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Craft beer law change on fast track

A bill upping production levels is so close to passage brewers can almost taste it. The long-sought revisions could make the state more attractive to larger breweries and help those already here.

South Carolina is on the verge of passing the most progressive craft beer production laws in the country, industry advocates say — a prospect that just three weeks ago was virtually unthinkable.

The "Stone Bill" — an effort to loosen Prohibition-era beer laws to attract San Diego-based Stone Brewing Co.’s $31 million eastward expansion — has already been approved by the state House of Representatives.

On Thursday, the state Senate assigned the bill to a six-member conference committee that is expected to meet as early as next week to iron out details.

Half of the committee’s House and Senate members sponsored the bill, said Wesley Donehue, a political consultant for the South Carolina Brewers Association.

"We made magic happen," Donehue told The Greenville News on Thursday. "To pass a bill this fast in South Carolina is something I’ve not seen, especially when it comes to alcohol. It’s pretty insane."

The new law would eliminate a choice beer producers have had to make for 80 years: Produce a little and serve on site or produce a lot and only be allowed to distribute.

But not both.

Stone Brewing — the nation’s 10th largest brewer reporting $135 million in revenue last year — demands both options in its "request for proposal" released this past winter, which several communities in South Carolina, including Greenville, have responded to.

Three weeks ago, the bill was introduced and was cast as a launching point for a broader discussion on making beer laws more favorable to brewers in the state’s fledgling-but-booming craft beer industry, with an eye toward adoption in the coming winter.

However, the allure of capturing a company promising a $31 million investment and more than 250 jobs was enough put the bill on a fast track.

Last year, a study by the national Brewers Association found that craft beer production contributed $254 million to the state’s economy in 2012.

There are currently 18 breweries in South Carolina and 11 brewpubs, accounting for at least double the amount from the previous study.

The six-member legislative committee that will meet and issue a report is made up of three members who sponsored the Stone Bill, Donehue said. The House and Senate are expected to move quickly after that to adopt the recommendations, he said.

The bill met with some opposition this week from beer wholesalers who had been reluctant to join negotiations, Donehue said.

The S.C. Beer Wholesalers Association sought to have the bill reassigned to another committee, Donehue said, which would have effectively killed its chances of passing this year.

The wholesalers association — which represents companies in the state’s three-tier distribution system — said that the issue wasn’t about defeating the bill but instead involved concerns that the legislation was being drafted in a way that would present "legal challenges."

The wholesalers association supports the craft beer industry’s expansion and economic development in the state and wants to "ensure smooth expansion," said Julie Cox, the association’s executive director.

"We are not lobbying against the bill," Cox said.

The bill proposes a novel change in state beer laws.

Currently, a brewer can operate under two constructs — a brewpub or a brewery.

Brewpubs are allowed to sell unlimited quantities of beer for on-site consumption, but they can’t distribute their products to the market.

Breweries can produce unlimited quantities and have their beers distributed but are only allowed to offer the equivalent of three pints of beer to be consumed on the premises per person per day.

The change in law would allow Stone to operate under the new definition of a brewpub, upping brewpub production limits from 2,000 barrels per year to 500,000.

The change would create one of the most progressive beer laws in the country, said Brook Bristow, a Greenville lawyer who represents the S.C. Brewers Association.

The proposal comes less than a year after legislators amended brewery laws to allow on-site consumption of up to three pints from a previous restriction to only samples.

The change at the time was important, brewers said, to allow them to market their businesses as tourist destinations.

North Carolina has benefited from more favorable laws, landing multimillion-dollar eastward expansions such as California’s Sierra Nevada and Colorado’s New Belgium and Oskar Blues.

Stone hasn’t set a specific timeline but expects this year to announce its new location east of the Mississippi, company spokeswoman Sabrina LoPiccolo said.

"It’s definitely not too late," Donehue said. "No state in the entire country has worked as hard as South Carolina has to get them."

If Stone doesn’t come to the Palmetto State, the mere effort will have been a success that will smooth the path for other brewers, both outside and within the state, Bristow said.

The nation’s 12th-largest brewer, Oregon-based Deschutes, has indicated it plans to expand eastward, and South Carolina brewers like Greenville’s Thomas Creek have said they will want to convert their licenses to fall under brewpub laws and lift restrictions on the amount of beer they can serve on-site.

"We just kind of hitched our wagon to that star," Bristow said. "If this change goes through, whoever the next Stone is would have a hard time saying ’no’ to South Carolina. And you’ll probably see a lot more brewpubs sprouting up and existing breweries wanting to change their licenses."

Greenville Online - 17 May 2014
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