and show no intention of giving in.

Policy, said NoDa brewing’s Todd Ford, will prevail over crony politics.

And, toward that end, a lawsuit over the barrel provision is a near certainty.

Managing Editor John Trump is author of Crate and Barrel: Craft Spirits in the Old North State (Blair, 2017). He will discuss the book May 22 at noon at the John Locke Foundation’s Shaftesbury Society meeting in Raleigh.