- [Ian] Matt Richardson and his wife opened Tilted Barn Brewery on an old family farm in Exeter in 2014.

Craft beer was exploding in popularity at the time, and Tilted Barn was an immediate hit.

But Richardson was surprised to learn that Rhode Island lacks a separate license for farm-based breweries.

Farm-based wineries can sell unlimited amounts of their wine on their premises, and Richardson believed a similar license for farm-based breweries would make it possible to sell and distribute more beer.

He took his quest to create a farm-based brewery license to the State House.

During legislative hearing, Richardson's supporters ranged from the State Department of Business Regulation, or DBR, to the agency that bills itself as the voice of local agriculture.

- We had all the important agencies there at the State House for all these bills that were proposed advocating for us and in full support of us.

I was there speaking every time, and I just said, "Oh, this is gonna be great.

It's a piece of cake."

And then after we all spoke, a lobbyist for one of the larger wholesalers stood up.

- [Ian] According to Richardson, the lobbyist said he didn't think the bill to create a farm brewery license should move forward.

- Next thing you know, gavel's hit by the committee chair and said, "Oh, this bill's held for study, not gonna move forward."

That's when I learned about how it really works sometimes.

- [Ian] 10 years later, there's still not a farm brewery license in Rhode Island, although Connecticut and Massachusetts do offer that type of license.

- Really all we want to do is get on par with neighboring states.

There's a lot more freedom as to how they can sell their beer.

- [Ian] There are now almost 40 craft brewers in Rhode Island, up from just a handful 15 years ago.

Craft brewers say they employ more than 500 people, and that brewery tap rooms attracted more than a million visits in 2023.

But until 2013, the brewers couldn't even sell a six pack to customers who wanted to take one home.

That per person limit is now up to two cases, or 48 beers, although that amount is less than in other nearby states.

And then there is the issue of selling quantities of beer in different formats.

- We can't sell kegs ourselves out of the brewery.

If someone wants to have a backyard party and buy a keg from us, we're not allowed to do that.

- [Ian] And unlike in Connecticut and Massachusetts, Rhode Island brewers cannot distribute their own beer to liquor stores unless they create a separate company at an added cost of at least $2,000.

- It involves an expensive license you have to pay for every year, it involves extra infrastructure and staff to do it that way, and comes at a pretty significant cost.

- [Ian] Most states' alcohol laws are based on a three-tiered system developed after Prohibition.

It outlines separate roles for manufacturers, wholesalers, and retailers.

But Rhode Island has done less than other New England states to modernize the three-tier system and make it less rigid.

Part of the reason?

Opposition from groups like the Teamsters Local 251, which works closely with alcohol distributors in the state.

Here's union lobbyist Paul MacDonald testifying before the House Small Business Committee last March.

- The Teamsters enjoy good paying jobs, and that is something that this State House has always worked so hard to create.

We are in the liquor business in a big way, and we are in the transportation business.

That's the core business that we have.

- [Ian] MacDonald defended the three-tier system and he says additional steps to help craft brewers would be bad for the Teamsters.

- Just remember, every time you do one of these little things, it takes another little job away from us, and we don't like that.

We have the good paying jobs now, we'd like to keep them.

- I don't think the distributors want our business.

It's too small, too small for them.

- [Ian] Jeremy Duffy runs The Guild, a craft brewery with multiple locations in the state.

- They're not gonna hire an additional Teamster because they're gonna get a Guild or a Tilted or a Ragged Island, they're just gonna put another item on their trucks.

- [Ian] Duffy is also vice president of the Rhode Island Brewer's Guild.

He says craft brewers multiplied over the last 15 years in part because the state increased their ability to sell beer from tap rooms.

But he says brewers are blocked now from things like opening satellite locations that would help to expand their business.

- And we need a lot more opportunities for growth and a lot more ability to have the customer attention to sell to the customer.

And what does that mean?

You know, our ability to maybe sell more off-premise, our ability to have self-distribution rights.

- What changes would you see as being a good thing for the three-tiered system?

- What I think we need to realize is that the three tiers should work in unison together.

The way it's set up right now, there always seems to be a conflict, and it always happens within the legislative side, that where one tier thinks the only way they can win is that they win themselves.

I think we can win up and down the three-tiered system.

- [Ian] But saturation has slowed the growth of the craft beer sector and there are other headwinds in the alcohol business.

- Beer sales are shrinking in the state.

They're actually shrinking internationally.

From fiscal year 2022 to 2023, packaged liquor stores saw a decrease in beer sales, about 14%.

I'm sure there were similar decreases in breweries.

I think right now everyone is concerned with their slice of the pie and everyone's pie slice shrunk.

- [Ian] Nick Fede Jr. runs the Kingston Liquor Mart in North Kingstown.

It's a third generation business started by his grandfather with money he saved during World War II.

Fede is head of the Rhode Island Liquor Operators Collaborative, an advocacy group for package stores.

He argues that the legislature is not more supportive of distributors and package stores than craft brewers.

- What I've seen at the State House through work with the Senate and House, that they have been open to helping the brewers over the last 10 years, there have been updates to the laws in the last 10 years to make it more business friendly to brewers.

The Raimondo administration, when revising craft brewer laws, put in a massive excise tax exemption for craft brewers up to a hundred thousand barrels per year.

- [Ian] Fede says the abundance of alcohol choices for consumers complicates efforts to increase everyone's share of the pie.

What would be the best way of addressing the concerns of people like yourself, distributors, and the craft brewers?

Is it possible for everyone to be happy and increase their business?

- I don't have a good answer for you there.

I think we need to focus on consumers, keeping them happy, giving them the variety that they want.

And I think that we need to continue support local products that are well made.

- Look, I understand that craft, these breweries are new.

They're like disruptors.

They're like Uber was to taxis and I understand that.

It's part of the changing and evolving economy that we have in Rhode Island, and I understand people want more choices.

- [Ian] House Speaker Joe Shekarchi says the General Assembly has taken steps to help craft brewers, but he says the changes sought by brewers need to be examined for how they affect other longstanding businesses.

- I think if there were a way to make this revenue neutral for the state, I think you'll see the deregulation change significantly.

So I would encourage the breweries, which they have a very effective lobbyist and they come up here and they work very hard and they have had in the last four years that I've been here, some significant gains and I will tell them to continue that process.

- [Ian] Back at Tilted Barn Brewery in Exeter, owner Matt Richardson likes the modest scale of his business with seven full-time employees and more in the summer, but he still views state regulation as an impediment to growth.

Richardson says comparable out-of-state breweries that started around the same time as Tilted Barn now make about five to 10 times as much beer.

- That's not to say that we would want to be that big.

We're happy with our slow and steady approach and we kind of like to keep it simple, but at the same time, obviously when you run a business, you want to see growth and you want to support the people that work for you.

And to do that, you need to make more beer.