PIERRE, S.D. — Competing bills overhauling rules for microbrewers are pitting powerful beer distributors against South Dakota’s growing craft brewing industry at the state Legislature.
The Senate State Affairs Committee voted 7-2 Wednesday to approve a distributor-backed bill that critics say doesn’t sufficiently deregulate microbreweries. A different Senate panel passed Gov. Dennis Daugaard’s brewer-supported legislation the day before despite concerns from beer wholesalers.
The governor’s bill would allow craft brewers to produce up to 30,000 barrels annually before losing privileges such as being able to sell growlers — large refillable jugs — for customers to take away and operate multiple locations. The limit now is 5,000 barrels.
It would also let microbreweries bypass distributors to sell their beer directly to bars and stores. Current law prohibits a craft brewer from even moving beer between two locations it owns.
“This bill will look to the free market and will take away onerous regulations that hold back South Dakota businesses,” Patrick Weber, a policy adviser to the governor, recently told lawmakers.
Senate Majority Leader Blake Curd’s bill, supported by distributors, would increase the barrel limit to 12,000 each year, but wouldn’t permit self-distribution by brewers. Under the bill, a brewer would be able to transfer up to 1,500 barrels of beer from its brewery to retail locations it owns.
Supporters said the bill would allow craft breweries to grow while protecting the three-tiered system of brewers, distributors and retailers.
“The three-tier system can evolve,” said Jeremy Rambo, general manager of a Rapid City-based beer distributor. “We can make improvements to it, but I don’t think we need to really throw the baby out with the bathwater on it.”