LB632 – All alcoholic beverages purchased for resale in this state prior to being resold at retail shall physically come into the possession of a licensed wholesaler and be unloaded into and distributed from the licensed wholesaler’s warehouse located in this state.
Interpretation – Under the current law, a craft brewery is allowed to deliver their products directly to a retailer; each transaction still passes through the distributor via a paper process, thus the distributor still receives their portion/fee as part of the transaction (as the transaction on paper is reflects the flow of brewery to distributor to retailer). The change noted above would require that the beer be physically moved to the distributors premises prior to being provided to the retailer.
Opinion – This does not appear to serve any purpose other than ensuring that beer manufactured within the state is slowed in getting to the retailer, ensure the use of additional fuel and other resources to move it around, and make it considerably more difficult for local producers to get their product to their customers.
For example, a brewer in central Nebraska is contracted with a distributor in Omaha. The brewer is informed that a local bar in the town in which his/her brewery is located wants to sell their beer. Under the current law, the brewery is allowed to physically deliver the beer to the bar after completing the required paperwork for the distributor. The proposed change to the law would, therefore, require the beer to be moved to the distributor in Omaha before it can be brought all the way back out to the bar.
Additionally, this has the vast potential to significantly hurt smaller distributors for whom this kind of business is important. All distributors operating in Nebraska would need to have the resources to house all of the beer between delivery from the brewery and then re-distribute it to the various retailers they serve. This would include buildings/space to house the beer as well as the personnel and vehicles necessary to undertake this task.
LB632 – Notwithstanding section 53-123.14, if the holder of a craft brewery license or manufacturer’s license, or any person owning an interest in such license, owned an interest in a retail license located off the craft brewery’s or manufacturer’s licensed premises or off the licensed premises of a brewpub owned by the craft brewery as of January 1, 2017, such holder or owner of such interest in such license may continue to own an interest in such off-site retail license but may not acquire an interest in any additional off-site retail licenses. Notwithstanding subsection (1) of this section, the holder of such craft brewery license or manufacturer’s license may sell and directly deliver, to any retail location that it wholly owns, any beer manufactured by such craft brewery or manufacturer on its licensed premises
The holder of such manufacturer’s license may continue to operate up to five retail locations which are in operation at the time such manufacturer’s license is issued and shall divest itself from retail locations in excess of five locations. The licensee shall not begin operation at any new retail location even if the licensee’s production is reduced below twenty thousand barrels per year.
Interpretation – Last year (2016), LB1105 was approved by the Nebraska Legislature. As enacted, this clause (as seen in strike-through text above) granted craft breweries producing less than twenty thousand barrels per year the ability to have up to 5 separate locations, as well as the power to transfer their beer between those locations without requiring the need to have the physical product go through a distributor. LB632 revokes that.
Opinion – The proposed amendment to this clause serves to unfairly limit small business owners (craft brewers) from continuing to invest in their communities and the state of Nebraska. It seems unlikely, if not unheard of, that other small local manufacturers would be limited to selling their product from a single location. This clearly serves to limit employment and investment in our local communities by the craft brewers; this in turn does not allow for the related benefits to the state of Nebraska. Large national and multi-national brewers will not directly employ Nebraska citizens to run Tap Rooms, Beer Halls, brewpubs, or other local establishments that provide local jobs and pay local and state taxes not only on their sales and the establishment itself, but also through the tax given to the state from/through the employ of these same citizens.