- Associated Press - Saturday, May 2, 2015

RALEIGH, N.C. (AP) - A major campaign donor’s interests. Upstarts changing the established market. Arm-twisting lobbyists. An anonymous web site urging legislation’s defeat as a job-killer.

The details are all part of the normal push and pull of varied interests as legislators balance the public’s interests as well as their own. Sometimes public demands are sidetracked, either to be forgotten or returning again and again until a change is adopted.

One of the many battles that played out at the General Assembly this week involved a disagreement between wholesale beer distributors and a competing trade group for the state’s 130 small breweries.

The contest came to a head with one lawmaker’s last-minute push to force a vote on legislation benefiting craft brewers. Their bill, bottled up in a state House committee, never got an airing before a self-imposed deadline this week that makes further legislative consideration before 2017 much more difficult.

Craft beer-makers from Innovation Brewing in the mountain town of Sylva to the Outer Banks Brewing Station in Kill Devil Hills are limited to themselves selling 25,000 barrels a year of their own products. That’s about 8 million 12-ounce servings, or a bit more than the volume of one Olympic-sized swimming pool. Produce beyond that and the law says brewers must sell everything to a wholesaler, which then sells to stores or taverns.

That three-tier system created after Prohibition was designed in part to keep breweries from limiting competition and consumer choice by locking up distribution. Since then, major breweries and in-state wholesalers have gotten bigger through consolidation.

Beer sales have been flat for a generation. The real growth has come from upstart brewers innovating with hops, malt and unexpected flavors like basil. Craft beer had 11 percent of the U.S. beer market last year, according to the Brewers Association, a Colorado-based trade group. Distributors want to continue serving a growing segment.

Though only five of North Carolina’s small breweries are approaching the 25,000 barrel sales limit, brewers argued they could add home-grown jobs if they had more freedom to choose not to hand over sales to a middleman.

“It didn’t make any sense that the state was telling a manufacturer that you could only manufacture so much before you have to turn your business over to somebody else. That’s basically what the law says,” said Rep. Michael Speciale, R-Craven, who supported the craft brewers. “I think it’s a dumb law. We’re up there touting jobs and pushing that that’s what we want to do, get jobs in North Carolina, and damn it, here’s a good way to do it and help a lot of little companies.”

Speciale and other lawmakers proposed quadrupling the brewery sales limit to 100,000, even outstripping the federal government’s definition of a small brewer.

The state’s influential beer wholesalers group countered that North Carolina law already gives small brewers greater opportunities than neighboring states, and distributors have been successful collecting alcohol taxes and limiting illegal consumption.

“We feel the current level is exceedingly generous and more permissive than any other state in the Southern U.S.” said Tim Kent, executive director of the North Carolina Beer & Wine Wholesalers Association, one of the state’s oldest trade groups.

The association’s affiliated political-action committee gave more than $250,000 to legislative candidates of both parties and the parties themselves leading up to last November’s elections, according to state campaign finance records. The wholesalers have long been one of the biggest spenders in state campaigns alongside trial lawyers, utilities, and banks, according to research by the North Carolina FreeEnterprise Foundation, which tracks legislative races for the state’s business community.

Efforts to get legislators to raise the barrel sales cap for small brewers had been tried for years. This year, it went to a House committee overseeing alcoholic beverage laws. The committee’s members include Rep. Leo Daughtry, R-Johnston. He’s part-owner of a large distributor, mostly of wine but also Heineken beer.

A challenger to become state House speaker this year, Daughtry said he didn’t take a position on the beer barrel bill.

“I felt some sensitivity about maybe having a conflict, so I didn’t want to get involved,” he said.

Earlier this week, an anonymous website urged readers to lobby legislators to defeat Speciales’ measure as misguided and putting distribution jobs at risk. Late this week, the contents were changed to display nearly the verbatim explanations Kent offered in press releases and emails. Kent declined to say whether his association was behind the site.

“That website had one purpose and one purpose only, to inform and educate the distributor employees across the state,” Kent said. “By that measurement, the project was a success.”

Speciale needed more than half the 120 members of the state House to sign his petition forcing the beer barrel bill out of committee for a vote. His petition collected fewer than two dozen names. Some later erased their signatures. Speciale said they told him they’d been pressured by the wholesalers association’s lobbyists.

Kent didn’t directly respond when asked about the arm-twisting claims.

“We are actively involved in lobbying the men and women of the Legislature and our members, our member-firm principles, have been actively engaged in the legislative process for three or more generations,” Kent said.

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Emery Dalesio can be reached at https://twitter.com/emerydalesio

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