South Carolina lawmakers: Craft beer bill compromise reached

A glass of HopArt India Pale Ale produced by Coast Brewery is a high-gravity beer, with a 7.7 percent alcohol by volume.

COLUMBIA - A compromise on a bill that could mean a spending and infrastructure bonanza for craft breweries in South Carolina is expected to pass this year and could bring a major California-based craft brewer to the state, lawmakers said Tuesday.

Sen. Luke Rankin, R-Conway, said at a House-Senate conference committee meeting that he had been told by Commerce Secretary Bobby Hitt that Stone Brewery, a large, popular craft brewer, would expand its operations to the state if the bill is passed. He later said in an interview that he may have overstepped and that he would defer to the state Commerce Department for comment on the status of the deal.

The committee's compromise paves the way for a full House and Senate vote. Because the conference committee made significant changes, the bill will require the approval of two-thirds of both chambers. Lawmakers said they expected it to pass.

The Escondido, Calif.-based craft brewery, the 10th largest of its kind in the United States, had said it plans to expand its operation to the East Coast this year - a move that promises to bring nearly 400 jobs and a $29 million investment to the host city that lands it.

Senators said that Stone is looking at the Greenville, Spartanburg and Charleston areas.

Stone Brewing spokeswoman Sabrina LoPiccolo said the brewer has not decided on a location for its first East Coast plant.

"While we applaud the legislation in South Carolina and any like it, this necessary element is but one of many factored into our decision-making," she said.

Allison Skipper, a state Commerce Department spokeswoman, would not confirm reports that South Carolina officials had traveled to California in recent days to court Stone Brewing. She said it is against the agency's policy to discuss business recruitment or economic development initiatives until a formal announcement is made.

The bill that would ease restrictions on craft brewers is a game-changer for the fledgling artisan brewing industry in the state.

The compromise version of the bill would allow breweries to produce an unlimited amount of beer and also operate on-site restaurants that serve food. They would not be able to sell liquor. They could also sell their brews, other breweries' suds and wine in their restaurants.

That's important to attracting breweries like Stone, supporters argue, because their operations are more than just production facilities, they are destinations for beer aficionados. In addition to tours of its plant, Stone offers a restaurant, an elaborate garden, upscale bars, a store and other features.

Legislators also attached to the bill a provision that would do away with a ban on Election Day alcohol sales in exchange for a ban on Christmas Day sales.

The biggest resistance to the bill had come from beer distributors, who feared that the bill would be a slippery slope toward cutting their homegrown businesses out of the picture. Since the end of Prohibition, beermakers have been required to sell the vast majority of their products through distributors in a system that the industry has fought to maintain.

The new bill built in added protections for distributors, creating a compromise that would benefit all parties, said Brook Bristow, general counsel for the S.C. Brewers Association.

"It's a great deal for both distributors and brewers." he said. "It's a fantastic agreement, and we're going to create a lot of jobs together with this."

Julie Cox, executive director of the S.C. Beer Wholesalers Association, was somewhat less effusive about the deal, describing it as "something everyone could live with." "We're pleased with the compromise," she said.

The Pearlstine family, longtime beer distributors and recent investors in Palmetto Brewing Company on Huger Street in Charleston, attended the conference committee meeting in Columbia and were excited about the bill's prospects to expand production and venture into new business opportunities. "This was a game changer," said Susan Pearlstine, one of the owners.

Brew pubs currently can serve food and unlimited amounts of beer, but they can't produce more than 2,000 barrels per year. Breweries can produce as much beer as they want, but they currently can't serve food or more than three pints a day per person.

Brew pubs won't be left out of the mix by the compromise, Bristow said, because they would still be able to convert their licenses to brewery status, which would let them to distribute their products.

Rep. Jim Merrill, R-Charleston, who served on the committee, said the agreement was significant - and rare. The alcohol industry tends to protect itself and the state's antiquated system, Merrill said. During the meeting, Rankin had attorneys and lobbyists on both sides of the issue pull up chairs to the table with lawmakers to ensure a deal had been reached. Few days remain in this year's legislative session.

"They protect it like it's the Holy Grail," Merrill said of the current system. "It is very rare for a bill of this nature to get through the process."

He said the compromise and endorsement of distributors and wholesalers was promising for the coming vote. "It's a battle for the growth of craft beer in South Carolina," he said.

Reach Jeremy Borden at 708-5837.