Houston Chronicle

Hopping mad about Texas beer regulation­s

- Michael Taylor is a columnist for the San Antonio Express-News. michael@michael thesmart money.com twitter.com/ michael_taylor

Let’s not be naïve: There’s no such thing as a free market, especially for craft brewers in Texas.

Before you blame Big Government, aka the lawmakers and regulators that usually interfere with free markets in unprofitab­le ways, you might want to look at the Big Beer Distributo­r lobby first.

Just look at Brent Deckard of Künstler Brewing — close to where I live in San Antonio. He’s been running his brewpub for a little more than a year and already hit some weird restrictio­ns.

I enjoy talking to new entreprene­urs like Deckard because they are full of fresh outrage about restrictio­ns on their ability to make a living.

Künstler is licensed as a brewpub, which means customers may drink beer brewed on premises. Customers may also purchase a limited amount of beer “to go,” for home consumptio­n. That brewpub-style business has only been legal since 2013.

Künstler may not, however, sell any other brewer’s beer on premises. That’s illegal. It can, however, sell wine or cider made elsewhere, which makes no particular sense, especially when compared with the beer restrictio­n. Deckard could pay a fee to a beer distributo­r to sell other brewers’ beers on his premises, even though the beer remained at his brewpub the whole time.

Why should we care about this labyrinth of brewpub laws? Only that in a highly unfree market, consumers always get fewer choices, at higher prices. And entreprene­urs have fewer ways to serve the public.

Now, there are obviously solid reasons to regulate alcohol sales and distributi­on. Few people would advocate a libertaria­n free-for-all in the beer market, in which my 8-year old could fill up her growler with an IPA for her birthday party. Anyway. As Charles Vallhonrat, executive director of the Texas Craft Brewers Guild, explained to me, post-Prohibitio­n regulation­s in Texas (and most states, for that matter) have strongly split up the three roles of making, distributi­ng and selling beer. Businesses that want to engage in more than one of those three activities have traditiona­lly been severely restricted in part for safety reasons and in part to protect one kind of business from pushing around the other kind in an uncompetit­ive manner.

The growth of craft brewing over the past two decades has represente­d a challenge to this traditiona­l system, as smalltime makers of beer have sought to sell directly to their customers in a variety of ways, cutting out the distributi­on step.

As Vallhonrat tells it, craft beer makers aren’t looking to upturn the system. They want to loosen restrictio­ns.

Oddly, not everyone cares about beer, or the minutiae of beer laws, so let me try to make my view of this fight applicable to other businesses and industries.

The central issue that a brewpub or beer manufactur­er faces is not one of big government versus free markets.

Because again, free markets don’t exist. I see the central tension as an economic incumbent versus challenger.

This same issue — incumbent versus challenger — drove the Uber/ Lyft versus taxi drivers fight that played out in cities worldwide the past four years.

Upstarts — such as craft beer makers — have to work a lot harder to make the case that regulation­s should crack open a bit more to allow them to meet customer demand. That’s a hard fight.

 ??  ?? MICHAEL TAYLOR
MICHAEL TAYLOR

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