UPDATE: Texas brewers group forms a PAC to fix state’s ‘broken beer laws’
UPDATE: The Beer Alliance of Texas has a statement in response to CraftPAC’s launch.
“Our members continue to support the long established, very workable three tier regulatory system in Texas. We will continue to dialogue with all beverage stakeholders, as we always have, including the craft brewers, as lawmakers update and refresh public policies,” Rick Donley, president of the Beer Alliance of Texas, said.
EARLIER: Texas’ legislative session last year was a disaster for the state’s craft brewers. But they don’t intend for the next one to be.
To fight back and implement the changes brewers see as necessary for the industry’s growth, the organization representing their interests in Texas has launched a political action committee, or PAC for short. The Texas Craft Brewers Guild’s CraftPAC will use monetary contributions from brewers and consumers alike to support legislation, legislative candidates and other political initiatives that will benefit the industry.
The new CraftPAC is in response to recent bills that one of the state’s most influential lobby groups — wholesale beer distributors — pushed through, such as last year’s HB 3287, now a law prohibiting taprooms in breweries that grow beyond a certain size or become owned by a larger beer company. Texas brewers largely opposed it.
CraftPAC is also a means for Texas brewers to gain rights that breweries in the country’s 49 other states already have, Adam DeBower, Austin Beerworks co-founder and director on the board of the guild, said. He’s board chair for CraftPAC as well.
The PAC “is a way that we can raise money not just from the craft brewers in the state of Texas but also the fans, the craft beer fans,” he said. “Get them engaged, get them involved, in seeing real legislative change. Quite frankly, the beer laws in Texas are broken, and we need to fix them. The three-tier system itself is broken. We need to fix it. We don’t want to get rid of it; we want to upgrade it.”
He and Charles Vallhonrat, executive director of the Texas Craft Brewers Guild, recite two facts when they talk about the need for a craft brewery-focused PAC: Texas is the only state in the U.S. that doesn’t allow its breweries to sell beer directly to consumers for their enjoyment off-site. Texas also ranks 46th in breweries per capita.
“Texas has a huge population but such a small number of breweries,” DeBower said, citing restrictive laws, among other factors, as the reason for the state’s slow craft beer growth.
That’s in contrast to states like California, which has a slightly larger population but about three times the number of breweries — almost 630 breweries to Texas’ more than 250. California also doubles in breweries per capita, according to data from the Brewers Association, a national organization representing the country’s craft brewers.
Additionally, California and all other states sans Texas allow manufacturing breweries the ability to sell beer to go in their taprooms. Texas’ wineries, distilleries and brewpubs also can sell their products on-site for off-site consumption. As a result, many manufacturing breweries — Austin’s Hops & Grain most recently — have switched to brewpub licenses, a designation that limits how much beer they can make.
“The advantage in selling beer to go, for me, is that you are able to offer customers the full brewery experience that is becoming not only the norm across the U.S. but an expectation. And if you can't offer that experience to folks that visit your brewery, I firmly believe that you're at a disadvantage,” Hops & Grain’s founder Josh Hare wrote last month about the main reason his brewery became a brewpub.
Preventing Texas breweries specifically from taproom sales for off-site consumption is the wholesale beer distributor lobby, led by the trade groups Beer Alliance of Texas and Wholesale Beer Distributors of Texas. They argue that having those sales is a violation of the three-tier system.
In the three-tier system, breweries make beer, distributors sell that beer to retailers, and retailers then sell it to the public, and none of those groups can veer into each other’s business. The alcohol regulations were established in the 1930s, following the repeal of Prohibition.
To beer distributors, the system is still doing its job.
The three-tier system “has allowed for an incredibly competitive marketplace and allows smalls breweries to thrive in a way that other commodities can’t do because of the inability to get to market without a distribution tier,” Keith Strama, counsel for the Wholesale Beer Distributors of Texas, said during testimony last year for HB 3287. (We have requested comment from the distributors but have not heard back.)
The bill hijacked the guild’s plans for Texas’ legislative session. The Texas Craft Brewers Guild had intended to push for SB 1217, which would have allowed the to-go taproom sales.
Instead, the guild had to play defense against HB 3287. It dictates breweries making 225,000 barrels or more of beer per year — namely, Austin’s Oskar Blues facility — have to sell any beer designated for their on-site taprooms to their distributor and buy it back. The beer doesn’t leave the facility. Detractors of the bill, including the guild, called this payment an “extortion fee” and “dock bump tax.”
To fight for a gubernatorial veto of HB 3287, the Texas Craft Brewers Guild created an online petition that generated “about 15,000 signatures in a 48 hour period,” DeBower said.
Though it ultimately didn’t succeed, the petition demonstrated to Texas brewers that they have a huge base of supporters who want to help their cause and might even be willing to donate money.
“Through social media and word of mouth was how that got out,” DeBower said of the petition. “Our aspiration here is that we can build on that. Get this idea in front of craft beer fans and get a few dollars. We will never have the money our opposition has, and nor do we want to have it. But we still have to spend the money and play the game.”
DeBower is likely right — that no matter how much CraftPAC is able to raise, the amount will look like pennies in comparison to the millions of dollars in donations the wholesale beer distributors have given to lawmakers in the state. Their lobby is one of the most powerful in Texas, but CraftPAC intends, at least, to level the playing field a bit.
According to an analysis by the Texas Tribune, “booze industry players gave more than $11 million to state campaigns over the past four years, about three-quarters of which came from beer distribution interests.”
CraftPAC will start giving money as well, launching just in time for state primary elections on March 6, Vallhonrat said.
“One of our greatest assets is our fanbase,” he said. “The public outpouring from the petition was fantastic, and we need to build on that type of effort.”