Craft beer

Jacob Ehlers packages cases of Zipline Brewing Co.'s Copper Alt beer Wednesday in Lincoln. The state's craft brewers and beer distributors have worked together on a set of proposed rule changes.

ERIC GREGORY, Journal Star

Two groups that were seemingly at loggerheads as recently as the 2017 legislative session — craft brewers and beer distributors — said Wednesday they'd come to an agreement on a set of rule changes. 

“As far as I know, everybody is in favor of this, and if there’s anything, they’ll bring it up at the public hearing,” said Hobert Rupe, the Nebraska Liquor Control Commission’s executive director, as he announced the proposed changes.

He was knocking on a wooden tabletop as he said it.

During last year's legislative session, the relationship between Nebraska craft brewers and the state’s beer distributors seemed to publicly fracture thanks to a proposed brewer-blindsiding measure. But there remained some open lines of communication between brewers and the people who trucked their beer off for sale.

Kim Kavulak, who co-founded Nebraska Brewing Co. and is president of the Nebraska Craft Brewers Guild, said she talked with the team at Quality Brands about the divisive measure proposed in LB632, which would have required beer from the state's microbreweries be delivered to a distribution warehouse — primarily for taxing purposes — before being shipped off for sale.

For major breweries shipping beer in from out of state, that’s how it’s been for ages. But for the state's microbreweries, Kavulak said the added cost could cripple business. Having formed a strong relationship with her distributors, Kavulak said she felt comfortable sharing her concerns about the bill with them. Similar conversations took place throughout the industry.

“That was key in leading to the discussions that happened this (winter),” Kavulak said.

Protests by craft brewers and their supporters led to a stripped-down bill last spring that was pulled from the agenda. In sitting down and hashing out concerns this winter, the sides came to a set of agreements reflected in two printed pages of proposed rule changes discussed briefly at Wednesday's Liquor Control Commission meeting. The changes are on pace to be adopted later this spring, following a public hearing at a commission meeting in March.

Vanessa Silke, an attorney representing the Nebraska Craft Brewers Guild, said at the meeting that its members and those represented by the Associated Beverage Distributors of Nebraska have agreed upon the proposed changes, which address both the “at rest” definition that blew up during LB632 debate last year, as well as an issue that dates back a year prior regarding satellite locations.

"For satellite locations, the new rule language affirms what the commission has long required: that all additional locations for a craft brewery must be wholly-owned by the same entity that owns the craft brewery," Silke said. "Craft brewery licensees may directly deliver beer they produce among these locations only. All other sales of beer to retail licensees in Nebraska must come into the physical possession of a Nebraska licensed wholesaler."

Rupe said the proposed changes distinguish between beer brewed by Nebraska microbreweries and those brewed elsewhere, allowing craft-brewed beverages to avoid paying for a gas-guzzling and time-consuming trek to warehouses located, in the case of some rural brewers, hundreds of miles away, before going to retail locations, as the struck-down provision in LB632 could have led to. Silke said the proposed changes also provide clarification on a number of issues that concern both craft brewers and beer distributors. 

"The proposed rule changes affirm that when beer is required to come into the possession of a Nebraska licensed wholesaler, it must be physical possession rather than a paper-only transaction," Silke said. "In addition, years ago, Nebraska wholesalers requested that the commission allow physical possession to occur at the wholesaler's truck instead of at the warehouse for intrastate transactions.  The new rule language affirms that practice.  Lastly, the rules language affirms the timing and responsibility for payment of state excise taxes by craft brewery licensees."

Kavulak said that the agreements were reached thanks to “the level of willingness” of the distributors.

“They both depend on one another,” said Ann Pedersen, a spokeswoman for the distributors. “The distributors distribute beer and the craft brewers want to create beer.”

The first meeting between the two sides took place in December at the Country Club of Lincoln, Kavulak said. Call it a beer summit, perhaps, though there weren’t any pints consumed.

“There should have been,” Kavulak said, "but there was not."

That could change. During this week's Nebraska Grower and Brewer Conference in Omaha, Kavulak and a representative from the distributors will join the “Pints and Politics” podcast to talk about how both sides came together to iron out rule changes.

They’re calling it the “peace summit podcast,” Kavulak said.

Reach the writer at 402-473-7438 or cmatteson@journalstar.com.

On Twitter @LJSMatteson.

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