In an effort to lift a controversial rule imposed by the state’s Department of Revenue, Georgia craft brewers this week cut a deal with beer wholesalers and recaptured the right to sell beer directly to consumers as a “souvenir” for brewery tour-goers.
The agreement, which is still pending an official DOR policy bulletin, will allow beermakers to once again charge variable rates for brewery tours — something craft brewers gained when SB 63, the so-called “beer jobs bill,” was signed into law last July.
Two months later, however, the DOR issued a memo that “clarified” language in the bill and restricted how much a brewery could charge for tours and gifts. The DOR has since said it would alter its position on the matter if the Georgia Craft Brewers Guild and the Georgia Beer Wholesalers Association both agreed to a compromise presented by House Speaker David Ralston, Lt. Governor Casey Cagle, and Governor Nathan Deal.
But the compromise doesn’t come without a price: In exchange for restoring the bill’s original intent, the GCBG agreed to drop any push for new legislation for the remainder of 2016, including a recently drafted bill that could have altered stringent three-tier system laws to the benefit of the state’s craft breweries.
“The Guild was able to work underneath the leadership of the Governor’s office in order to avoid a legislative battle and instead find regulatory fixes to problems facing the industry,” said Nancy Palmer, executive director of the Georgia Craft Brewers Guild, in an interview with Brewbound.
Per the new agreement, breweries will be allowed to charge customers variable rates for facility tours depending on what kind of free “souvenir” they would like to include with their experience. Beer companies can offer merchandise, up to 36 oz. of beer to drink on-site, or up to 72 oz. of beer for off-premise consumption.
The legal loophole, created by state lawmakers last April, is currently the only way beer companies in Georgia can sell product directly to consumers for on or off-premise consumption. Breweries had originally pushed to sell beer directly to consumers without having to offer the tour experience.
State Representative Ron Stephens (R-Savannah), who had been drafting a craft-friendly bill that would have given brewers additional retail allowances, told Brewbound he felt the new deal was a great success.
“Actually, I recommended it,” Stephens said. “I kept the bill in my pocket to see if we could get these two groups to come together to come up with something reasonable — because what we had was unreasonable.”
Stephens said he still thinks Georgia brewers deserve the right to have unlimited direct-to-consumer sales rather than the “smoke and mirrors” allowance the state gives them now. But he felt that a clear and final agreement between the two groups about the ticket-prices would be more beneficial to brewers than a contentious legislative battle.
“It’s still a smoke and mirror [allowance] so to speak, but my prediction is that if we had put a super strong bill in then we could have been in a worse position than we were before,” he said. “This year I think it was a huge win; we got real clarification.”
Some brewers in Georgia were less enthusiastic about the arrangement.
“Everybody’s touting it as this big win,” said Nathan Cowen, CEO of Eventide Brewing in Atlanta. “I don’t think you can give us what we had the legal right to from last year’s legislation, take it away and then give back it to us, and call it a win.”
When it passed last year, the law expressly granted brewers the right to charge variable ticket prices for the tours and set the rates at their own discretion.
“If a brewer chooses to charge a fee for a brewery tour [that includes a free souvenir], such brewer may charge varying fees for the brewery tours, provided that such fees are charged prior to the beginning of such tour,” the final approved bill read.
The DOR, which is responsible for setting rules and regulations of state laws, did not contest the allowance before the law went into effect in July 2015. Two months later, the government agency surprised brewers and lawmakers alike when it issued a bulletin stating breweries could not charge varying ticket rates based on the kind of beer a customer wanted with the tour.
The sudden change of position prompted an investigation last November by the Atlanta Journal Constitution, which found evidence suggesting the DOR gave the Wholesalers Association preferential treatment and unequalled access to information while it was still finalizing regulations for the law. Cowan describe this week’s change of position as a clear sign of the political influence the state’s distributors have over government officials in Georgia.
“I think it’s kind of telling that the wholesalers pretty much gave permission to the DOR and the legislation to allow the regulations to change back to what they originally were,” he said.
Georgia beer makers did earn some additional benefits from the deal, however. Breweries will now be able use social media tell consumers where their products can be purchased, and can begin selling food on-site. While Cowan was pleased with the new allowances, he still felt the gains fell short of what brewers had hope to accomplish with new legislation.
“I don’t like that the legislative process deteriorated because there were people in powerful positions saying ‘this isn’t getting off the ground so take this lollipop and shut up, take what we gave you already and go away,’” he said.
It is unclear when exactly the new allowances will take effect.
“Although a deal has been reached and agreed to, it’s important that the deal is implemented speedily,” Palmer said. “That’s very important to the brewers of Georgia and to this industry, so I look forward to seeing that done and participating in this process.”
The longer it takes for the DOR to formally approve and enact the changes, the less time the Guild will have to push for new legislation if the deal falls through. For now, the state’s brewers are holding off in good faith that the wholesalers and government to uphold their end of the bargain.
For his part, Cowan doesn’t understand why the process of changing the laws in Georgia needs to be so complicated. He feels the state’s regulation of the industry is far behind the rest of the country, and the complex rules dictating how brewers may sell product directly to consumers ultimately hurts businesses in all three tiers.
“I get it, everybody’s got an interest in this but at the end of the day don’t make it more confusing than it has to be,” Cowan said. “Call a spade a spade.”
Calls to Georgia’s Department of Revenue and members of the Georgia Beer Wholesalers Association were not immediately returned.