Against All Odds

Texas has cultivated a love affair with craft beer, but that doesn’t extend to the Texas Legislature, which recently passed a bill that beer advocates are calling grossly anti-competitive.

House Bill 3287, aka the “taproom bill,” says that if a brewer with a taproom produces more than 175,000 barrels of beer on-site, they must 1) sell their beer to a distributor at a wholesale price, then 2) buy it back from that distributor at a retail price — even though the distributor would never take possession of the beer.

“The distributor gets paid for doing nothing and the brewer does all of the work — I find it insulting,” says Michael Peticolas, owner of Peticolas Brewing in Dallas and a fierce advocate for Texas breweries.

Peticolas founded his brewery in 2012 and will produce about 5,000 barrels this year. He added a taproom in January, which has helped business, contributing to a 35 percent increase in revenue compared to 2016.

“On the day this bill becomes law, there won’t be an immediate change in my business,” he says. “But if I wanted to go to a bank and take out a loan to open another taproom, this bill hurts the value of my business and the loan terms I could receive, because the future revenue from the tap room is limited.”

Groups that represent distributors, such as the Beer Alliance of Texas and the Wholesale Beer Distributors of Texas, claim that the bill prevents large multinational breweries from becoming too powerful and gobbling up Texas’ craft breweries.

Those two groups have made significant political contributions to state senators, according to Andrew Schwab of beer website Craft Beer Austin. In 2016, Beer Alliance donated more than $65,000, while Wholesale Beer Distributors donated more than $68,000.

But the executive director of Texas Craft Brewers Guild, which represents 227 Texas brewers, says that the bill damages the future growth of craft beer in the Lone Star state.

“Ultimately this sets a limit on the overall growth of craft brewers in the state of Texas and it scares off any investors and sends them to another state,” says Charles Vallhonrat.

The bill, which had 15 different sponsors, was approved by the House on May 8 and the Senate on May 22. Now it goes to Governor Greg Abbott, who has until June 18 to take action. He has three options: sign the bill into law, take no action, which also forces the bill into law, or veto the bill.

The Texas Craft Brewers Guild created an online petition urging Abbott to veto, which has drawn more than 14,000 signatures. However, Abbott has received at least $437,000 in political contributions from those the bill will help.

“Hats off to distributors,” Peticolas says. “They have a business to run and they are using their deep pockets and the ear of the legislature to protect their business. [But] this is further proof that the distributors and their lobbyists run the legislature. The distributors have so much more weight and can give so much more money than the craft brewers. We’re not even in the same ballpark.”

I don’t understand how the officials elected to represent us approved this bill and believe it’s a good thing for Texas. The craft brew industry creates jobs. It attracts tourists to the state who spend money and help fill our tax coffers. So to all the craft brew lovers out there: If Abbott allows this bill to become law, it’s time to starting crying in our beer.