THE STONE BILL: WHAT THE COMPROMISE ACTUALLY MEANS

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Yesterday was a historic day in South Carolina. The Stone Bill not only got through the conference committee, but an agreement was reached between the South Carolina Brewers Association and the South Carolina Beer Wholesalers Association. And this isn’t just a deal. It’s a BIG deal. But, what does it actually mean?

Time was short yesterday with all of the activity, but through a flurry of tweets (https://twitter.com/brookbristow), I tried to explain some of what the deal actually meant. But, let’s try to go beyond 140 characters. First, the highlights. Then, an explanation (if applicable).

Here’s the agreement:

  • Instead of putting the new language in the brewpub section of the South Carolina Code, the language will fall under the tasting/sampling/brewery operation section. This provides the wholesalers with many protections, including territorial restrictions, and no termination of contracts without just cause. Those protections are crucial to protecting wholesalers.
  • Breweries will now be allowed to offer food service. This is not required. Again, the entire bill only applies to breweries that want to do food service. If they opt not to, then they are just subject to the provisions of the Pint Law. Further, if a brewery wants to do food service as well as have a tasting room, then the tasting room is subject to the Pint Law while the food service portion will be subject to the Stone Bill.
  • Certain provisions in the tasting law (for lack of a better term – the section that gives you the right to purchase up to 48 ounces of beer for on-site consumption at a brewery) will not apply to breweries in terms of the operation of their food service operations – most notably, tours are not required, there is no 48 ounce cap, and monitoring isn’t required outside of the already required dram shop laws (the laws that require you as a host or server to watch for someone being underage or intoxicated).
  • The food service portion of a brewery may sell the beer of other breweries, as well as wine, provided that they are purchased from a wholesaler. This puts breweries more in line with what is done in North Carolina. Basically, the ability to have guest taps. Liquor will not be offered.
  • The food service portion of a brewery will have to comply with state and local laws in terms of operation. So, if you live in a place that requires bars and restaurants to close at 12, then the brewery’s restaurant will have to comply with that.
  • Like in the Pint Law, the food service portion of the brewery will have to sell the beer at prices usually charged by retailers around them. So, you couldn’t go and find $2 pints.
  • The food service portion of the brewery will have to comply with discount pricing provisions, which is the part of the law that sets out happy hour pricing. Basically, a brewery’s food service operation won’t be able to charge only half of the price of a beer or two-for-one deals.
  • The bill will also provide some other protections for wholesalers which simply serve to insulate the three-tier system from challenges.

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Now, some might argue that this compromise is to the detriment of brewpubs. However, that is not the case. While the original language was focused solely on brewpubs, it would have allowed breweries to convert their licenses if they would take on food service. The inverse is true in this case. Brewpubs already have food service operations. Those wishing to distribute their beers will simply need to convert their license over to a brewery license and then sign with a wholesaler. Once those steps are completed, the brewpub is good to go. Now, will we start seeing more breweries than brewpubs? It wouldn’t be surprising. However, many brewpubs don’t want to distribute their products. Brewpubs wishing to maintain the status quo will still be subject to the 2,000 barrel production cap and the inability to distribute.

So, what does this do for a Stone or Deschutes that might be seriously considering South Carolina? Well, this opens the door for them and for whomever might come along after. It also allows the state’s existing breweries and brewpubs to grow their businesses and begin creating more jobs. This compromise really lets people know that South Carolina is open for business and wants to grow the craft beer industry. This also really puts South Carolina on the map in terms of great brewery laws – this is true certainly in the south, but also nationwide.

What happens next? The committee report will go to the Senate and House. Because the parties came together with an agreement, the committee had to alter the bill’s existing language. To change the language, the committee needs to gain what is referred to as “Free conference powers”. Because there is an agreement, that should be given by both bodies. Many times, it is not freely given as many legislators are leery of giving legislative freedom to a group of 6 legislators. Once free conference is given, the committee report (which consists of the bill’s new language), will be up for adoption by both the House and Senate. Once adopted by both, it goes to Governor Haley for her signature. She is expected to sign.

Write it in stone: South Carolina craft beer is getting ready to really take off. It’s a great time to be brewing here.

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24 responses to “THE STONE BILL: WHAT THE COMPROMISE ACTUALLY MEANS

  1. Pingback: More on the Stone Bill compromise and what it means for South Carolina beer | BeerPulse·

  2. If I were Stone or Deschutes I’d just go to NC where they can self distribute 25,000 barrels a year and serve food. This law is a baby step, not monumental by any means. You want to see us grow, get us distribution and get their hands out of our pockets. If they want to sell wholesale beer, let them make it instead of driving up costs for retailers and reducing profits for breweries.

      • Seems the case is made in NC over and over for self distribution. I’d settle for 8000 BBL per year for starters. Can we get you started on this next center stage performance!? 😀

      • In Texas (to cite one example I’m familiar with), breweries can self-distribute up to a certain amount of production, but many choose not to. They figure it’s easier to take advantage of someone else’s pre-existing infrastructure and expertise. So, the free market can and does validate the existence of wholesalers. Having it mandated by law is clearly a case of serving narrow interests above broader ones.

        Allowing small breweries to self-distribute, however, could be the critical revenue-stream difference between life and death for someone trying to start up. Let a small brewer drive kegs around town in the back of his pickup; he’ll grow and then he can outsource that to the professionals when the time comes (either by early option or triggered by an established production level). Now there’s another thriving brewery and another brand for some lucky wholesaler’s portfolio. Everyone wins.

      • Not saying that self-distribution isn’t something that South Carolina needs. To be clear, that would be an incredible benefit to small brewers. However, that’s something that will be a major legislative battle with the wholesalers. I haven’t heard that as being a priority for the state brewers association going forward. Then again, things can always change.

    • Stone or Deschutes will be producing quite a bit more than 25,000 barrels wherever they end up. That means if they came to NC, they would have to sign with a distributor rather than self-distributing their own beers.

  3. There are still some ways in which brewpubs, sorry to say, got shafted on this. For one, brewpubs can currently serve liquor (if they meet additional criteria for that kind of permit). If they convert their licenses, it sounds like this will no longer be the case. Also, a brewpub owner could conceivably own other bars, restaurants or even bottle shops in town. If he wanted to convert his license to become a member of the production end of the three-tier spectrum, certainly he would have to give up those retail holdings.

    • That is all true. Should be part of their calculation in deciding whether distribution of their products is worth it in converting over.

  4. From your explanation, this bill does nothing for existing SC breweries (not brewpubs). Existing breweries now have the ‘permission’ to have food service. However, if they do not provide food, nothing changes. I can not name one existing brewery that has the space or excess capital to build out a kitchen on site and hire experienced restaurant staff.

    • This is another reason why moving it out of brewpubs was a bad thing. As far as I can reckon, brewpubs are not required to serve food.

    • Nobody said anything about a true kitchen. The language as written should give enough leeway to existing breweries to set up minimal areas needing DHEC approval (snack bar) to make it work. Yes, a true kitchen would take a lot of investment.

  5. But does that language still prohibit “self distribution” which Stone wanted in their RFP? If so, does this not really help attract them, but just help current breweries?

    • Stone didn’t request self-distribution in their RFP. Nor is it required for them to locate here. They already have distributors in South Carolina.

    • I’m going to work on doing an explainer for that. The way we ended up wording it is not as bad as what it was going to be. This is much more feasible for existing breweries.

  6. Reblogged this on Craft Beer Chick and commented:
    The Stone Bill has successfully assed the House (unanimously) and Senate (one nay)! Go out to your local brewers and have a pint to celebrate this great day for growing the beer industry in South Carolina!

  7. Pingback: “Stone Bill” heads to Governor after South Carolina legislators vote 139-1 to pass | BeerPulse·

  8. Pingback: Rumors & Notes: 5/28/14 | Holy City Sinner·

  9. Pingback: THE STONE BILL: FOOD FOR THOUGHT | BEER OF SC·

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