Near beers are real beers, Michigan regulators say
Monopoly on nonalcoholic beer distribution hurts brewers
Michigan brewers who want to sell nonalcoholic beer in their taprooms face an obstacle: state officials who want to regulate the beverage as if it contains alcohol.
While the demand for nonalcoholic beer is rising, breweries find that regulations hamper their ability to cater to patrons seeking a sober alternative.
The Michigan Liquor Control Commission classifies nonalcoholic beer in the same manner as other beer, granting exclusive distribution rights to regional wholesalers and letting them enjoy monopoly profits. This regulatory framework restricts breweries from serving nonalcoholic beer, as they can offer only beer they brew themselves. Meanwhile, breweries can freely offer their customers soft drinks like Coke and Pepsi products.
Breweries find it difficult to turn a profit when they produce nonalcoholic beer in small batches. As a result, brewers face a dilemma: They can take a loss making nonalcoholic beer themselves or deprive their customers of an increasingly preferred beverage option.
Brewers would not face this dilemma if state alcohol regulators used the Michigan Constitution to define alcohol. The constitution says an alcoholic beverage is a beverage with an alcohol content, by volume, of 0.5% or higher. Nonalcoholic beer would not meet this definition. State regulators, meanwhile, define beer as a beverage that uses grains that undergo a fermentation process. This latter definition means that nonalcoholic beer is subject to the same regulations as its alcoholic counterparts — most importantly, the wholesaler distribution monopoly.
“It may be a little bit of a regulatory reach,” former state regulator James Storey said of the commission’s approach to nonalcoholic beer in a phone interview with Michigan Capitol Confidential. “To their credit, the staff takes its obligation to regulate alcohol sales to heart and is very serious about it. When products are introduced, they are slow to recognize the impact that these products have. Whether it is illegal or not is a different issue.”
Members of the commission did not respond to an emailed request for comment.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.