New bill allows Nebraska breweries to sell directly to retailers

OMAHA, Neb. (WOWT) - A new bill in the Nebraska Legislature would allow craft breweries to directly sell their beer to retailers.

LB-1236 passed unanimously on Monday on the first of three rounds. Supporters of the bill claim it supports small businesses.

“This is a game changer for these small breweries and will give them ample opportunity to grow,” said Kearney senator John Lowe, who introduced the bill, on the chamber floor Monday.

Right now, law requires breweries across the state to use a third party wholesaler or distributor if they want to sell their beer outside of their taprooms.

Some supporters of the new bill say these laws are outdated.

“It’s just that the landscape has changed, we now need a different way to do with these issues,” says Nathan Hoeft, the owner and head brewer of First Street Brewing in Hastings.

The bill allows up to 250 barrels per year to be sold directly to resellers from breweries. One barrel yields roughly 330 12-ounce cans, which means the bill would allow more than 82,000 cans to be sold directly to resellers.

Currently, there are 68 craft breweries in Nebraska, 34 of which produce less than 250 barrels per year.

The bill has also been paired with LB-1239, introduced by Omaha senator Tony Vargas, which Hoeft says would level the playing field when it comes to building contracts with wholesalers and distributors.

He says current laws support the distributor more than it does the brewery.

“If the contract does not fall in line with state statue then its unenforceable,” Hoeft says. “State law supersedes them, and there’s actually a piece within the law that says none of these provisions are waveable, so even if the distributor had agreed to this provision, and wants to continue to agree to it, state law says no.”

The law would require more clarity and more detailed information in written contracts between wholesalers and breweries.

Vis Major Brewing co-owner Lindsey Clements agrees that the laws are outdated. She explains that if a brewer wants to start using a new distributor, they could lose thousands of dollars, even if the contract between the two has come to an end.

“That previous wholesaler can actually charge us, as well as that new wholesaler, an unknown amount that is never pre-determined within those contracts,” she says. “They have their own way of calculating as to what the value of my brand would be, so that is another big sticking point to us - that we would like to be able to negotiate and clarify as to what that cost would be if I were to transfer the territory rights of my brand to a new wholesaler.”

The two changes would go hand-in-hand, Hoeft and Clements say. Hoeft knows from experience, too. After the 2020 lockdown, he and his distributor, which carried his beer from Hastings to Omaha and Lincoln, parted ways.

“We had issues getting another distributor to pick us up, we just came out of the pandemic, so no one knew where the business was going to go, and I don’t blame any distributors for that, but, because of the way our liquor laws are written, I have zero access to the markets in Lincoln and Omaha unless I go through a distributor,” he says.

Allowing breweries to self-distribute their beer means that if breweries like Hoeft’s can’t find a distributor, or if it doesn’t make sense for a business to have a distributor, then they can simply deliver the product themselves.

Clements tells 6 News that no one really wants to self-distribute, but it’s important to have the option in case of situations like Hoeft’s.

She also says allowing breweries to self-distribute could even be a foot in the door for smaller craft brewers who want to expand their product to new markets and want to get started with a distributor.

“If self-distribution is as successful as we hope and anticipate it to be, it’s a great way for brands that are in outside markets from where they want to grow into that ‘hey, there’s a demand for my product, I’ve already done all this legwork,’ it’s a great opportunity for a wholesaler to come in and do what they do best - distribute,” Clements says.

“It does provide an opportunity for them to try and introduce their beer beyond their taprooms, and maybe make an impact on their community,” Hoeft adds.

Clements says her business model doesn’t include distributing her products, as her goal is to create an on-site, in-taproom experience for customers.

But with this new bill, she says she would consider self-distribution if it passes.

“I think it would be a great opportunity for us to do some limited distribution, its a form of advertisement and being able to self-distribute would allow us to put a little bit more of that control and build those relationships directly with those partners.”

The bill was also amended to include parts of two other bills, LB-899 and LB-900. Bill LB-899 would allow a nonprofit organization to apply for a license to sell beer at six calendar events throughout the year; while LB-900 allows micro-distilleries to have up to five locations/tasting rooms under one license.