Kentucky Bill Prohibits Brewers from Owning Distributorships

The Kentucky Senate has just passed a bill prohibiting brewers in the state from also distributing their product. The vote is cause for joy for many small breweries – but not all of them, reports Cincinnati.com. Now sitting on Gov. Steve Beshear’s desk for approval, HB 168 was introduced as a response to Anheuser-Busch after they made an attempt to buy another distributorship in Kentucky, says WCPO. Once the bill is signed, it will require Anheuser-Busch to close down or sell the two distributorships it currently has in the state.

The bill, which revives a set of post-Prohibition liquor regulations enforcing a separation between alcohol producers, distributors, and retailers, was introduced in early January by Rep. Greg Stumbo. Many small brewers around Kentucky support the bill because they feel it creates a more even playing field, eliminating the potential for Anheuser-Busch to dominate shelves in the state. After the bill was passed, Daniel Harrison, co-founder of Country Boy Brewing, said, “I can’t tell you how extremely happy I am right now.”

However, if the bill passes, the founders of Rhinegeist Brewing, who just invested $300,000 to build their own distributorship in December 2014, will be forced to sell or shut down the new part of their business. “We just got screwed … this is why I hate government,” said Rhinegeist co-founder Bob Bonder.

Predictably, Anheuser-Busch strongly opposes the measure, although the ramifications for the beer goliath may be slightly less serious than for Rhinegeist. Busch made their position clear with a statement from their local director of sales and marketing, Damon Williams: “This legislation violates our rights under the U.S. and Kentucky constitutions, discriminates against our company by providing economic protections for in-state special interests, and represents nothing short of a taking of our property.”

As reported by the Courier Journal, in the final debate before the bill went to a vote, Stumbo challenged the idea that the bill takes any property rights by preventing state regulators from issuing an annual distributor license to a brewer: “A government license is not a property right,” he said. [Cincinnati.com][Photo: Flickr/ Wagner T. Cassimiro]