South Dakota bill could raise craft brewery production cap, distributors haggle over self-distribution

Stop us if you’ve heard this one before, but in South Dakota a bill was put forth to raise the measly cap on craft brewery production in-state and also allow some self-distribution rights, and then right after, miffed, distributors put forth their own less impactful bill to try and compromise but mostly to kill those self-distribution rights.

Straight news

The first bill, SB 169, was put forth by the governor and would increase the barrel limit from 5,000 to 30,000, maintain sales at the brewery for on- or off-premises and permit sales directly to wholesalers and retailers.

“This is a great bill for South Dakota’s microbrewers, their employees and the farmers and producers who supply them with local ingredients,” said Andrew Curley, Americans for Prosperity-South Dakota Deputy State Director. “Prohibition-era policies have stifled this booming industry in our state for too long. Loosening arbitrary caps on production and distribution mandates opens up the market for these craftsmen, allowing them to expand and grow as consumers demand. AFP supports this bill and will continue to advocate for pro-growth, free market policies that allow South Dakotans to pursue their American Dream.”

The counterbill put forth by distributors would also increase the barrelage cap, but only to 12,000, and not allow for any self-distribution rights, but it would maintain taproom sales.

Straight snark

Sigh. OK. Hey, we get why distributors feel this way. They are the third-tier, which was created to keep producers of alcohol from monopolizing retail sales — injecting some independence into the segment and *ahem* quelling the corrosive monopolies that brought about Prohibition in the first place. And we for sure wouldn’t want all of these fat cat craft brewers, living high off their 10-bbl systems, to grab too much power. Imagine the chaos. We might never see another Dilly Dilly ad, and then where would we be?

We do not come to hate on distributors though. The three-tier system has been a boon for craft beer and helped it get to where it is right now in the market. Distributor-craft brewery partnerships are huge for both sides. In fact, South Dakota distributors might do well to look around at some of the most successful craft beer states to see how they are regulated. Hint: It is a little looser than what it being proposed.

Before we end this post, we have to make fun of the distributors’ hilarious attempt at a compromise. “Hey, we don’t think you should cut into our territory and self-distribute, but we still support local business and, actually, if we worked together more, growth for each side, and the South Dakota beer scene, could be even greater in the long run. So, as a compromise for us not budging at all and keeping distribution rights, how about you also lower the beer production cap you are seeking from 30,000 to 12,000?”

Well played. Not sure brewers could pass up a deal so good.