Timing is everything, and CraftPAC’s time is now

BTBF-2016_logoThe last thing you would expect to read at a Dallas beer festival would be an article about the Oklahoma craft beer scene.

Most of the nation has always regarded Oklahoma as a little backward, a rural conservative state with few major industries beyond farming and natural gas. Their outdated alcohol laws do not help this reputation—to North Texans especially, as our proximity has made us somewhat familiar with Oklahoma’s legendary backward beer laws and regulations. As arcane and prehistoric as Texas beer laws can be, we could at least take some comfort in knowing that Oklahoman craft beer fans had it worse.

In only a few short months, Oklahoma will have less restrictive beer laws than Texas for the first time ever.

This is about to change in a very significant way come this October. In May 2016, the Oklahoma legislature passed SB 383, which included the most sweeping updates to their alcohol laws since Prohibition. It modernizes if not eliminates many pointless statutes and “blue law” restrictions, and effectively restructures the ABLE Commission (Alcoholic Beverage Laws Enforcement, their state’s version of the TABC).

No more stocking shelves with warm beer, or the infamous “3.2” limit. No more ABV caps for brewpubs, or ridiculous restrictions such as no persons under the age of 21 (which can impact modern craft breweries and gastropubs eyeing a family demographic). No more sales restrictions or special permitting at festivals. An expansion of homebrewing rights, wine and beer licenses for grocery and convenience stores, and broader operating hours/days for retailers. The new laws even allow for direct sales from breweries and stronger brewer rights with regard to distributors.

The law was intentionally given a distant two-year effective date (2018) to allow all the players in Oklahoma—breweries, retailers, distributors, even counties and municipalities—time to react to changes and update their own needs and practices accordingly. (Eighteen counties in the state are still dry.) Since that time other changes have followed, just about all of them progressive and beneficial to the craft beer indutry, including a statewide referendum (State Question 792) validating the aforementioned bill. Oklahomans are warmly embracing the craft beer movement.

Why is any of this relevant to Texas? Earlier this year, the Texas Craft Brewers Guild launched CraftPAC (www.craftpac.org) specifically as a lobbying body to advance the business and industry needs of the state’s craft beer movement. Its sole purpose is to educate Austin lawmakers and support candidates and legislation who will act for the needs of independent Texas brewers both large and small, hopefully moderating the influence of the more powerful wholesale lobby. With our state’s brewing industry maturing rapidly, it is unlikely we will see a public referendum; therefore, CraftPAC has to be the voice at the legislative table for consumers and small brewers alike.

In only a few short months, Oklahoma will have less restrictive beer laws than Texas for the first time, including the coveted direct sales rights that our state’s brewers have fought so earnestly to change. Less regulation means more competition, with Oklahoma set to instantly become a strong competitor located just beyond the Red River (and their craft brewers are just as good as ours). Texans do not like to consider themselves second to anyone, so now is the time to throw our support behind CraftPAC and their efforts if we, brewing and selling as a state, do not want to be left behind. SD

Originally published for 7th Annual Big Texas Beer Fest (2018 program).

Texas brewers’ legal victory significant for more than obvious reasons

Texas State Capitol

mask-of-silenus-avatarThis week, Texas craft brewers claimed something rare for their industry in this state. They won a legal victory.

The drama began three years ago with what was then known as Senate Bill 639. Introduced into the 2013 state legislative session by Dallas state senator John Carona (who subsequently lost the next election), the bill stated its intent of “protecting the independence of distributors” by eliminating compensation for craft breweries for territorial distribution rights of their products. Essentially, it stripped small breweries of the right to make money by selling their brand—something the distributors still had the privilege of doing once a distribution agreement was signed.

Craft brewing has the same rights of identity as any other industry operating in this state.

In an unprecedented action, three Texas craft breweries took the state legal code to task in December 2014. Two North Texas breweries, Peticolas Brewing of Dallas and Revolver Brewing of Granbury, jointly filed suit with Austin’s Live Oak Brewing and the Institute for Justice against the Texas Alcoholic Beverage Commission (TABC) to have the new law overturned as a violation of the state constitution. For small businesses like today’s craft breweries, the ability to make money selling their distribution rights can be a big revenue source at start-up, not to mention that they would receive no benefit or compensation should a contracted distributor strike a later deal. It was a blatant and vulgar power-grab by the wholesalers lobby, and challenging it was the right thing to do.

District Court Judge Karin Crump agreed this week, finding no compelling state interest in such a law. Although consumers may not see any tangible benefit from such an esoteric lawsuit, it will only contribute to the improving health and strength of craft brewing in Texas (which ultimately benefits consumers). However, more has been achieved with this decision than simply rolling back biased regulations or defending the pockets of small brewers. This decision may be a truly significant turning point for the brewing industry in Texas.

First significant legal challenge in Texas craft brewing

The craft brewing industry has made monumental advances in Texas brewing laws in recent years, probably the largest favorable gains since legalization of brewpubs back in 1993. They have struggled tirelessly to change laws both state and municipal; they have fought zoning, distributors, retailers, even conservative anti-alcohol groups who have no interest in craft beer. They face down the TABC and lobbyist groups every two years when the legislature meets in Austin.

What makes this result any different? This was a legal challenge to an existing law enacted in 2013, not a state-wide popular movement for incremental change. This was not grass-roots anything: these were some of the most knowledgeable, seasoned professional brewers this state has to offer taking on an unjust law forced upon their industry by a much more powerful special-interest group.

And the judge agreed with them. This giant is not as invincible as we once thought.

Intellectual property matters, even for breweries

What also sets this struggle apart are the stakes over which it is being fought. Of course, every legal matter regarding business and regulation can usually be boiled down to money and, truthfully, this decision is no different. Laws are enacted to win economic power and either project it or protect it. The parties behind laws are always fighting to control bigger pieces of their respective pies.

However, this lawsuit was not explicitly about commerce or access or territory or financial advantage over a competitor. The lawsuit just won was brought over control of a brewery’s intellectual property, the ownership of their fundamental rights as a business at the point of distribution and thereafter in future transactions. Too long has craft brewing been singled out as an industry, operating under a legal double-standard not even shared with wine and other alcohol manufacturers. Craft brewing has the same rights of identity as any other industry operating in this state.

Craft brewers can collaborate on more than just beer

Collaborations are nothing new for the craft beer game. If not simply a business partnership for a combined venture, genuine friendships develop and result in new and inventive beers. Brewery X will meet Brewery Y at a common event like the Great American Beer Festival and decide to collaborate on a flashy, co-branded product. The industry is embarrassingly amicable to direct competitors, even those in the same market, and these ventures usually result in a win-win-win for both parties and consumers.

But this collaboration is a brand-new animal. Texas craft breweries have now demonstrated that they can band together not only for a united front for change before lawmakers; they can also work together to fight for a focused, tactical purpose on behalf of their entire industry. Craft brewing is no longer a domain of hobbyist businessmen selling in a boutique marketplace. This was a grown-up lawsuit, and we walked away with the W. SD