Nevada craft brew industry could get boost thanks to compromise Assembly bill
April 17, 2017
Nevada brewers and distributors put their heads together last week to compromise and craft proposed legislation that opens the door for growth in the state's craft brewing industry.
The resulting legislation increases the amount of beer that craft brewers can produce while strengthening a three-tiered system designed to keep production, distribution, and sales separate and better regulated, plus keep beer giants from overwhelming the industry in Nevada.
"It's, finally, a relief that brewers do have a place in the state," Tom Young, CEO of Great Basin Brewing Company, said in a phone interview while he attended a craft brewing conference in Washington, D.C.
Brewers considered Assembly Bill 431, in its original form, a set back for the industry that would have allowed only a small increase in production, while limiting — even shutting down — some brewery retail locations.
As of press time, the bill was not yet scheduled to be heard in the full Assembly.
"It took a lot of work to come to a consensus," Alfredo Alonzo told the Assembly Committee on Commerce and Labor during a hearing April 10. Alonzo represented distributors Southern Glazer's Wine & Spirits and Nevada Beer Wholesalers Association in negotiations with craft brewers.
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"We've had discussions on what amount is a fair amount to produce that still protects the public and the distributors, which are an integral part of the system," Alonzo said. "How do you make all these independent businesses continue to thrive and grow? I think we have that here."
The compromise bill increases the volume a brewer can produce from 15,000 barrels to 40,000 barrels. (One barrel equals 31 gallons.) A previous version of the bill limited the total barrels to 20,000.
Of the 40,000, brewers can now sell 5,000 barrels as retail products in cans and bottles. A new provision allows craft brewers in Nevada to sell directly at farmers markets and similar events, limited to 20 days per year.
The compromise also strikes down a provision that would have limited each brewing company to two establishments in the state, which would have forced a few brewers to close locations.
Great Basin, the oldest and largest brewery in the state, currently operates at three location — two breweries with restaurants, and a separate tap house. Had the two-location limit gone through, Great Basin would have been forced to close a location resulting in employee layoffs.
"Getting AB431 to where it is now was quite a roller coaster ride," Young said in an emailed statement. "We brewers are not used to the political process where logic and reason are not necessarily, but should be, a factor in developing legislation. The first proposed version of the bill would have seriously cut back what we craft brewers in Nevada were allowed to do. …
"Most states do not have a restriction that causes a brewery to close their taprooms when an arbitrary limit is reached. Only two other states in the west have such limits."
Idaho has limits at 30,000 barrels and Arizona's limit is 250,000 barrels. Even conservative Utah does not have a limit on brewery production.
"As expected, states with a strong craft beer reputation like Washington, Oregon, California and Colorado have no limits," Young wrote.
Great Basin is the only brewery in the state close to hitting the old 15,000-barrel limit, but the low production limit has inhibited expansion goals for many brewers.
Revision Brewing Company opened in Sparks in March but is on a fast track for growth. Even with the late start, owner Jeremy Warren said in a phone interview with the NNBW that he expects to produce 10,000 barrels this year and surpass 15,000 next year.
Without the change in the top limit, he will consider moving the company to California where he already has experience with that state's more accommodating brewery regulations.
Without the limit increase, the craft brew industry "is going to come to a freezing halt," Warren said. Some locations would have to shut down and Revision Brewery would not expand.
Increasing the barrel limit in Nevada "would be huge," Warren said.
"At Revision, we can invest more in infrastructure, hire 50-plus more employees."
The craft brewers in the region are working together to increase awareness of the industry and create a tourist destination for craft beer enthusiasts. They view each other brewers as industry partners more than individual competitors and appreciate what other brewers are doing.
Increasing the limit is "going to allow Great Basin to expand, to hire more people, ship more beer out of state," Revision's Warren said. "That's good for Nevada."
Young also hopes to see AB431 move forward with its revised, more accommodating provisions.
"We are excited to get some momentum to move forward," Young wrote. "Our distributors who deliver our beer to our accounts will benefit greatly as we will have more interest in investing in equipment and people so that we can grow. We make money by selling our beer in our pubs and taprooms but can enjoy the most growth by selling more beer to our distributors who in turn sell more beer to grocery stores, bars and restaurants. This is how we both make money."