by Jon Sanders
Research Editor and Senior Fellow, Regulatory Studies, John Locke Foundation
Under current state law, North Carolina craft breweries cannot produce more than 25,000 barrels of beer per year without having to contract with a third-party distributor. This is the state’s notorious distribution cap, which has been an issue for several years, leading to a lawsuit last year.
In practice, it forces growing breweries to choose between staying artificially small or turning over all distribution to a third-party wholesaler that could have divided loyalties to bigger brands.
Senate Bill 246 would move North Carolina craft breweries into a relatively freer environment in terms of self-distribution.
If passed into law, no longer would a brewery be required to contract with a third-party wholesaler if it wanted to produce over 25,000 barrels. Breweries could self-distribute up to 50,000 barrels, and if they wanted to brew more to sell to consumers, wholesalers, and exporters, they could produce up to 100,000 barrels.
Such a change would give North Carolina breweries more room to grow and expand and still maintain control over their product as they wish. It would be an overall boon to the state’s craft breweries, but it would still maintain the three-tier system.