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Kentucky Craft Brewers Ask State To Double Production Cap

Edwin Lee/Creative Commons

Kentucky craft brewers are asking the state to raise the cap on how much beer they are authorized to produce in a year.

The request comes after craft brewers scored a big win in the state legislature earlier this year, when they successfully lobbied to close a loophole that allowed out-of-state brewers to own their own distributors.

Brewers that produce fewer than 25,000 barrels of beer a year are considered “microbreweries” under state law, meaning they’re allowed to operate taprooms on site at their breweries.

Many of the state’s craft beer-makers are starting to approach the 25,000 barrel ceiling, which would force them to either stop growth or close down their taprooms, said Adam Watson, president of the Kentucky Guild of Brewers.

“The taprooms are not only vital revenue centers for our businesses but also centers of employment, community gathering and innovation, as well as drivers of economic activity,” Watson said.

The brewers' guild wants the state to double the cap to 50,000 barrels.

Watson, who is also a co-founder of Louisville’s Against the Grain Brewery, said raising the production cap would allow Kentucky brewers to more effectively compete with neighboring states.

The Indiana legislature recently raised the cap for microbrewers from 60,000 barrels per year to 90,000. Ohio currently has a 2 million barrel per year limit.

Republican state Sen. Damon Thayer, the majority leader, said he doesn’t understand why the state caps microbreweries' production in the first place.

“It should not be up to government to set these artificial caps on commerce,” Thayer said. “It should be allowed for the free market to dictate to you how much beer you can produce. Because you know how much you can make, you know how much you can sell. Let’s let the market and the free enterprise system decide this.”

Craft brewers have a little more breathing room in Kentucky since the legislature last year closed a loophole in state law that allowed out-of-state breweries to own their own distributors in Kentucky. Anheuser-Busch vehemently opposed the bill, which forced it to sell distributors it owned in Owensboro and Louisville.

Anheuser-Busch did not respond to a request for comment for this story.

State Sen. Dan Seum, a Louisville Republican who voted in favor of that bill, applauded the growth of craft beer companies, noting that during the last century many small Kentucky brands were bought out.

“The big boys bought them and all those jobs went off to St. Louis, I guess. Well, they’re back,” Seum said.

The Kentucky Guild of Brewers is also asked for a change to state law to allow craft brewers to sell beer at festivals and small fairs.

The 2016 legislative session begins Jan. 5.

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