Microdistillery, craft brewery expansion bill advanced

A measure intended to provide greater flexibility to the state’s microdistilleries and craft breweries to grow their businesses was given first-round approval March 4.

As introduced, LB113, sponsored by Grand Island Sen. Dan Quick, would increase the amount of alcohol that a holder of a microdistillery license can self-distribute to retail licensees in Nebraska from 500 gallons to 5,000 gallons.

It also would increase the number of licensed premises and retail locations a craft brewery or microdistillery licensee is permitted to operate from five to 10 physical locations.

Quick said there are about a dozen microdistilleries operating in Nebraska that are up against the current caps in state law. LB113 would increase opportunities for those establishments to market their products by getting regulations “out of the way” of small business growth.

“Local breweries and distilleries are using Nebraska-grown ingredients to create high-quality products that contribute to the state’s economy,” Quick said.

A General Affairs Committee amendment would lower the self-distribution cap from 5,000 to 3,500 gallons and lower the number of retail locations that licensees could operate from 10 to eight.

Whitman Sen. Tanya Storer supported LB113 and the amendment, which she characterized as a good compromise from where the bill started. Allowing small distilleries to self-distribute more gallons per year would encourage them to continue to use the state’s high-quality water and grain to make an excellent product and to reach more customers, she said.

“We talk a lot about small business and entrepreneurship … we talk about the need to limit burdensome regulations,” Storer said. “We also talk about value-added agriculture, and I think [this bill] pulls all those things together in a beautiful way.”

Sen. Bob Andersen of Omaha also supported the bill and the amendment. The proposal would allow small businesses to flourish if they are able to, he said, without arbitrarily restricting their growth.

“I think the government’s role is primarily for safety and security and besides that we should … get out of the way,” Andersen said.

Opposing the measure was Fremont Sen. Dave Wordekemper, who noted that the Nebraska Liquor Control Commission opposed LB113 at the bill’s public hearing. He said his job as a lawmaker is to rely on agency representatives to serve as a guide to good policymaking.

In addition, Wordekemper noted that senators raised the self-distribution gallon cap to its current level just two years ago.

“I don’t know if we know the full impact of that yet and where that’s going,” he said. “I would like to see that maybe come to fruition a little bit more to see how this goes.”

Lincoln Sen. Jane Raybould opposed the measure and the changes outlined in the committee amendment. She said the “growing pains” being experienced by some of the state’s microdistilleries are a natural part of owning a business and should be resolved within Nebraska’s existing regulatory framework.

The committee amendment was adopted on a vote of 36-3.

Raybould then offered an amendment to instead lower the number of gallons a microdistillery could self-distribute to 1,000 and the number of physical locations a licensee could operate to six. Very few distilleries are up against the current caps, she said, so there is no need to raise the limits as much as the committee amendment would.

Quick opposed Raybould’s amendment, saying it did not reflect the compromise that he and the committee worked hard to find. He said the goal of LB113 is to help distillers grow their businesses without harming distributors, and that Raybould’s amendment would not be enough of a change to the status quo to achieve that aim.

After a 12-30 vote on Raybould’s amendment was questioned due to procedural confusion, Omaha Sen. Machaela Cavanaugh offered a successful motion to reconsider it. The amendment then failed on a second vote of 10-33.

Lawmakers advanced LB113 to select file 36-5.