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The craft brew industry and the Michigan Beer and Wine Wholesalers Association have been at odds in the past, but they are agreeing on easing the liquor law restricting brewpubs and microbreweries.

(Brandon Howell / MLive)

LANSING — Groups representing Michigan craft brewers and beer distributors have reached agreements on proposals to loosen brewery and brew pub restrictions, but they so far have not moved in the legislature.

The Michigan Beer and Wine Wholesalers Association, which had previously come out against several proposed reforms to the state's liquor control laws, said it reached consensus on a few rule changes that should promote the state's growing craft beer industry.

"(We) worked with the craft brewers on what reforms we could mutually support, and we're hopeful that a package that comprises those things can move and move quickly in the fall legislature," said Mike Lashbrook, president of the trade group that represents beer and wine distributors.



The distributors and brewers had hoped that the House would pass three bipartisan bills before leaving for summer break, but they haven't yet passed committee. And while some consensus has been reached, disagreements over other regulatory issues may be holding up the process.

Proposed changes

House Bill 4709 would increase the barrel threshold from 30,000 to 60,000 barrels for micro brewers. HB 4710 would allow brewpubs to have an interest in five other brewpubs if the combined production doesn't exceed 18,000 barrels of beer per year. Current law restricts it to two additional brewpubs with a total production of 5,000 barrels.

Some micro brewers would like to invest in expansions and create jobs, but are held back by the restrictions, said Scott Graham, executive director of the Michigan Brewers Guild.

"Why would you want to hold somebody back from that kind of growth?" he said, explaining that many rules were put in place before the state's craft beer industry exploded with some 140 breweries.

Bell's Brewery founder Larry Bell said he's generally supportive of the bills but wants an amendment that would prohibit microbreweries and brew pubs from transferring beer between locations. He said that would prevent corruption in the industry and maintain the spirit of the law.

Bell said he's concerned about breweries or large restaurant companies controlling a finite number of liquor licenses and only offering their products at the sites. The Kalamazoo brewer runs the largest craft beer operation in the state and hasn't always seen eye-to-eye with the brewers guild.

HB 4711 allows brewers to sell their beer for on-premise consumption at two brewery locations instead of one. Bell's and Founders Brewing Co. are only licensed brewers in the state (the rest are micro brewers).

Bell said he thinks the House bills will get committee hearings this fall.

"There may be a few little things (to resolve) but there's been a lot of dialogue," he said.

Other reforms on tap

The wholesalers association also is open to allowing small startup breweries to self-distribute their beer.

Lashbrook originally opposed such a measure, fearing that it would invite lawsuits from larger suppliers and threaten to take down the three-tier system of manufacturers, distributors and retailers. But he said he'd support "carefully crafted" legislation that's tailored to small startups. Details are still being worked out.

The wholesalers remain opposed to allowing proprietors to own both a microbrewery, which produces beer for off-premise sales, and a brewpub, which sells beer on premise. Craft brewers want that flexibility to promote further growth in the industry.

The wholesalers also are against efforts by bars and restaurants to change the so-called "secondary use" law and allow the use of glasses, coasters and other items with beer, wine and liquor logos. Some brewers also oppose it, contending it could hurt smaller craft brewers in favor of larger beer companies.

Most other states allow such items. Bars and restaurants are willing to pay for them so there shouldn't be concerns about fairness, said Scott Ellis, executive director of the Michigan Licensed Beverage Association.

Some believe that disagreement over the secondary use rule is holding up progress on other legislative changes. Micro brewers have been pushing for updates while wholesalers have generally been more resistant to some of the changes.

The Wall Street Journal recently ran an opinion piece that argued the wholesalers group is hurting Michigan's craft beer industry and has lobbied hard to keep Michigan from updating its regulations because it's concerned about maintaining its position in the three-tier distribution system. Lashbrook said he was unfairly portrayed and that his group supports the three House bills and other potential changes.

Several of these proposed reforms came out of an advisory committee's review of Michigan's liquor laws that made recommendations that appeared in a 2012 report to the Michigan Office of Regulatory Reinvention (ORR).

Email Melissa Anders at manders@mlive.com. Follow her on Google+ and Twitter: @MelissaDAnders. Download the MLive app for iPhone and Android.