Moderate Steps for Brewers, Industry Freedom

No reason for Legislature not to do more

Several bills related to brewers, restaurants and bars were recently passed by the Legislature. While all are pushing the rules in the right direction, there is no reason the state should not allow for more freedom on these legal products.

The most significant proposed laws are as follows (all have passed the Legislature nearly unanimously and are headed to the governor):

  • House Bill 4709 would “increase the amount of beer microbrewers can brew from 30,000 to 60,000 barrels per year” (up from 18,000).
  • House Bill 4710 would “allow one brewpub to have a financial interest in up to five other locations” (up from two).
  • House Bill 4711 would “allow a brewer to sell its beer at two tasting rooms instead of just one.”
  • Senate Bill 650 would “allow very small commercial brewers (ones that produce fewer than 1,000 barrels per year) to sell directly to a retail merchant, rather than being mandated (like larger producers) to sell through one of the regional wholesale distribution monopolies that are protected by current liquor control regulations.”
  • Senate Bill 505 would lift some regulations the prevented bars and restaurants from allowing advertisements on trays, coasters, napkins, shirts, hats, pitchers, glasses, bar mats, buckets, bottle openers, stir rods, liquor drink menus, patio umbrellas and packaging used to hold and deliver liquor purchased by the retailer. 

There’s no good reason for the state to limit the amount of beer microbrewers can make or the number of operations and tasting rooms — consuming alcohol is legal and production should be set based on demand. If Michigan businesses are limited, it is likely that the response of consumers is to drink other types of beer, which means capping the brewers serves no purpose other than to hamper successful operations and harm economic growth. And while allowing smaller brewers to avoid the regional wholesale distribution monopoly is a good idea, all enterprises should have the freedom to ship how they want.

We have covered Senate Bill 505 previously, which is a compromise between the old, Prohibition-era rules that prevented any logos on a variety of bar and restaurant items and the idea that establishments should not be limited by government from these types of agreements. Ironically, the craft brewers lobby, which has long had to fight anti-competitive government restrictions, supports the old rule because it limits their competition. The bill is better than the previous law, but the compromise is still a ridiculous regulation hampering businesses.

From a broader public policy standpoint, there is little reason the state should be standing in the way of the expansion of Michigan brewers. The truth is, none of these laws are about public safety, or any other reasonable purpose.

A 2012 study by Michael LaFaive, director of the Morey Fiscal Policy Initiative at the Mackinac Center, and Antony Davies, an associate professor of economics at Duquesne University in Pennsylvania, found that a state’s alcohol regulatory regime has little to do with public health outcomes.

Another study from Donald Boudreaux, a professor of economics at George Mason University, and Julia Williams, with the Regulatory Economics Group, completed in 2010 looked broadly at how tough alcohol regulatory laws were. It found “no statistically significant differences between the 18 control states and the 32 license states (and the District of Columbia) in rates of alcohol-related deaths, drunk-driving fatalities or binge drinking.” They also found “similar results for rates of drunk-driving fatalities and binge drinking among youths.”

The state is moving in the right direction on alcohol regulation, but current laws still enrich a handful of special interests in the alcohol wholesale and distribution business. The Legislature should do more.