Craft brewers speak in opposition of proposed bill

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LINCOLN, Neb. -- Some craft brewers from around Nebraska are feeling more optimistic when it comes to the future of their businesses. However, concerns still remain when it comes to the delivery of their beer and the extra costs a proposed law could create.

The legislature's general affairs committee held a hearing Monday, which lasted more than 5 hours. So many people were there, overflow had to sit in another room.

Thirteen people spoke in opposition to Sen. Tyson Larson's bill. Five supported the measure. Sen. Larson of O'Neill did not introduce his bill to the committee, but his legal counsel spoke on his behalf. He explained some amendments to the bill that so many craft brewers have been concerned about.

The big change that has some breathing a sigh of relief is that the bill no longer forces breweries to operate in the tap rooms they sell their beer in. They can still have five different locations without having production at those places.

"We're actually really thrilled with the amendments that we heard [Monday]," Tom Wilmoth, president of the Nebraska Craft Brewers Guild, said. "It's our understanding that the retail challenges that were being mounted in LB632 are going to stripped out and that our tap rooms will continue to be developed the way that we intended last year, so we're very, very happy with that progress."

However, the major concern is what's called the "at rest" rule. Currently in Nebraska, distributors pick up beer from breweries and take it to be sold at locations across the state. Sen. Larson's bill aims to make a change to that, by forcing those distributors to take the beer back to their warehouses and put it "at rest" before making the deliveries.

Currently the delivery trucks serve as an extension of the warehouse. Sen. Larson says Nebraska's present law is unconstitutional after a ruling by the U.S. Supreme Court.

"Right now, Nebraska craft brewers aren't necessarily doing that and what that does is that creates a constitutional issue that has already been decided by the U.S. Supreme Court and Granholm," Sen. Larson said. "For that reason, it opens the state up to liability to be sued."

Craft Brewers say changing the "at rest" rule would create more costs to their businesses.

"I think the biggest issue is the additional cost of requiring the distributor to pick up the beer and take it all the way back to their warehouse, which could be as many as 200 miles round-trip," Wilmoth said. "Adding that additional cost creates a competitive disadvantage for those folks that are kind of in further parts of the state."

Sen. Larson argues some breweries are choosing to use distributors in Omaha, rather than local businesses to deliver their beer.

"I don't think it runs them out of business by any measure of the word," Sen. Larson said. "They are choosing a distributor in Omaha rather than distributors that are closer to them in rural Nebraska. Honestly, they are saying, and I understand that they support rural business and they support rural jobs, but so do those distributors that are in rural Nebraska. Yet, they are choosing a distributor in Omaha. I think that's a little hypocritical to say that they're the only rural business out there that's trying to survive."

One brewery owner from Ord argues their local distributors cater mostly to big-name companies.

"It changes the nature of how we're going to do business out in rural Nebraska," Caleb Pollard, president and owner of Scratchtown Brewery, said. "It's going to change how we're able to serve those accounts, because we didn't want to do business with a large scale, corporate entity that has, up until last year, created disincentive in their distribution market by putting a quota of certain percentages of beers that had to be brand central."

Larson said changing the "at rest" rule would also ensure proper taxes are paid to the state. The Nebraska Liquor Control Commission is expected to address the same issue at a hearing in March, as well.

Some craft brewers were upset at Monday's hearing because they said they weren't included in the process of drafting this bill, much like a previous bill last year.

"I think that brewers are using rhetoric to bring sympathy to what they want and that doesn't mean that they were any less involved than they were last year," Sen. Larson said. "They were asked if they had concerns, they were asked if they had any changes to the liquor control act and they said no."

In the coming weeks, the general affairs committee will decide whether or not this measure will move to the floor for further debate.