Politics & Government

Did big money stop craft beer from expanding in NC?

North Carolina beer distributors used political contributions this year to reinforce their battle with craft brewers, pouring more than $90,000 into the campaigns of influential lawmakers.

Individually and through their political action committee, distributors made the contributions as they turned back an effort by craft brewers to raise the self-distribution cap.

Much of the money went to legislative leaders and committee members who helped kill the push for “craft freedom” led by two Charlotte brewers.

“They’re doing the work of those who paid them,” said John Marrino, owner of Olde Mecklenburg brewery. “They’re doing favors for those who gave them the most money.”

Distributors gave Senate Republican leader Phil Berger $33,300 and House Speaker Tim Moore $21,700, according to reports filed with state elections officials. They gave at least $22,000 to members of the House Alcoholic Beverage Control Committee, which considered the major craft beer bill.

The effort to raise the cap pitted North Carolina’s fast-growing craft beer industry against wholesale distributors, who had given lawmakers nearly $1.5 million over the last four years, according to Democracy North Carolina.

The craft beer industry has exploded in North Carolina and across the country. Craft brews made up 12.3 percent of the beer market in 2016, a share that continues to grow, according to the Brewers Association, a national trade group.

North Carolina has more than 205 craft breweries with an annual economic impact of $1.2 billion. Since Olde Mecklenburg opened in 2009, another three dozen have sprung up in the Charlotte area.

Marrino, and Todd and Suzie Ford of Charlotte’s NoDa Brewing led the fight to raise the 25,000-barrel cap on craft beer production.

Producing one barrel above that forces brewers into a costly contract with one of the state’s big distributors. The franchise law then gives distributors control over sales, marketing, delivery, quality control and even pricing. And the distributor essentially controls the rights in perpetuity, according to attorneys for the craft brewers.

Distributors argue that the current system helps craft brewers by expanding their markets and prohibiting big brewers from having their own distribution systems and greater market share. With no self-distribution limit, they say big brewers such as Anheuser-Busch InBev could become their own distributors, squeezing out other brands.

The craft brewers supported a bill from Rep. Chuck McGrady, a Hendersonville Republican, that would have raised the production cap to 200,000 barrels. That provision was stripped before the bill came up for debate in the ABC committee.

Reports show that distributors contributed $4,500 to GOP Rep. Jamie Boles, who co-chairs the ABC committee, and $4,750 to Republican Rep. John Bell, the House Majority Leader who was a late addition to the panel. Both opposed raising the production cap.

Neither Boles nor Bell could be reached.

Tim Kent, executive director of the N.C. Beers & Wine Wholesalers PAC, downplayed the contributions.

“We’ve had a political action committee for decades,” he said. “We have routinely supported our friends and members of the General Assembly. Nothing has changed.”

The House eventually passed a watered-down version of McGrady’s bill, without the production cap increase.

“I was well aware that campaign funds were being contributed,” McGrady said in an email. “One has to wonder whether we could have gotten movement on those other issues if there hadn’t been campaign contributions made to committee members.”

Ford, of NoDa brewery, said he’d “like to” think the contributions had nothing to do with the legislative defeat. “I’m sure it does have some effect otherwise they wouldn’t do it,” he said.

After losing in the legislature, Marrino and Ford went to court. They’re challenging the annual production cap and franchise law, saying they stifle competition and hurt consumers.

The case is pending in Wake County Superior Court.

Jim Morrill: 704-358-5059, @jimmorrill

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