E-Malt.com News article: USA, MI: Local breweries disagree on proposed changes to Michigan's liquor regulations

Michigan’s beer makers don’t all see eye-to-eye on recommendations to loosen the state’s craft brewery restrictions, Mlive.com reported on June, 29.

The Michigan Office of Regulatory Reinvention on June, 29, released a report with 72 recommendations to update the state’s liquor control system. The proposals came from a 21-member committee comprised of business owners, chambers of commerce leaders, state regulators, trade groups, law enforcement and others.

The changes, which require action by the legislature, would impact the state’s growing craft beer industry that now boasts more than 100 breweries and brewpubs.

The recommendations largely maintain the state’s three-tier distribution system that requires a distinct separation between licensed alcoholic beverage suppliers, wholesalers and retailers.

But the proposed rule changes would allow microbrewers, small wine makers and distilleries to sell their products to wholesalers, to consumers through direct shipment, or at retail locations for consumption on or off the licensed premises. The regulations would mirror those currently in place for Michigan’s wineries.

Existing law prevents proprietors from owning both a microbrewery, which produces beer for off-premise sales, and a brewpub, which sells beer on premise. The committee recommends combining the two into a single small brewer’s license.

There are ways around the law, by having two separate owners, but existing regulations didn’t promote growth, said Scott Graham, executive director of the Michigan Brewers Guild Inc.

“Some of the people who have successfully operated brewpubs, it seems to be a logical extension for some of them to then want to take some of their beers to market,” he said.

The committee also recommended allowing microbrewers and small winemakers from the state’s franchise law if they comprise less than 3 percent of a wholesaler’s volume. That would allow the brewers to cancel or renegotiate their contracts with wholesalers as their business grows.

“Franchise laws that were wisely put in place to protect wholesalers from the undue bargaining power of their largest suppliers need to be updated to protect small suppliers from that same undue bargaining power,” the committee wrote in its report.

That doesn’t sit well with Larry Bell, owner of Bell’s Brewery in Kalamazoo, which is by far the state’s largest beer maker.

He said the franchise exemption could hurt wholesalers who rely on small brewers.

“While I do believe that the Michigan franchise law could have some amendments, I’m not so sure that this is the one to do it with,” he said.

Bell also criticized the state for not including large brewers or more wholesalers on the committee.

Matt Greff, owner of Arbor Brewing Co. in Ann Arbor, was the sole brewer on the committee.

He argued that supply chain decisions and other marketing considerations should be left to businesses, not the state.

“State laws and rules must support an independent distribution tier that is unencumbered … and insure access to market by all brewers,” he said.

Bell called for more discussion on the recommendations.

“It’s going to take some serious dialogue for everybody in the business to come to some consensus to find some changes in the law,” he said.


04 July, 2012