Study: Beer regs stifling small craft breweries, raising prices

Beer regulations dating back to the end of the Prohibition era unfairly target small craft brewers, making it difficult for them to compete with larger beer companies, according to a new study.

The conservative think tank Mercatus Center released a report Wednesday that argues outdated beer rules limit competition and raise prices for consumers. 

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The study looked at the rules breweries face in Virginia and found it can take months and even years for a craft brewer to comply with each of the 12 regulations at the federal, state and local levels necessary to start brewing. 

"This means that starting a microbrewery in the state of Virginia requires as many procedures as starting a small business in China or Venezuela, countries notorious for their excessive barriers to entry," the authors of the study wrote.

Current regulations require that suppliers, wholesalers and retailers maintain separate businesses, according to the study. 

This makes it difficult for small breweries to sell directly to consumers, which gives wholesalers and distributors the upper hand, the study argues.

Even though the same rules apply to all beer companies, the larger distributors are able to meet the requirements more easily and actually benefit because of the difficulties the rules place on their smaller rivals, the study argues.

The study compared larger beer distributors to the bootleggers who supported the Prohibition, because it limited competition and helped them corner the market.

"Eliminating regulatory burdens for all firms would allow brewers to succeed or fail on the basis of their ability to provide the greatest value to consumers at the lowest cost to society," according to the study.