Colorado Beer Laws – For Better or Worse, Part 2

This is the second article in a three-part series spotlighting Colorado’s divisive beer laws in comparison with other states.

Momentum for House Bill 1178, sponsored by Rep. Kevin Priola, R-Henderson, tapped out recently after the congressman acknowledged an “unwillingness to move this bill forward” by fellow House Business, Labor, Economic and Workforce Development Committee members. State representatives sent a clear message that 3.2-percent beer won’t be deregulated in grocery and convenience stores and the one-liquor-license limit won’t be lifted, racking the aging Colorado beer laws for at least one more year.

Colorado craft brewers and independent liquor stores are soaking in the victory. Though Priola was quick to disclose to the Colorado Statesman he still believes modifying the alcohol code is “the right policy going forward,” even after this year’s flat launch.

Colorado Beer Laws

Photo: Jeff Wheeler, Star Tribune

For now Colorado craft brewers and drinkers can toast to oddly-balanced regulation that may be maturing past its prime. While this Rocky Mountain state certainly separates itself from other 3.2-percent-beer-guzzling states, how does it fair when compared to other blazing craft beer scenes?

States With The Most Breweries

Continuing the journey of the state of local craft beer laws, Colorado follows only California and Washington for the most number of breweries, with Oregon nipping at its heels. Out of the 1,776 breweries throughout the country in 2011, these four states comprised just over 36% of the market.

Colorado Beer Laws

Editor’s note: 2011 statistics are the most complete data at the time of publishing.

California

Aside from being known as a travel destination for oenophiles, breweries fueled by locals and tourists are also big business in California, with nearly double the amount of breweries as Washington, the state with the second most breweries. Devoted, palate-savvy craft beer drinkers are eager to get their hands on special releases and line up for tappings of coveted suds from Golden State breweries, including Stone, Russian River, Firestone Walker; the list goes on.

As both the most populous state and the third largest state, California ranks only 21 for number of breweries per person. A variety of propelling factors are at play: Relaxed regulation, left-leaning policies, sheer size, proximity to resources and an established wine industry. Aside from having just an average brewery-per-citizen ratio, it’s almost hard to argue with California’s infrastructure for the alcoholic beverage industry. Should the laconic liquor laws in place in California be considered as a model for other states looking to balance regulation and access while maintaining a positive economic impact?

Washington

Washington privatized the alcohol sector in June of 2012 in a move that was projected to increase competition. While the number of liquor licenses quadrupled, prices instead increased for consumers due to both high state “sin” taxes remaining in place and distribution and retail price hikes toppling 27%. So far it’s been a learning experience for Washingtonians and a living example for other states with government control of beer, wine and liquor, including Oregon.

And what if Washington were to implement a liquor tax structure similar to California? “That would have cost the state and local government millions in lost revenue,” according to the Washington State Liquor Control Board. Plus stifling legislation in Washington requires all beer to be distributed to any retailer who wants it, leaving both local and out-of-state brewers without a say in where their beverages are sold. Regardless, outsiders are finding other markets, as shown in the exit of in-demand beers from Speakeasy, Allagash and, most recently, Russian River.

For now many are waiting to see the precise long-term impact of privatizing alcohol sales on the growth of Washington’s craft beer market. Anticipation is high for when the free market will stabilize prices, especially since Washington distributors have to come up with $150 million to pay to the state by the end of this month.

Oregon

Rounding out the west coast, Oregon also luxuries in a diversified and booming beer scene. According to the Oregon Brewers Guild, Oregon is the:

  • Third largest craft beer market;
  • Second largest craft beer producer;
  • Third largest craft-beer-consuming state;
  • Second largest hop-growing state;
  • Plus it has the largest metro craft beer market (Portland).

However as a liquor control state, the repercussions of repealing the state’s jurisdiction are not so obvious. Oregon citizens have already seen the immediate effects of privatization in Washington, with added fees and taxes contributing to over a one-quarter increase in consumer prices. Yet Oregon has other bewildering beer, wine and spirits regulations:

  • Bars, restaurants and stores are required to pay cash at the time of sale on all alcohol; and
  • If a brewery wants to sell beer for off-premise consumption it must ship the beer to a storage warehouse and then to the state for taxing before it’s shipped back to its site of conception for legal tender.

Ouch. The double entendre of this Oregon sub-economy offers only muddled insight while small brewery owners contribute to one of the most prosperous regional beer industries in the U.S., and perhaps the world.

“The industry has thrived despite laws that were written 80 years ago to throttle it,” says Portland lawyer Chris Hermann to Harry Esteve in his three-part series on state booze laws for The Oregonian. Other state and wholesaler advocates claim that the regulations are designed to keep low barriers of entry for new businesses, spark growth and competition and maintain an eye on dominant corporations. Maybe it’s just a matter of time: California’s BevMo!, one of the largest alcoholic beverage retailers in the west, opened stores in Washington after last year’s deregulation. Though the Oregon beverage economy is ripe, unfriendly markups and outdated methods currently discourage retail growth opportunities from out-of-state businesses.

Colorado’s Beerscape

Progress is fruitful in Colorado. The Colorado Brewers Guild estimates that craft brewers contribute $446 million annually to the state’s economy. With expansive growth slated for craft beer this year, tax payers and small business owners should be content with the industry’s economic impact that is unmatched by any other market in the state. Meanwhile tax-revenue-reducing legislation proceeds in California, Washington’s bloated market is overbearing and straining regulation pinches at Oregon from every direction. … Does the Pacific beer culture embody its conditioned socioeconomic movement that keeps it from blossoming fully and naturally?

Part three will explore the four states with the highest number of breweries per capita – Vermont, Oregon, Montana and Colorado.

Missed Colorado Beer Laws Part 1? Read it here.

With what many consider to be stale beer and liquor license laws, do you think Colorado beer culture measures up to other states with the most breweries?

About Lindsey Dulin


After discovering real beer since her FSU tailgate days, Lindsey Dulin is making up for lost time. She’s now an avid homebrewer and is ceaselessly finding reasons to celebrate the ordinary with a pint. In between beer sessions, Lindsey specializes in digital marketing communications and new media for SMBs. In her spare time she coordinates and participates in multiple volunteer programs and has been a veteran bartender and server for over 10 years. Contact her at lindseyrdulin@gmail.com.