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There are 1.2 million home brewers across the county producing more than 2 million barrels of beer each year. Young Americans love craft beer, and brewing new options to satisfy our sophisticated palates has become an exciting business for young entrepreneurs.
Even President Barack Obama brews his own beer — in the White House — with equipment that he purchased himself. White House Assistant Chef Sam Kass tasted it and said, “America, I wish everyone could taste this.”
But Americans are unlikely to get the chance to taste the president’s recipe. It’s nearly impossible for aspiring entrepreneurs — even if they are the leader of the free world — to put their delicious beer in the hands of consumers yearning for their product. Why?
The problem lies in the regulations at the local, state and federal level that make entering the world of beer expensive and difficult to navigate. We need to free the brews from politicians and bureaucrats.
Recently, Generation Opportunity hosted an event with a few local brewers in the D.C. area who found success despite all the government obstacles. Brandon Skall of DC Brau called the laws impeding his start “nonsense.” For instance, regulators insisted DC Brau install a hood for a food oven. They don’t have an oven. They don’t cook food.
Justin Cox of Atlas Brew Works in D.C. nearly couldn’t open because he didn’t have equipment to handle raw chicken. Never mind that Atlas doesn’t use raw chickens (Thank goodness!) in any of its beer recipes.
These ridiculous examples are but a small portion of many more, even greater restrictions on aspiring brewers. In all but four states, there is a three-tier structure that mandates brewers, distributors and retailers remain entirely separate entities. This structure has allowed distributors to control the flow of the good stuff from the brewers to the consumers. A brewer can’t just make some beer and sell it very easily.
The feds are in the game, too. Not only does a young entrepreneur face the normal federal business tax and compliance costs, but they also have to receive approval from the Alcohol and Tobacco Tax and Trade Bureau before they can start a brewery.
These nonsensical laws are remnants of a bygone era. Bill Madden of Mad Fox Brewing Company in Virginia described the regulatory system as “antiquated and left over from the prohibition.” Brewers were so excited beer became legal again they didn’t sweat the regulatory details.
But there’s a bigger reason the laws remain outdated and redundant. A coalition of “bootleggers and Baptists,” those who are genuinely interested in promoting well-being and private interests who stand to gain from increased regulation, have teamed up to restrict access to our favorite beverages, leaving a lot of potential kegs untapped.
This regulatory maze is no accident. Big beer companies have colluded with politicians to horde profits and limit new competition. However, the popularity of craft breweries is pushing legislators to reform laws across the country. Unfortunately, the tendency is to subsidize new brewers or create new tax loopholes in an attempt to level the playing field.