Alabama business roundup: Headlines from across the state
Here’s a roundup of some of the top weekend business headlines from across the state: AL.com: Craft brewers: Alabama laws stifle growth of burgeoning beer industry Like many of Alabama’s close to three dozen craft brewers who stepped into an industry barely formed, Jeremy Pate is above all optimistic. On the Dothan farm where his grandparents used to grow corn and peas, Pate started Folklore Brewing & Meadery a few years ago, offering the only locally produced beer in the Wiregrass region. There he has lots of room to grow, but Pate says beer laws in the state need to catch up first. Pate, 40, believes the existing regulations, which restrict breweries from selling beer directly to customers other than through a licensed retailer, are not broad enough for his business to thrive. “There are beers that we do not distribute, that we do in very small scale, experimental nature,” he said. People often want to buy those, or another beer that’s to their liking. Unlike many states, Alabama law prohibits brewers from selling it — either in a keg, bottle or glass jug — to-go. Pate started by making a simple wheat ale when he opened in 2013. Wiregrass Wheat, he called it. Today, you can find one of his beers in restaurants and stores in Enterprise, Ozark and around Opelika and Auburn. Revenue from retail distribution is great, but not as lucrative as the cash that comes from residents and beer aficionados in search of something new to drink in their taproom. “The profits on a bottle that we sell out there in the market is miniscule compared to what we get by the pint,” Pate said, “so the limiting factor is how much beer came one person safely consume at a brewery?” Fighting ‘history’ Pate is not alone in his frustration with the state. Beer makers in north Alabama and down along the Gulf Coast have long agreed lawmakers could do better by the burgeoning industry. And there have been efforts since 2009 when a law allowing beers with a higher alcohol content to be sold was passed. But it was a relatively small change in the grand scheme of things. “It was not until the Brewery Modernization Act that any breweries wanted to be in Alabama, period,” Pate said. That law was passed in 2011, and aside from a bill allowing 22-ounce bottles known as “bombers” to be sold by breweries, expanding regulations for the industry has stopped. Brewers, who sometimes struggle to eke out a profit, say this has put a vise grip on available business opportunities and limits their ability to compete. Meanwhile, there’s about $23 million in unrealized economic activity in the beer industry, a figure that could grow with more relaxed beer laws, according to a recent study by Jacksonville State University. Like many, Pate knows there is more money to be made with off-premise sales, but in December 2014 he started bottling “bombers” for distribution. “That’s the only way that we have any chance to grow because of the limited laws,” he said. “And even at that rate we’re going to have to grow slower than other breweries in other states.” Using what’s known now as the “three tier system,” lawmakers placed in between the manufacturer and retailer an independent wholesaler to keep one company from controlling each stage of the process: production, distribution and sales. Beer and alcohol production was a different industry in 1933. The three-tier law never anticipated a surge in craft beer production several decades later, mainly by small upstarts, not dominant corporations. But “history” is the chief opponent to changing the old law, said Jason Wilson, current president of the Alabama Brewers Guild and founder of Back Forty Beer Company in Gadsden. In Alabama, and more generally in the Deep South, Wilson said changing “a lot of the stereotypes and misconceptions that are associated with alcohol” is not easy. Legislative challenges As a case in point, look to the recent Legislative session. A number of proposed solutions filtered through the statehouse in Montgomery. The largest bill, which would have allowed growler sales for breweries and brewpubs, and given them the option to participate in entertainment districts, failed. A trimmed down version of that bill also died. And a last-ditch measure that would have permitted just to-go beer sales didn’t come up for a vote. The one bright spot was the creation of the Alabama Alcoholic Beverage Study Commission, which has the task of making the state’s laws consistent with others around the country. Wilson said his hopes for the group “are a little bit grander” than simply identifying policy outcomes. The commission, which is hosting public hearings this month in Alabama, has “a pretty promising mission statement,” he said, “– now whether we can accomplish those things this year, I don’t know.” The Guild has already offered the commission a jump start, creating a list of proposals that outline the organization’s objectives. At least one of those, the creation of a single craft brewer license for brewpubs and breweries, may cause some in the industry to pause. “That means everybody is operating under one license, and I would have to revert back to ABC to see if you can actually regulate under those types of circumstances,” said Donna Alexander, executive director of the Alabama Wholesale Beer Association. Overall, she said craft brewers do not pose an existential threat to the beer wholesalers she represents. Limited opportunity In the meantime, some business opportunities are slowed. And an industry that produced close to 40,000 barrels of beer last year is moving at half speed. Some feel it more than others. Making about 250 barrels of beer every year, Druid City Brewing in Tuscaloosa is up against a real demand crunch, said co-owner Elliott Roberts. “We’re actively exploring expansion plans, but where we have trouble is, well, money,” Roberts said. Nailing down the right real estate has also been a challenge, but primarily it comes down to creating more revenue.
Hillary Clinton says nation needs “growth and fairness economy”
Laying out her agenda to help American workers, Hillary Rodham Clinton said Monday that if she’s elected to the White House she will seek to build a “growth and fairness economy” that would rejuvenate wages that have remained stagnant since the Great Recession. In her first major economic speech of her presidential campaign, Clinton vowed to crack down on Wall Street excess and warned that a large field of Republican White House hopefuls would promote tax cuts and a return to policies that would balloon the national debt. She singled out three GOP candidates by name, including former Florida Gov. Jeb Bush, whom she accused of failing to understand the plight of workers. “You may have heard Governor Bush say last week that Americans just need to work longer hours. Well, he must not have met very many American workers,” Clinton said at The New School in New York, urging Bush to speak to nurses, truckers or fast-food workers. “They don’t need a lecture. They need a raise.” Bush, during an event in Sioux City, Iowa, said Clinton believed that it didn’t matter that 6.5 million people were only able to work part-time instead of holding full-time jobs. “Hillary Clinton believes that 2 percent growth, apparently the new normal, is acceptable,” Bush said. He told reporters that Clinton’s “policies are going to suppress wage growth. Her policies are a continuation of the Obama economics which has been a complete disaster.” Republicans note that under President Barack Obama, the workplace participation rate has declined to its lowest level since 1977. In an agenda-setting address, Clinton sought to appeal to liberal voters within her party who have questioned her willingness to regulate Wall Street and have rallied behind her chief Democratic rival, Vermont Sen. Bernie Sanders. The message also appeared aimed at anxious voters who have seen little gains in their paychecks even as the nation moves past the Great Recession. “As the shadow of crisis recedes and longer-term challenges come into focus, I believe we have to build a growth and fairness economy,” Clinton said. “You can’t have one without the other.” Clinton said she would propose more public investment in infrastructure projects, advance renewable energy and promote tax cuts for small business owners. She expressed support for an increase in the federal minimum wage, an overhaul to the tax code, and policy proposals related to child care and paid family leave. Clinton, who maintained strong ties to Wall Street as a New York senator, pushed back against the industry, saying the largest financial institutions had too often focused on short-term profits instead of helping grow the economy. She expressed outrage at accounts of money laundering and currency manipulation involving several major financial firms, calling them “shocking,” and promised criminal prosecutions of bad bankers. One of the firms she identified, HSBC, paid former President Bill Clinton $200,000 to speak at a Florida conference in 2011, an appearance that was cleared by the State Department despite an ongoing federal money-laundering probe that led HSBC to reach a 2012 settlement with prosecutors. The former secretary of state said few rogue traders had faced consequences for malfeasance, a subtle swipe at the Obama administration, which took no action against the individual financial titans who pursued risky fiscal practices. “This is wrong, and on my watch it will change,” she said. Clinton also vowed to expand the Dodd-Frank law passed by Congress in 2010, which tightened regulation of financial institutions, and said she would bolster government oversight of hedge funds and high-frequency traders. The speech offered Clinton’s most extensive critique of Bush, a top contender for the GOP nomination. Clinton said the nation’s economy should not be measured by “some arbitrary growth targets untethered to people’s lives and livelihoods.” That was a veiled reference to Bush, who has said he would set a goal of 4 percent economic growth, including 19 million jobs, if elected president. She also lobbed criticism at Florida Sen. Marco Rubio and Wisconsin Gov. Scott Walker, who was launching his campaign Monday. Rubio’s tax proposal is a “budget-busting giveaway to the super-wealthy,” Clinton said, and she called Walker an example of a GOP governor who had made his name “stomping on workers’ rights.” Rubio spokesman Alex Conant said Clinton wanted to “take us back to yesterday, but we cannot raise taxes like the 1990s or increase spending like the 2000s. Marco is proposing a 21st century tax plan that would benefit all Americans, especially middle-class families.” Clinton, meanwhile, made no mention of Sanders, who has wooed Democrats by making economic inequality the central plank of his insurgent campaign. Republished with permission of The Associated Press.
Birmingham Mayor William Bell says gaming would bring thousands of per-hour jobs to city
Birmingham Mayor William Bell traveled to Montgomery today to show his support for Senate leader Del Marsh’s legislation to expand gaming options in Alabama. In a press conference today, Mayor Bell echoed Marsh’s call for a referendum on his gaming proposal. He added that at least half of the 11,000 jobs estimated in an economic impact study on the gaming proposal would go to Birmingham. “That means more wage-an-hour jobs, more earning power and more spending power for a lot of people in that area,” he said. “You would have those dollars turning over into the community, increasing the level of revenue we have at the municipal level to do a lot of the things that we currently do have revenue for.” Mayor Bell told ALToday.com that Marsh’s proposal would mean new construction, revenue, and jobs at Birmingham Race Course, specifically. He also said that added entertainment would make the city – and the state overall – an attractive option for larger conferences and conventions. “It would increase our economic footprint tremendously,” he said. The mayor dismissed concerns that a state lottery and more casino games could have a disparate impact on low-income residents, saying that a strong gaming commission could oversee how the facilities operate. “People are going to gamble,” he said. “I look at the various parking lots where people leave their vehicles to get on buses to go to Mississippi. That is money leaving our state to go to other areas, and we need to find a way to capture those dollars and keep them right here in the state of Alabama.” On Tuesday, Sen. Marsh introduced Senate Bill 453 a bill to establish an Alabama Lottery and authorize Vegas-style gaming in the state’s four existing racetracks. Gov. Robert Bentley has rejected the gambling proposal outright, saying that it would not address current budget concerns. “My legislation doesn’t deal with the immediate problems, but I think it solves the longer term problems,” added Marsh. “None of the other models bring jobs. This is as much about economic development as it is about solving our budget issues.” Marsh said he expected to hold a committee meeting in his legislation sometime next week.
Four flaws in conservatives’ argument against state-run lottery
I’ve been intrigued by the ongoing discussion about a state education lottery. In a completely unscientific poll, AL.com readers seem to overwhelmingly support this. Among the loudest critics are folks that I agree with on eight out of 10 issues, but not this one; at least not for the reasons they are citing. Conservatives against the lottery note that this is essentially a regressive tax that harms the poor and favors the rich. I can boil my problem on these commonly cited problems into four points: 1) It is hypocritical to say that you’re for personal responsibility and limited government, except when it comes to gaming. Either people have the ability to police themselves and their own behavior or they don’t. 2) Conservatives often use the argument that liberals or progressives talk down to and underestimate poor and minority populations. An example of this would be by questioning their ability to get identification cards for voting. These same conservative groups are now saying that it is the poor and minority populations who need to be saved from themselves and their inability to act responsibly. (Side note: You need an ID to prove you’re over 18 and to buy a lottery ticket so can we say this may increase voter turnout?) 3) You can’t legislate morality. If the issue at hand is your personal belief that gambling is sinful, then don’t participate. (For the purposes of a simple single topic post I’m not arguing for or against that premise). People who want to gamble will find a way to do so with or without a state lottery. 4) Being anti-lottery is the anti-free market position. As long as people can cross state lines to get tickets for big jackpots, play online poker, and visit existing pari-mutuel facilities stopping a lottery accomplishes little. Prohibiting a state lottery isn’t ending gaming, it’s just giving preferential treatment to existing gaming options. If an argument was made that state-run lotteries are not conservative because the state shouldn’t compete with what the private sector could do, I’d cede that point. If an argument was made that state-run lotteries that it’s not a vital function of the government, I’d cede that point. Then we could have different discussions. Those aren’t the arguments being made against lotteries and those arguments aren’t consistent with the ideals of limited government and personal responsibility. This column appeared first on AL.com. Apryl Marie Fogel is a new Alabama resident who works as a conservative political activist.
