The craft beer industry is one of the most innovative industries in America. Craft brewers blend tradition, regional tastes, and artistry to make some of the best beers in the world. Against all odds, the craft brewing business has boomed in an outmoded and ill‐fitting regulatory environment. As more countries—and multinational brewers—follow in the footsteps of American craft brewers by cultivating their own fledgling markets, the fragile international dominance of our industry is threatened by our own stifling rules.
This Comment proposes two methods that state and federal governments can use to spur competition and thus innovation. First, the federal excise tax should match the size of the brewer. Tax rates must be reduced to lower a significant barrier to entry for the smallest brewers. Second, all states should allow brewpubs to operate with direct sales and reasonable barrelage limits. Barrelage limits threaten growth without furthering a legitimate regulatory purpose. These two small changes in federal and state law will lower barriers to entry, improve the odds of success for existing craft brewers, and create more competition—innovation follows. Importantly, for the regulators and legislators, these changes can coexist harmoniously with the current, post‐Prohibition moral framework.