Jim Kirkham, Chairman
Chip Comer, Chairman-Elect
Schipp Johnston, Treasurer
Julie Cox, Executive Director
1114 College Street Columbia SC 29201 www.scbwa.com
May 23, 2014
Robert M. Hitt, III, Secretary
Department of Commerce
1201 Main Street, Suite 1600
Columbia SC 29201-3200
Dear Secretary Hitt:
The South Carolina Beer Wholesalers Association wholeheartedly supports economic
development and the growth of the craft brew industry in South Carolina. However, we strongly
oppose the dual licensure inclusion recently proposed by the South Carolina brewers and the
brewpub amendments currently contained in H. 3512. Unlike we have been portrayed, we do not
base our opposition on controlling or inhibiting small brewers from expanding their business
model, and we do not impede economic progress in South Carolina. Rather, dual licensure on
the producer and retailer tiers presents unintended consequences, including the increased
potential for legal challenges to South Carolinas three-tier system.
Three-tier laws level the playing field for small brewers to get to market without
discrimination, fostering the well-deserved and growing market presence and share small
brewers are experiencing. The Wholesalers support continued evolution and growth, but doing
so at the expense of three-tiers anti-discrimination, tied house, and financial separation policies
is extremely myopic for the industry and South Carolina commerce.
Of equal concern, H.3512, as currently written, will separate smaller South Carolina
brewers from out-of-state brewers and simply cannot withstand challenge under the Dormant
Commerce Clause of the United States Constitution, leaving South Carolinas three-tier system
constantly open for attack. The language authorizes a separate type of brewery, one which is not
constrained by current prohibitions against the provision of gifts and services to retailers, a
practice commonly utilized in other industries, including alcohol before Prohibition, to foster
retailer discrimination in favor of the giver. As such, the language violates the Dormant
Commerce Clause by discriminating in favor of in-state brewers who elect such licenses over all
out-of-state brewers and in-state brewers who do not elect such licenses.
Our wholesalers believe so strongly in the three-tier system that they voluntarily gave up their
retail licenses in the 1970s in order to protect the integrity and separation of the tiers. This
concession was made because they realized they could not fairly service other retailers without
discrimination if they were also acting as retailers themselves. Concurrently, legislation was also
Jim Kirkham, Chairman
Chip Comer, Chairman-Elect
Schipp Johnston, Treasurer
Julie Cox, Executive Director
1114 College Street Columbia SC 29201 www.scbwa.com
enhanced to support the separation of the tiers by permitting licensing on only one tier for each
producer, wholesaler and retailer. This system has succeeded in creating thousands of
wholesaler jobs in South Carolina and in the systematic collection of over $104 million each year
in excise tax revenue for the state.
We have prepared alternative language, outside of the brewpub section, which affords
brewers the opportunity to create capital and expand brand awareness through food service and
the sale of their beer in conjunction with such food service. Under the wholesaler proposed
language, amount limitations imposed for sampling do not apply when the beer is sold in
conjunction with a food service operation. We urge inclusion of this language in Section 61-4-
1515 of the Code, as opposed to the currently proposed amendments to Article 17.
As Chairman, I reiterate that we support the craft beer industry and economic
development in our state. We thank you for your consideration of this critical issue and stand
eager to discuss it at greater length and resolve it.
Sincerely,
Jim Kirkham
James F. Kirkham, Chairman
SCBWA Board of Directors
cc: The Honorable Nikki Haley,
SC General Assembly, SCBWA
Sarah Hazzard, SCMA
