South Dakota Governor aims to implement pro-craft laws, expand barrel cap, allow direct sales

The South Dakota 2018 legislative session is on, baby. What’s on the agenda? Glad you asked. For Governor Dennis Daugaard, who spoke last week in his final State of the State address, it’s definitely workforce. The Gov wants South Dakota to create more attractive industries and better educated students who can supply those industries with topnotch workers. He wants to create an interstate licensure compact with neighboring states like Montana, Wyoming and Colorado. He wants a better workforce-focused education for students and better pay for teachers. He wants to pilot an awkward Medicaid recipient work program, and he also wants to allow South Dakota craft breweries to continue to thrive.

When it comes to the latter, Daugaard wants to allow South Dakota “malt beverage manufacturers” (definition here) to brew more than a measly 5,000 barrels per year, which is the current cap. Because, well for starters, neighboring states can product a lot more. From KSFY (the local ABC affiliate):

“Current law caps microbreweries at 5,000 barrels per year. Compare that to Montana’s cap of 60,000, Wyoming’s 50,000 and North Dakota’s 25,000,” Daugaard said.

“If I were to produce more than 5,000 barrels, I would not be able to keep my tap room,” [Remedy Brewing Co. co-owner Matthew] Hastad said.

Hastad says [sic] these tap rooms are a big part of the craft brewing business.

“Our tap room is by far our more profitable side when it comes to margins,” Hastad said.

Daugaard wants to push that cap to 30,000, which still feels anemic but way better than only 5,000 barrels. But just as important, Daugaard wants to allow small breweries to self-distribute in some fashion (no legislation has been introduced yet), which has eyebrows raising for both brewers and distributors. From the Sioux City Journal:

Brian Trimble, owner ofBill of Rights Brewery in Pierre, said he would likely distribute his own beer around the city if he had the option.

…

“The more money I save on that end, the more money I can invest into more kegs, and getting more out there, brewing more often and all that kind of stuff,” said Trimble, whose top sellers are a jalapeno amber ale and a honey basil ale.

Of course, distributors who make up that third tier of the three-tier system will surely have their say.

Bob Riter, a lobbyist for the South Dakota Beer Distributors Association, said he’s going to meet with the group’s members to discuss the proposals. Riter said the organization is willing to work to be “reasonable in our approach to this.”