Businesses Flow to Illinois to Avoid Wisconsin Beer Laws

Published October 13, 2015

Wisconsin businesses are moving to Illinois and other states to avoid outdated Prohibition-Era regulations on who may operate or own restaurants and pubs.

Restaurant owners such as Justin Aprahamian, the chef of Sanford Restaurant in Milwaukee, are opening brewing companies in Chicago in response to Wisconsin’s prohibition against brewery or pub owners holding liquor licenses for other businesses.

Legislated Morality

Competitive Enterprise Institute Fellow Michelle Minton says the problem is caused by regulations crafted almost a century ago, when lawmakers intended to enforce their personal beliefs on the rest of the state.

“People believed that the reason for excessive drinking was the fact that breweries owned taverns and would push the bartenders to sell as much of their product as possible,” Minton said. “There’s no evidence this actually occurred, but when prohibition was repealed, all of the states passed laws to separate the producers of alcohol from consumers.

“They created distributors, also called wholesalers, who were the only ones legally able to buy beer from brewers or to sell beer to retailers,” Minton said. “This is what we call the three-tier system.”

Big Brewers and Baptists

Minton says Wisconsin’s beer laws are relics of a bygone era.

“These laws serve little purpose other than preserving an outdated separation between brewer and beer drinker and protecting certain entities from competition,” Minton said. “Brewpubs are a great way to have a steady income, while people get to know and, hopefully, like your beer, while you prove to potential investors that there’s a market for what you’re selling. By preventing this type of branching out, Wisconsin is slowing down what is one of the most vibrant markets around today: Craft beer.”

‘Kind of Embarrassing’

Wisconsin state Rep. Dale Kooyenga (R-Brookfield) says something is very wrong when businesses are moving to Illinois to escape big government.

“It’s kind of embarrassing,” Kooyenga said. “Wisconsin is historically a place that’s known for brewing beer.”

Kooyenga says established players in the beer industry use the state’s regulations to protect themselves against competition.

“Essentially, what you have in this particular case is the established taverns are opposed to any changes in the law that may [allow] someone else to serve drinks, which is kind of silly because I don’t think it’s a threat to their business model,” Kooyenga said. “It’s totally different. In Wisconsin, if you are an owner of a restaurant, then you also can’t be the owner of a brewery because of this provision.”

Elizabeth BeShears ([email protected]) writes from Trussville, Alabama.