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Legislators seek to upend Georgia craft beer law

Booze is back as an issue at the Georgia Capitol, in a big way.

Legislation will be filed in the state House in the coming days that would make the first major revisions to the state’s three-tier system of alcohol sales in at least a decade.

The bill by state Rep. Ron Stephens, R-Savannah, would allow smaller brewers and distillers to sell directly to consumers, sell food onsite and open up to five “tasting rooms” where they can offer samples as well as sell their beer or liquor directly to the public. It also would end the stranglehold distributors have over manufacturers by allowing these smaller operations to opt out of contracts with wholesalers, according to a draft of the bill obtained by The Atlanta Journal-Constitution.

It’s a bold move and one directly borne of the frustration craft breweries have with how the state Department of Revenue interpreted last year’s bill to allow breweries to give limited amounts of beer to consumers who purchase tours.

“Georgia’s brewers need a modernized three-tier system,” said Nancy Palmer, executive director of the Georgia Craft Brewers Guild. “All brewers need simple, direct retail sales, clarification in areas where regulation has gone too far, and equitable and fair business relationships with the wholesalers that sell their beer.”

Representatives of the alcohol wholesalers - who have traditionally been big donors to the campaigns of lawmakers —said whole salers “are in the business of promoting and making a lot of money for larger and small craft brewers and other alcohol producers.”

“Many small brewers have become big brands because of the way the industry is set-up in Georgia,” Georgia Beer Wholesalers Association director Martin Smith said. “The fact is we also know how the three-tier system protects consumers, gives them access to a huge variety of products and allows the state to collect the maximum amount of taxes possible. The proposed bill would have unintended consequences and would certainly not be beneficial to the state. However, we want to see all brewers succeed so we hope to work toward something mutually beneficial.”

The bill is based on existing law governing Georgia’s wineries, which several years ago were granted much more flexibility in selling and marketing their wines.

While Stephens’ bill might be the most comprehensive, it’s not the only one dealing with state liquor laws. Rep. Brett Harrell, R-Snellville, has renewed his push for House Bill 535, the “better brunch bill,” which would allow restaurants to sell alcohol earlier on Sundays.

Harrell’s bill is stuck in a Senate committee, but the former mayor of Snellville and his supporters, including the Georgia Restaurant Association, have stepped up their efforts to get it moving. The association and Harrell sponsored a Twitter campaign Monday to get voters to call their senator and ask that the bill be brought up for a vote.

Harrell said Tuesday that he’s hopeful it reaches the Senate floor this session.

“Hopefully (senators) are hearing from their citizens on this bill,” he said.

Sen. Renee Unterman, R-Buford, expected to carry Harrell’s bill on the floor last year before running out of time to get a vote. She said government-owned buildings — such as the Georgia Dome or convention centers — are already allowed to serve before 12:30 p.m. on a Sunday — the current restriction on privately owned restaurants.

The restriction, she said, was a leftover from Georgia’s old “blue laws” — laws designed to restrict or ban Sunday activities for religious reasons. But, she added, “times have changed.”

“I just think it’s an uneven playing field,” Unterman said. “Just because government makes the policies doesn’t mean government should be the only one benefiting from the policies.”

Harrell is hoping his proposal will be largely uncontroversial, since he projects almost $11 million in additional tax revenue for state and local governments. The same will not be true for Stephens’ bill.

Lawmakers last year passed Senate Bill 63, which gave craft brewers a small, but important, victory. The bill allowed brewers to give away their product to costumers who paid for a tour of the brewery. It was designed to help the brewers introduce their product to new buyers while protecting the three-tier system, which says manufacturers can only sell to wholesalers/distributors who sell to retail stores and restaurants.

The system came into play as Georgia and the nation emerged from Prohibition, and was designed to prevent monopolies by national beer manufacturers. The rules prevented them from doing it all: making the beer, selling it and delivering it themselves to anyone who wanted it.

Wholesalers essentially play the role of middlemen in the state’s regulatory system, and they believe the current system works well.

Shortly after the bill took effect, the Department of Revenue issued a new rule, called a bulletin, that said breweries cannot set the price of the tour based on the amount or value of the beer consumers would receive — something they said undercut the point of legislation. The brewers called foul. The AJC reported in November that the change came after agency officials met and spoke multiple times with representatives of the state’s alcohol distributors, one of the most powerful interest groups in the state.

The AJC’s reporting led House Speaker David Ralston, R-Blue Ridge, and Senate President Pro Tem David Shafer, R-Duluth, to call on the agency to roll back the new rule.

Now, however, the brewers and distillers in Georgia are looking for even more.

They said Georgia remains behind the times in how it handles their efforts to grow craft beer and liquor businesses.

“It’s become clear to the brewers of Georgia that leaving important changes in the subjective hands of regulators is problematic,” Palmer said. “The only answer to our problems is legislation allowing for common-sense direct sales like 48 other states have allowed their small brewers to do.”

The wholesalers are sure to fight the bill and have the muscle to do so. The wine and liquor lobby spent $5,500 in June hosting lawmakers at its annual convention on St. Simons Island. Wholesalers have contributed at least $587,000 to state campaigns in the past five years, and individual distributors have given hundreds of thousands of dollars more.

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