Texas Legislature Taps Craft Brewery Profits Al Capone–Style

A new law passed by the Texas legislature will punish craft breweries that produce more than 225,000 barrels of beer a year by taking a cut of the profits and giving it to distributors.

Texas craft brewers say House Bill 3287 is an “extortion fee” that will punish them for running successful businesses, The Texas Tribune reported. It could also force capital investment to other states, they said.

Distributors say the law aims to prevent larger beer companies that acquire independent breweries from avoiding paying distributors. But ABC News Channel 8, citing Texans for Public Justice, reported that the Texas distributors’ lobby has given $11 million to lawmakers since 2013, including nearly $2 million to Gov. Greg Abbott, who refused to veto the bill despite last–minute pleas this week from craft breweries.

According to Channel 8:

“This is insane old-world Al Capone protection money. It shouldn’t happen. I think the only reason why it does happen is that the politicians themselves are being paid for their results,” says Andrew Wheat, the research director for Texans for Public Justice.

Texas Beer Alliance President Rick Donley called opposition to the new law a “disinformation campaign” because none of the craft breweries are yet close to producing the law’s 225,000–barrel trigger. But should they get there through expansion, The Texas Tribune notes, breweries will have to pay distributors “even if they’re delivering it to on–site taprooms just yards away from where it’s produced.”

Both news outlets pointed out that the law exempts Texas breweries recently acquired by mega–breweries Anheuser-Busch InBev, Miller-Coors, and a Heineken-owned subsidiary, and it allows these mega–breweries to expand.

Bottoms up!