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Regulation Without Thought

August 23, 2011

Anyone who’s been following local news recently might be aware of the potential disaster that almost befell craft brewers in Massachusetts. For anyone who missed it, allow me to explain.

It began at the end of last month, when the Idle Hands Brewery in Everett applied for a farmer-brewer license through the Massachusetts Alcoholic Beverage Control Commission (the ABCC for short). A farmer-brewer license enables small breweries to run their own distribution networks and make in-brewery sales to customers (usually through a brewpub or associated restaurant), without the requirement of a liquor license. The farmer-brewer license exists as an alternative to the much more expensive manufacturer’s license (which can cost up to $10,000, as opposed to the $500 farmer-brewer license). Under Massachusetts law, alcohol manufacturers are not allowed to sell directly to retailers and consumers, they have to go through a distributor, and they can’t serve alcohol on site (so no tasting tours or brewpubs). The farmer-brewer license has existed in Massachusetts since 1982, and since then “farmer-breweries” have been classified as those breweries that derive some of the ingredients for their beers from local and on-site sources (though it is not specified exactly how much).

The ABCC, for some unknown reason, decided that it was time to regulate, and suddenly passed a new rule that would require at least 50% of cereal grains and hops used by farmer-brewers to be locally produced. Not only was that figure unrealistic (and entirely uncalled for), but it would have forced small brewers to scramble to find vast quantities of brewing ingredients that are virtually unavailable to commercial buyers in Massachusetts. That, or be stripped of their license and lose their business. It should come as no surprise that almost immediately after news of this rule change went public, people in the brewing community were quick to take action against it, and just recently it was struck down.

It’s easy to make the assumption that there was a political motivation for these new regulations, because of the way that they would have hurt small brewers in favor of large manufacturers. But I’m not in the habit of pointing fingers, and besides, there’s no solid evidence that that was the case. Still, the idea that a regulatory body like the ABCC would propose something like this demonstrates either a fundamental misunderstanding of the business they are meant to regulate, or a reckless, misguided attempt at micro-managing. In the middle of all of this, a spokesperson for the ABCC said that the decision to change the rule was made in order to encourage farming in Massachusetts. The logic of this escapes me. In spite of the recession, small craft brewers have been a steadily growing segment of the U.S. beverage market, one which creates jobs and generates tax revenue, and craft brewers in our state have been a major part of this. So it seems odd, to say the least, that the ABCC would suddenly become farming enthusiasts.

Motivations aside, this strange move by the ABCC is important for several reasons. Even though it was quickly struck down thanks to the outcry from brewers and beer-lovers all over the country, the fact that it even happened in the first place makes Massachusetts seem suddenly hostile to small brewers, and could discourage people from starting brewpubs here. That picture up there is only a small sample of some of the breweries that would have been drastically affected or even put out of business if the new regulations hadn’t been reversed. The fact that the ABCC was so ready to enact a rule change that would have effectively destroyed these venerable businesses is cause for concern going forward.

The only real benefit of this whole fiasco with the ABCC comes in the form of a reminder. Just like with any vibrant, rapidly growing movement, the craft beer movement requires constant vigilance to stay that way. As the economy continues to flounder, and big-name brands like Budweiser and Coors continue to lose ground in the market to independent craft brewers, these kinds of shady moves by regulators are only going to become more common. In short, Massachusetts has a great craft beer culture, and it’s up to us to keep it that way by supporting local brewers.


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