Are States Waging War on Craft Brewers?

Wisconsin's Motion 414 worries small brewers

Two days before Wisconsin’s governor signed the state budget into law, Furthermore Brewing Co. sent out an urgent email to its customers: “Will Furthermore die at the hands of Motion 414?” owner Aran Madden wrote.

He’ll soon find out.

Days later, Governor Scott Walker signed the state budget into law without the veto of Motion 414 that Wisconsin’s craft beer community and politicians from both parties had been calling for. Now, the resulting regulation has the state’s small brewers worried that the changes will have an unintended and severe negative impacts on their businesses.

“Most craft brewers already have competitive disadvantage written into their business plans, quite literally,” Madden said. “We don’t need to have the state piling on.”

As devised, Motion 414 was apparently meant to bolster the state’s three-tier distribution system by implementing new requirements that would prevent the likes of Anheuser-Busch from buying up distributors in Wisconsin. This would protect Miller-Coors, its biggest competitor and the state’s largest brewer.

Wisconsin and other state governments regulate the distribution of alcohol through three independent tiers: manufacturers, wholesale distributors and retailers. This system was originally devised following Prohibition to protect against monopolies and provide clearly accountable sales and tax records.

Not everyone is happy with this model. In an open letter protesting Motion 414, Wisconsin’s Tyranena Brewing Co. called the system “dysfunctional,” and opponents say the motion may threaten small brewers, especially those that are licensed wholesalers, have tasting rooms or operate brew pubs.

The entire 9-page motion can be found on page 281 of the Wisconsin budget here, and commentary from the Madison Beer Review here.

Wisconsin isn’t the only state where craft beer distribution has recently become a hot-button political issue. In Texas, HB 602 and 606 would have given permission to breweries to sell beer on tours and allowed brewpubs to distribute outside their business, but the bill died in the legislature after opposition from Anheuser-Busch and some distributors.