Wisconsin Statute 125.33(1)(a):
…(N)o brewer…may furnish, give, lend, lease, or sell any furniture, fixtures, fittings, equipment, money, or other thing of value to any…Class “B” licensee or permittee… Such actions may not be taken by the brewer…directly or indirectly, or through a subsidiary or affiliate corporation or limited liability company, or by any officer, director, stockholder, partner, or member thereof.
This, my friends, is the first section of the once-lauded but now-dreaded Wisconsin Tied House Law. Originally developed nationwide after the repeal of prohibition, the impetus was to prevent unfair business practices by major brewers. Even Milwaukee’s own Pabst, Blatz, Schlitz, and Miller breweries would give tavern owners money, gifts, and in some cases the furnishings for their entire bar, all in exchange for the owner guaranteeing only to serve that one brewer’s beer. Evidence of such “tied houses” (as in “tied” to a brewery) are still visible all over the city.
Regano’s Roman Coin on Brady Street and Ristorante Bartolotta in Tosa, both former Pabst Tied Houses. Photos by Jeramey Jannene, used with permission from Flickr.
From a high-level, this seems like a great idea. Tied houses were unfair to consumers, and often unfair to the tavern owners. Few people would advocate for them again today.
But the problem no longer lies in mega-breweries with unwieldy influence; even with these laws, Miller is on draft in nearly every bar in Milwaukee (which no one is saying should be illegal). Instead, small-time home brewers and business owners are finding it difficult or even impossible to start their own craft brewery because of their interests in other ventures.
Wisconsin’s three-tiered system for businesses dealing with alcoholic beverages. Mmmm, beer-cake.
Wisconsin operates on a three-tier system: Brewer, Distributor/Wholesaler, Retailer (bars). There can be no co-mingling; if you are involved in one space, you can’t be an owner in another. Seems simple, but this three-tiered system of regulation for alcoholic beverages is literally forcing jobs out of the state.
One of the most high-profile cases in recent years occurred right here in Milwaukee. Justin Aprahamian, an award-winning chef and owner of Milwaukee-landmark restaurant Sanford, recently opened a production facility for his brewing company, Like Minds, in Chicago rather than Milwaukee. The sole reason: owning a restaurant with a liquor license precluded him from also owning a brewery.
But it’s not just Mr. Aprahamian, and it’s not just restaurant or bar owners who are running into this issue. The law does not allow anyone with any monetary connection to a business with a liquor license (from busboy to owner) to also have an owning stake of a brewery. The owner of Bavette in Milwaukee couldn’t be involved at Company Brewing. The owner of Enlightened Brewing had to quit his other bartending job to start his craft beer business. Lowlands Brewing Collaborative told us that the Tied House Laws are a big reason they contract brew abroad and elsewhere in the state rather than creating their own brewery. Madison brewery, MobCraft, is in the process of moving to Milwaukee, and faced issues finding a food provider for their taproom due to similar legal hurdles with potential restaurateurs. Those are just examples in Milwaukee, and just over the last couple of years!
“Laws that were meant to create fair competition by ensuring large breweries couldn’t buy-off bars to give preferential treatment to their own product have inhibited the entrepreneurialism commonly found in today’s startup breweries.” – Henry Schwartz, co-owner and founder of MobCraft Beer.
Though initially created to protect consumers and small-business owners, these laws are now doing the exact opposite in Wisconsin. We’re seeing a stifling of entrepreneurship, exportation of jobs, and perhaps worst of all, a discouragement of more local craft beer creation in our city. Miller’s place in our bars is secure, so these laws do nothing but limit their potential competition from small business owners.
I don’t propose a complete repeal of the Tied House Laws: instead, I’d encourage our legislators to sit down with actual brewers, distributors, and retailers in our state and discuss how this is immediately affecting them today. The current state of the brewing business is not the same as it was in 1933 upon the repeal of prohibition, and our laws should reflect the modern reality. If not, we’ll continue to discourage prospective business ventures from starting in Wisconsin, and instead send one of our greatest cultural assets (beer) across the border.