The state Senate’s Licensing, Occupations and Administrative Regulations Committee approved HB 168 — the so-called “Beer Bill” — in a bipartisan 8-3 vote on Tuesday, leaving its prospects for becoming law more promising.
HB 168 would explicitly strengthen the state’s three-tier system of suppliers, distributors and retailers of beer, which supporters say will help local craft breweries stay competitive against big corporate players, such as Belgian-based A-B InBev, looking to create distribution monopolies for their products in Kentucky. A-B InBev has countered that the law would infringe on its property rights, forcing it to sell distributorships in Louisville and Owensboro, which it claims will cause 175 employees to lose their jobs.
Daniel Harrison, co-founder and co-owner of the up and coming Country Boy Brewing in Lexington, testified that the bill was necessary so small breweries like his could compete in a fair market.
“What we at Country Boy and the Kentucky Guild of Brewers are asking for is a fair and level playing field for all brewers, both in state and out,” said Harrison. “HB 168 also helps guarantee our access to market, especially in rural areas where there are few distribution options. And the more houses of distribution that are owned and operated by large brewers, Kentucky craft brewers are left with fewer and fewer options to see our beers get on those taps and on those shelves.”
The bill now heads to the full Senate, where Republican leadership will determine if it gets a vote on the floor. Among that leadership are Senators Damon Thayer, R-Georgetown, and Dan Seum, R-Louisville, both of whom are strong supporters. Seum noted that when he used to own a bar in Louisville, they had a wide variety of local beers that have since been bought up by larger breweries and put out of business.
“I guess I can’t help myself, I just kind of like the little guy,” said Seum, noting that legislators have been “badgered” by both sides on this issue. “I started from nothing, and I know what that is to build a business.”
While Thayer claimed both sides have gone out of bounds in their lobbying efforts — criticizing A-B InBev for its Super Bowl ad attacking craft brewers — he said the beer industry is regulated for good reason, and the bill would be positive for consumers.
“The alcohol business is not a free enterprise,” Thayer said. “It is a heavily regulated enterprise, and it is done so for a reason … A vertical monopoly will ultimately lead to a lack of choice for consumers and increased prices for consumers.”
That sentiment was echoed by Thayer’s usual opponent in Frankfort, House Speaker Greg Stumbo, the lead sponsor of the bill. Stumbo testified for it in committee on Tuesday.
“You don’t have a property right, you have a license granted by the state,” said Stumbo. “It’s subject to be changed by existing law.”
Committee chairman Sen. John Schickel agreed that the issue went beyond A-B InBev’s free enterprise arguments.
“The free market argument is a good argument, but I think the flip side of this is a level playing field,” said Schickel. “Sometimes my party is criticized for something a presidential candidate calls crony capitalism. And I think in a way, this bill speaks to that issue.”
One of the three votes against HB 168 came from Sen. Denise Harper Angel, D-Louisville, who like 10 Louisville Democrats in the House did not support the bill because of A-B InBev’s claims that 175 union jobs would be lost at its Louisville distributorship.
“I wish we could have had a compromise reached on this bill,” she said. “I wholeheartedly support the craft beer industry in Louisville, and they’re doing great. But I also think that A-B has been an excellent corporate citizen. But I cannot vote against property rights, and I believe property rights go beyond a license. But I most definitely can’t vote against workers’ rights.”
Several legislators challenged A-B InBev’s claims of job losses, saying if the bill is ultimately approved, the company will simply sell its distributorships to other distributors, making layoffs unnecessary. Local distributor George Clark testified that 37 other states have a three-tier system, and that since 2010, “seven states have passed legislation to ban A-B InBev and other breweries taking over distributorships in their states with a combined vote of 695 to 81.”
Even if the full Senate approves HB 168 and it is signed into law, Sen. Tom Buford, R-Nicholasville, warned that “obviously, this will end up in courts after we take our votes, either way.”