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.
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.