EDITORIAL: Nevada liquor wholesalers muck up craft beer bill at the Legislature

The term “rent seeking” describes how special interests try to manipulate public policy and the regulatory state to their advantage. Think: members of the taxi cartel calling on their political friends to kneecap Uber and Lyft.

On Wednesday, the rent seekers were once again prowling the halls of Carson City when the powerful liquor wholesalers succeeded in neutering a bill intended to foster the state’s growing craft brewery scene.

Senate Bill 130, introduced by James Settelmeyer, a Minden Republican, would have tripled the amount of beer that state brewers could produce each year to 45,000 barrels. This should have been a no-brainer — we would argue, in fact, that the cap should be eliminated entirely. The reform is an easy means of encouraging expansion and competition in a growing industry that has a $480 million impact on the Nevada economy.

“I tend to believe we should do what we can to foster these smaller businesses within our state,” Sen. Settelmeyer said.

The existing limit of 15,000 barrels inhibits growth and threatens to force some Nevada brewers to move their operations out of state if they hope to increase sales.

But none of this matters to the liquor wholesalers, who enjoy a monopoly on alcohol distribution and hate the fact that microbreweries and brewpubs may sell their lagers and ales directly to customers. That means craft brewers don’t have to funnel their products through the wholesalers unless they seek to put their beer on store shelves or in other taverns. The higher production limit proposed in SB 130 might result in more on-premise consumption at such businesses, which leaves the wholesalers without a cut.

The wholesalers have enough friends in the Legislature that Sen. Settelmeyer didn’t have much choice in the face of their self-serving opposition to his reasonable proposal. In order to push SB 130 forward — it cleared the Senate Commerce and Labor Committee this week — he agreed to a more modest production boost to 30,000 barrels a year and a provision limiting annual retail sales at a brewery to 10,000 barrels.

None of these restrictions has anything to do with consumer protection or public health, of course. They’re simply naked rent seeking for the wholesalers, sops designed solely to ensure an entrenched special interest gets a piece of the action.

Don’t let the perfect be the enemy of the good, they say. There’s certainly truth to that. SB 130 is a modest improvement to the status quo and deserves passage. But like a low-alcohol IPA, it could have been a whole lot stronger.