Small beer makers say bill creates "extortion fee" as they seek Abbott's veto
Craft brewers want Gov. Greg Abbott to veto a bill that would put limits on some regulatory relief that benefits them. But supporters, including some major distributors, say the bill is needed to stop big beer companies that gobble up independent craft brewers from taking advantage of relaxed regulations.by Jay Root and Chris Essig June 8, 2017 12 AM Four years ago, the Texas Legislature helped nourish a beer-brewing renaissance by lifting onerous regulations on small manufacturers and brewpubs.
It was one of the main reasons why Oskar Blues of Colorado — the first American craft brewer to self-can — spent millions to open up a brewery with Austin's largest tap room last year. The investment has allowed connoisseurs of Dale’s Pale Ale and other craft brands to drink beer the company delivers from the brewery floor, visible through a glass partition, straight to their glasses.
But that was then and this is now.
At the end of May, the Legislature enacted a bill that, as Oskar Blues founder Dale Katechis put it, will “pull the rug out on us a year after we started doing business here in Texas.”
The legislation rolls the clock back on some regulatory relief injected into the Texas beer industry in 2013, all while providing “carve-out” provisions that financially benefit three global beer giants. Lawmakers passed the legislation at the urging of one of the most powerful lobby groups at the Capitol — the wholesale beer distributors — which prosper from regulations that generally require beer makers to use their delivery services.
Now, unless Gov. Greg Abbott vetoes a bill dear to some of his most generous campaign donors, brewers who reach the size of Oskar Blues will have to start forking over some of their tap room revenue to distributors — just for “delivering” a product that’s already sitting in cold storage a few feet from where it was brewed. The company is still evaluating how much it will affect its bottom line.
In the meantime critics are calling it an “extortion fee” or “dock bump tax” — money craft brewers will have to pay to distributors for services they don’t want or need. And they say it will immediately stunt investment and growth in an industry that is exploding in Texas and around the nation — not exactly the image leaders like to promote when they’re urging companies to come partake of the lightly regulated “Texas Miracle” economy.
“There’s definitely a disconnect between how Texas views itself as a free-market state and some of these alcohol regulations that basically turn distributors into rent collectors,” said Josiah Neeley of the R Street Institute, a free-market think tank. “The rules do not have any plausible public health or safety purpose. They’re just a matter of making sure that distributors get paid and don’t have to compete.”
The bill drew fire from a few dozen Tea Party-backed Republicans and their kindred Texas Public Policy Foundation, who saw it as antithetical to laissez faire economics. A handful of inner-city Democrats, the Texas Association of Manufacturing and the Texas Association of Business also opposed it.
They were no match for the establishment Republicans who, along with most of the Legislature’s Democrats, voted in favor of the new restrictions. Now craft brewers are doing a full-court press — in social media and direct appeals that have garnered thousands of signatures — for a gubernatorial veto.
Abbott’s office did not respond to requests for comment. The governor has until June 18 to sign or veto the bill. Otherwise it will take effect without his signature.
Distributor interests, who hold enormous sway inside the Legislature, say the bill is needed to stop big beer companies that gobble up independent craft brewers from taking advantage of relaxed regulations that big brewers don’t get under current law.
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https://www.texastribune.org/2017/06/08/small-beer-makers-facing-extortion-fee-seek-veto-abbott/
