Craft brewers hope to bottle up controversial legislative bill
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Craft brewers hope to bottle up controversial legislative bill


Nebraska brewers are rallying their devout drinkers against a legislative bill they say would damage the state's hopping craft-beer scene.

Supporters of the proposal, including the state's beer distributors, say it would bring regulation of small, local breweries closer in line with that of larger producers such as Anheuser-Busch InBev and MillerCoors.

But opponents argue the bill would burden rural breweries and make it nearly impossible for craft brewers across the state to open new taprooms to sell their products.

They've adopted the social-media hashtag #DontKillOurCraft, and Thursday, craft brew fans and brewers from across the state crowded into Lincoln's Blue Blood Brewing Co. for a rally against the bill (LB632).

Similar rallies are planned in other cities in advance of a Monday public hearing on the proposal.

"We, in particular, feel very targeted by this bill," said Cody Schmick, owner of Kinkaider Brewing Co. in Broken Bow.

A pair of controversial provisions — one requiring all beer to be distributed from a wholesaler's warehouse, the other clamping down on brewer-owned taprooms — would hurt Kinkaider's existing operation and wreck its plans for a new taproom and restaurant in downtown Grand Island, Schmick said.

The bill's sponsor, state Sen. Tyson Larson of O'Neill, said his intent is to address constitutional concerns in existing law, which gives local brewers preferential treatment over bigger beer producers.

"I, too, like craft beer," Larson said. However, easing regulation of the craft-brewing industry must be balanced with "protecting the state and the taxpayers of Nebraska from getting sued."

Kinkaider has already secured a lease for the Grand Island space, part of an overall revitalization effort by the city. Schmick said the proposed law change would kill that project.

Another part of the bill would require virtually all beer and hard liquor made in Nebraska to stop at a wholesaler's warehouse before it goes to retail outlets. That would undo a standing Nebraska Liquor Control Commission policy that allows distributors to deliver beer from the state's far-flung craft brewers directly to their local bars and stores, saving them the round trip to a warehouse along Interstate 80.

The change would force Kinkaider to ship its beer 80 miles to Grand Island or 200 miles to Omaha, then back to local retailers in Broken Bow.

Bigger, out-of-state brewers already have their beer distributed through warehouses. They are also prohibited from selling their products to retail customers directly.

The three-tiered arrangement of producers, distributors and retailers is designed to keep national and international brewers from controlling the industry from kettle to keg tap, and to help regulators ensure taxes are properly paid.

Larson's bill includes other changes that were requested by the Liquor Commission, but executive director Hobert Rupe said the commission has "concerns" with the parts related to craft breweries.

"It's not that well of a drafted bill," Rupe said.

The Associated Beverage Distributors of Nebraska, which represents the state's distributors, supports the measure.

“The effort here is not to penalize or restrict the growth of Nebraska’s craft brewery industry, but rather to create a level playing field for all industry members," the group said in an emailed statement.

"I think the playing field's plenty even," said Schmick.

He said craft beer makes up just 2.5 percent of the market in Nebraska, with the rest coming from bigger brewers. Big producers don't need protection, he said, and applying their rules to in-state startups would stifle small business.

Owners of Lincoln-based brewers Empyrean and Zipline both said the proposed limits on taprooms might hinder their expansion plans.

For Empyrean, the bill could dash its hopes of converting Lincoln's former Meadow Gold plant in the south Haymarket into a new brewing facility, replacing the one at Seventh and Q streets.

That project has been in the works for years, and Empyrean president Eric Schafer said the company is working with the city to rezone the area, has hired an architect and started interior demolition.

And Zipline expects to open a taproom in downtown Omaha this spring, in a space between the Slowdown music club and Film Streams. That's despite a requirement in Larson's bill that any new, brewer-owned taprooms also brew beer themselves, which Zipline's wouldn't.

Empyrean worries the same language in Larson's bill could impact beer sales at Lazlo's next door if it removes the brewing equipment from its existing location.

Both projects bank on an exemption the Legislature created just last year, with a bill that received widespread support and was sponsored by Larson himself.

That measure (LB1105) allowed craft brewers to share beer between as many as five satellite retail locations owned by their label.

Larson said the proposed changes this year are meant to clarify the law and bring it into compliance with the U.S. Supreme Court's 2005 ruling in Granholm v. Heald, which struck down laws in New York and Michigan that allowed in-state wineries to ship wine directly to consumers but barred out-of-state wineries from doing the same.

Zipline co-owner Tom Wilmouth, an attorney and president of the Nebraska Craft Brewers Guild, said he disagrees with Larson's interpretation.

"What we have here is an act that operates wholly within the state of Nebraska and has no impact on interstate commerce," Wilmouth said.

Schafer expects a big crowd of beer lovers will attend Monday's hearing.

"I think it's going to be standing-room-only."

Reach the writer at 402-473-7234 or

On Twitter @zachami.


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