Governor Mary Fallin signed into law today SB424 and SB383, marking a giant shake up in the Oklahoma craft beer scene. These bills have been in the works for years, passed in May by the Oklahoma House and Senate and signed by the Governor today. Barrels and Mash has not reported much on these bills, and we decided to do a little research and see what SB 424 could mean for the alcohol landscape in Oklahoma.
SB424 allows breweries to sell their own “high point” beer by the glass and for takeaway at the point of production. Right now breweries and brewpubs are only allowed to sell “low point” 3.2% ABW beer at the brewery. Most of the breweries in the state had begun to sell special low point offerings at the brewery, but once this law goes into effect they can sell any of their own beers, of whatever alcoholic content. In other states this means special release day events and hopefully long lines for the most sought after brewery-only releases. This law has been rumored for years, as wineries have been able to sell their products at the vineyard since 2008. The laws for vineyards are still more lax after the passing of SB 424, as wineries producing less than 10,000 gallons are able to distribute their own wine to package stores without a distributor. No such provision in SB 424 was made for breweries.
This really could be a game changer for Oklahoma breweries, greatly increasing the profitability potential of brewery sales. Selling direct to the consumer cuts out the distribution middle man, creating additional profit for the companies while increasing choice and lowering prices for the consumer. As the craft beer business becomes more profitable it should potentially attract more breweries to the market, meaning more beers for us. Increased access and greater choice should help make the craft beer industry more attractive to more consumers.
There is some doubt however to the Constitutionality of the bill. According to Article 28 of the Oklahoma Constitution, a brewery “shall be required to sell such brands or kinds of alcoholic beverages to every licensed wholesale distributor who desires to purchase the same, on the same price basis and without discrimination, and shall further be required to sell such beverages only to those distributors licensed as wholesale distributors.” So that would seem that breweries must sell to a distributor. SB 424 addresses this by saying that sales at the breweries don’t count as “sales”: “Samples and sales of beer made or served by a brewery under this section shall not be considered a “sale” of beer within the meaning of Article XXVIII of the Oklahoma Constitution or Section 506 of this title.” Lawyers, right? They created this workaround to avoid having to amend the Constitution as SB 383 will, and necessitating a vote of the people, as SB 383 will in November.
This bill goes into effect 90 days from the close of the legislative session in which it is passed. The session ended on May 25 so that makes this go into effect on August 25th. There should be some amazing events that day at Oklahoma breweries, mark it on your calendar.
We’ll be back with some commentary on SB 383 in a few months when the vote gets a little closer.