Editor’s note: A new bill has been introduced in the Kansas Senate that seeks to permit microbreweries to directly sell beer and hard cider instead of going through distributors. Here’s a link to Senate Bill 511.
It seemed like such a simple request.
Sean Willcott had been asked by the Holton Jackson County Chamber of Commerce if he could provide locally brewed beverages from his business, Willcott Brewing Co., for a Fourth of July beer garden. The town, about 30 miles north of Topeka, would be promoting a local business and Willcott would, theoretically, be making some money.
Before it could happen, though, the state of Kansas had to be involved. Because of the state’s outdated liquor laws prohibiting brewers from selling outside their premises, Willcott said, he had to go through some steps.
First, he bought a catering license. Then he sold his beer to a wholesaler, who marked it up 30%. As caterer to the beer garden, Willcott then bought it back from the wholesaler at the marked-up price so it could be available to thirsty patrons.
After the beer garden closed, the state required Willcott to destroy any beer in kegs that had not been sold.
“So I ended up losing money,” he said.
Brewers seek a change to state law
The restrictions on how breweries, many of them small businesses, can sell their product is a problem local tap room owners say keeps them from growing.
Matt Britton, whose Discourse Brewing in Overland Park opened about four months ago, and Brent Anderson, owner of Friction Beer Company in Shawnee, along with Willcott and others, have been making the trip to Topeka this session with hopes to change a law they say is outdated and doesn’t address the needs of the many microbreweries that have opened the past few years.
The problem, they say, is Kansas Statute 41-308, which limits how brewers may move their products.
The law prohibits a tap room owner from selling directly to a popular restaurant a couple of blocks away, Britton said, even if the restaurant owners want the beer on their menu. Instead the law requires brewers to enter into an agreement with a distributor, who then would mark up the price and offer it within the distributor’s territory.
Getting your beer with a distributor doesn’t necessarily solve the problem, though, Britton said, because the distributor is under no obligation to sell the product to that restaurant down the street.
“Once you sign with a distributor, you become their property,” he said. The distributor can sell to the restaurant, but might choose not to because a better-known brand might be making them a lot of money in that location.
Anderson calls it “a monopolistic force to maintain the status quo.”
Shopping around for a better distributor is not really an option either, because the terms of the contract are indefinite and only one distributor can operate in a given territory, Willcott said. That makes it all but impossible to fire a distributor. The best hope, if the distributor is not selling the product, is to sue them, he said.
Brewers say the law has “throttled” business growth
Under the law, a brewery could not even sell directly to its own satellite. Britton and Anderson said the end result of all that regulation is that small breweries are prevented from expanding, and Kansans are more likely to encounter popular beers from Wisconsin and Missouri in restaurants than Kansas beers.
Willcott has figures to back that up. There are currently 81 microbrewery licenses issued in the state, and 30 out of 105 counties have a microbrewery. Yet less than 2% of the beer consumed in Kansas last year was produced in Kansas, he said, citing the state Alcoholic Beverage Control arm of the Department of Revenue.
“This is survival,” said Anderson. “We are being throttled and prevented from growing,” because of the statute.
The brewers said Kansas is behind other states in revising outdated Prohibition era regulation to account for the growth of microbrewing. Forty states and Washington, D.C., already allow some form of direct sales ability for microbreweries, Willcott said.
Brewers seek more flexibility in microbrewery licensing
The brewers have enlisted state Rep. Sean Tarwater of Stilwell for help revising the law. They say they’d like to see the breweries under basically the same rules as wineries. For instance, wineries and breweries can both make ciders, Willcott said, but wineries can sell them directly and breweries cannot.
The proposal does not limit distributors but changes microbrewery licensing and allows them the option to sell direct to retail or use distributors when it makes sense, Willcott said.
Anderson said the idea is to find a law that brewers and distributors can all live with. “There’s no reason why both can’t peaceably exist,” he said. “For a small producer like us, there’s only so much we can sell out of our taproom.” Changing the law will get Kansas beer out in front of more people, he said.
Their bill does not yet have a number, and Tarwater’s office did not return a call about this issue. But Britton, Anderson and Willcott said they have seen support in their trips to the statehouse because of how the rules affect small businesses.
To draw attention to the issue, Britton has evoked Kansas Day, which was Monday, Jan. 29. The state’s birthday celebration is, he figures, a good time to remind people to buy local.
So Discourse is releasing a special beer for the occasion, made with all Kansas ingredients, including Kansas-propagated yeast. It’s called “..I’m from Kansas,” he said.
