Monday, December 22, 2014

House considering lifting restrictions on microbreweries

By EVAN DUNBAR, KU Statehouse Wire Service | 3/6/2014

TOPEKA — The Kansas House Committee on Commerce, Labor and Economic Development heard testimony Wednesday on House Bill 2598, which would remove self-distribution and production restrictions from microbreweries.

Under current law, a microbrewery is limited to producing 100 to 15,000 barrels of domestic beer in a license year. There are 31 gallons of beer in one barrel, which is equivalent to 330 12 ounce servings.

Current law restricts a liquor retailer to purchase only from a licensed distributor or confiscated liquor at a sheriff’s sale. This bill would allow liquor retailers to purchase from a microbrewery or farm winery as well. 

Jason Watkins, executive director of the Kansas beer wholesalers opposed the bill, saying that if it passed and microbreweries began self-distributing their products, the state would be forced to allow manufacturers of all alcohol products, including out of state producers, to self-distribute.

“Not only would this make controlling, tracking, regulating and taxing alcohol nearly impossible, it would also create a playing field where only the largest alcohol interest could compete,” Watkins said. 

Watkins cited the five pillars of a “three-tier system” of Kansas alcohol production, distribution, sales and consumption laws, that he said “balance business needs and market growth with public health and safety concerns.”

 “It’s a system that levels the playing field, encourages competition and allows the private sector to thrive and create local jobs,” Watkins said. “If not for our (distributors) and the ‘three-tier system,’ there wouldn’t be craft breweries in Kansas.”

However proponent of the bill R.G. Johnson, owner of the High Noon Saloon in Leavenworth for more than 20 years, said the current laws in place are restrictive in allowing microbreweries to enter the market.

“Many states allow microbrews to self-distribute, and their food service and beverage industry flourishes,” Johnson said. 

Johnson said if microbreweries like his were allowed to self-distribute, it would attract new workers and business to the market. He said that in five years, he would create new jobs, estimating his number of employees to grow from 40 currently, to about 100 if he could self-distribute.

“I am not here to upset the ‘three tier system,’” Johnson said. “I am here to get a small window into the market.

“If I can simply service local accounts and it’s a nice, clean operation, it can start to be prosperous.”

Final committee action on HB 2598 is scheduled for Thursday.

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