Modifications to Georgia’s alcohol laws

Modifications to Georgia’s alcohol laws will benefit smaller producers, consumers and preserve the system that serves us well

With passage of the 21st Amendment Prohibition ended and the states became the regulators of alcohol within their borders.[1]The states largely adopted one of two regulatory schemes, “control” or “license.” In the eighteen control states, the state has a monopoly over the wholesaling and/or retailing of some or all categories of alcoholic beverages, such as beer, wine, and distilled spirits.[2] The remaining thirty-two states adopted varying forms of private licensed wholesalers and distributors. With the sole exception of Washington State, all others operate with some varying form of the “three tier” system segregating producer, distributor, and retailer.[3]

States have various exceptions to this rule, the most prevalent one being the case of a brewpub, which is simultaneously a producer and retailer, and has no requirement to sell to a distributor. [3]

Georgia is a “license” state operating under a modified three-tier system permitting some exceptions for brewpubs and farm wineries.[4]

A national telephone survey commissioned by the Center for Alcohol Policy polled 1,000 adults over the age of 21 between August 12 – August 14, 2013 and the results indicate Americans are very satisfied with current alcohol laws and regulations.[5]Eighty-six percent (86%) said it is easy to find a wide variety of beer, wine, and liquor in their community. In fact, there are more breweries operating in the U.S. today than any time in our history. The Brewers Association recognizes 2,483 “Craft Brewers” of the total 2,538 breweries operating as of June 2013.[6]

Georgia’s alcohol regulatory system is working well. Georgian’s benefit by strong brand and aggressive price competition within a system that insures a safe, high quality product while providing an efficient method of tax collection. Yet, industry interests frequently request legislative modifications to the current structure largely in an attempt to benefit smaller producers. Other industry interests fear such modifications detrimental to not only their business, but problematic for the industry as a whole.[7]

How should the state respond? If the current system provides Georgian’s a safe, high quality product, encourages brand and price competition, allows entry into the marketplace for new products, and insures an efficient method of tax collection, what more should the state do?

The state should adopt limited modifications to the current alcohol regulatory system to provide start-up and growing concerns added opportunities to prosper and succeed without unduly harming the long-standing and proven program that is benefiting the vast majority of Georgian’s.

 IMG_1296
32 oz and 64 oz bottles called
“Growlers” allow patrons to
take locally brewed beer home.

 

In as much as brewpubs exist in Georgia as an exception to the established three-tier system[8] operating as a producer and retailer, permitting the retail sale of up to 64 ounces of draft beer, brewed on-site at the brewpub for off-premise consumption is a reasonable modification. Permitting customers that have already entered the business to take a limited quantity of beer home for personal consumption will dramatically affect the profitability of these small businesses without injuring the established distribution and retail system within Georgia. These off-premise sales should be included in the 50% food calculation for brewpubs excluding from the calculation only the quantity of beer sold through the established wholesale distribution system.

Breweries and distilleries are both producers and the state should treat them similarly within the law. Georgia law currently permits “free” tastings at breweries and distilleries in conjunction with educational and promotional tours.[9] The current provisions are largely unenforceable and easily circumvented by breweries and distilleries that choose to serve beyond the legal limits. The legislature should modify Georgia law to permit limited sales for on-site consumption by breweries and distilleries. Permitting breweries and distilleries to sell for on-site consumption during pre-determined “tour” hours would affect, as with brewpubs, the profitability of the smaller breweries and distilleries, build brand identity and demand for their products, without harming the established distribution and retail network, and improve enforcement.

The modifications to Georgia’s alcohol laws suggested here represent a compromise of the various positions advocated before the General Assembly over the past several years. Regulatory change often results in unintended negative consequences; however, legislators must take the initiative to consider in balance the interests of consumers and all industry participants in a changing marketplace.

The Georgia Senate has published a report on the findings of a Study Committee on Brewpubs and Alcoholic Beverage Tastings and is available at: http://www.senate.ga.gov/sro/Documents/StudyCommRpts/13BrewpubsStudyCommitteeReport.pdf

Brett Harrell represents House District 106 in the Georgia General Assembly. Representative Harrell serves on the House Regulated Industries Committee and is Vice Chairman of the Alcohol and Tobacco Subcommittee. He also serves on the House Budget and Fiscal Affairs Oversight, Transportation, and Ways & Means Committees.

October 28, 2013