Craft Breweries Need Help, Not Handouts

You could help this entire industry without spending a dime. Instead of getting financially involved, get out of the way.

In a development that has become as commonplace as the hoppy IPAs that symbolize the United States’ craft beer renaissance, state and local governments are rushing to “help” breweries. Port City Brewing in Alexandria is just the latest example of what’s happening across the country. Thanks in part to $500,000 in public grants from the Virginia Department of Agriculture and the city government, Port City announced that it will expand its operations and nearly triple its brewing capacity.

The knee-jerk reaction for beer lovers would be to rejoice. After all, this means more beer. People looking for a way to boost the local economy might find cause for celebration. This means more jobs. And local politicians certainly love this, too. Piggybacking off of craft beer’s popularity might increase their popularity (read: re-electability) as well.

While these sentiments are certainly understandable, they neglect to consider how policymakers can actually lend a hand to the industry. Craft breweries do not need subsidies, but they do need help.

In fact, giving money to brewers simply masks the biggest problem facing the industry’s continued growth: Craft brewers face an outdated, counterproductive and oftentimes redundant regulatory mess. In Virginia, for example, starting a craft brewery requires 20 regulatory steps at the local, state and federal levels. This is as many bureaucratic steps as starting a small business in China or Venezuela.

This is not to say that there is no role for regulation, especially when a real public-safety concern is in play. But most of these regulations date to the end of Prohibition, fail to account for changes in the market over the last eight decades and have become poorly disguised gifts to established breweries and wholesalers.

At the federal level, aspiring craft brewers currently must wait more than 160 days to get approval from the Alcohol and Tobacco Tax and Trade Bureau. This includes background checks, field investigations, equipment and premises examination and a legal analysis of proposed operations. Then it’s another 24 days for the TTB to approve the label you put on the bottle. The TTB may also need to approve your formula (depending on your ingredients and brewing methods), which requiresmore waiting. In all, just at the federal level, a brewer must wait nearly six months for the necessary approval.

An aspiring brewer’s work is not done, however, as he or she must also obtain permission at the state level. In Virginia, the problem is not how long it will take to get approval but whether approval will be given at all. The state can deny a license if the applicant is “physically unable to carry on the business” (couldn’t this person hire some help?). Or if the applicant is not a “person of good moral character and repute” (who makes this subjective judgment?). Or even if the applicant is “unable to speak, understand, read and write the English language in a reasonably satisfactory manner” (so much for inclusiveness).

If you become a craft brewer today, don’t plan on selling your first bottle of beer until this time next year. That is, if you’re able to make it through the process at all.

Policymakers have correctly recognized that this process creates problems for craft brewers. Focusing on subsidizing some brewers, however, rather than reforming the entire process for all brewers, does more harm than good. It gives the appearance that policymakers are taking active steps to support an industry when the truth is that it’s only supporting certain members of the industry: those lucky (or shrewd) enough the win subsidies.

You could help this entire industry without spending a dime. Instead of getting financially involved, get out of the way.