Iowa breweries tap into major changes with overhaul of alcohol laws

CEDAR RAPIDS — If brewer Todd Viall wanted to sell a six-pack of Witch Slap beer at Clock House on Sept. 1, he couldn’t just hand it over to the customer and take payment at his downtown Cedar Rapids location. It was a little more complicated than that.

After canning the beer on site, Clock House staff had to package their beer and load it on a truck to their beer distributor, who would process it through a warehouse, load it back onto a truck, ship it back to Clock House’s taproom and put it back on their shelves.

That’s because Clock House Brewing, like a lot of popular breweries adjacent to restaurants in the Corridor, operated under a brewpub license that prohibited self-distribution directly to customers. Though electronic transfers of beer inventory were made legal in 2020, some distributors didn’t enable them — and switching beer distributors can be a difficult task.

“This legislation really is a big deal. It’s a signal from the legislature that craft brewing is an important industry and part of the Iowa economy.” — Noreen Otto, executive director of the Iowa Brewers Guild.

With one of the biggest overhauls of Iowa’s alcohol laws in decades, breweries and restaurants are praising SF 2374, signed by Gov. Kim Reynolds in June, for modernizing state code to match the needs of a growing industry dealing with significant challenges after the pandemic.

“It’s a large bill that became a discussion for all things alcohol modernization for Iowa this year,” said Noreen Otto, executive director of the Iowa Brewers Guild. “We really want to elevate Iowa beer as a product and a destination. This legislation absolutely does that.”

The new law, which took effect Sept. 2, makes changes that will impact every brewery and restaurant in the state:

A ‘tremendous’ help for smaller brewpubs

Though native breweries and brewpubs will benefit most from the changes, small breweries will feel a stronger buzz from the new implementations.

For Viall's Clock House, which pushes about a thousand barrels each year, the changes are welcomed after 18 months of shrinking profit margins, rising costs and inflation.

“The hard part is we can’t just keep raising our prices. Nobody’s going to pay $10 for a glass of beer,” he said. “This helps us tremendously.”

The cost savings for Clock House from labor alone in the legal shuffling required to sell to-go containers from its taproom will save thousands, Viall said. Can sales are roughly one-third of their sales.

The downtown Cedar Rapids brewery also will be able to sell beer kegs for carryout, allowing for a greater variety of keg flavors compared to what they can offer through retailers like Hy-Vee.

“The bill is extremely helpful for our industry — a modernization of the law itself,” said Dave Moore, director of operations for Big Grove in Coralville and vice president of the Iowa Brewers Guild. “It’s something we can build off of and it’ll be good for the health of the industry.”

Native breweries like Lion Bridge Brewing Company in Cedar Rapids, who already had direct distribution rights, will benefit from their new ability to serve spirits and cocktails at their locations.

Owner Quinton McClain said that impacts their versatility, making them a more attractive venue for events like wedding rehearsals.

With new possibilities for high-strength beers, it also opens up the door to collaborations with distilleries. A brewery could use distillery barrels for their beer, make a high-strength beer, and pair it with a spirit for an event.

“It’s fun to push the boundaries and not be held back by a number that’s pretty arbitrary,” McClain said. “We’ve tiptoed up to 13 percent, 14 percent. Now that the limit is gone, we might try it just to see if we can do it.”

And as the difference between brewpub and native brewery classification erodes further, encouraging that creativity could be a key to positioning the Iowa industry for craft beer tourism as it works to catch up with nearby states already known for their beer scene. Since 2014, the Iowa Brewers Guild’s membership has doubled, and the number of craft breweries statewide has bubbled up substantially.

“This legislation really is a big deal. It’s a signal from the legislature that craft brewing is an important industry and part of the Iowa economy,” said Otto. “That’s really important to us — that overall support.”

The legislation has been a goal for the guild since its formation in 2007, and part of a concerted effort by similar guilds nationwide to undo the odd patchwork of state laws that have been in place since the repeal of Prohibition.

How it helps restaurants and bars

Jessica Dunker, president and CEO of the Iowa Restaurant Association, said the law changes are huge for restaurants and bars, too.

Until now, restaurants and bars could only buy beer through distributors. Those that ran out of beer could not get more until their next distributor delivery.

The new law will allow them to buy up to five cases per day from local retailers — an important stopgap highlighted by pandemic supply chain disruptions. The Iowa Restaurant Association “fought hard” for the privilege, Dunker said.

It means beer stands at a stadium in the middle of a football game, or concession stands on a golf course in the middle of a fundraiser can make a run to the nearest convenience store if demand is higher than expected.

For rural establishments, it’s an important change that can be used any time. When beer distributors cut certain weekly routes during the pandemic to every other week, many bars and restaurants were tasked with figuring out how much to purchase for two weeks and where to store it.

“At a time when we need to have barriers removed for us to be able to claw our way back, this was a huge barrier removed for us so we don’t have to stop doing business or say no to customers,” Dunker said.

Though the association advocated many years for the changes, it wasn’t until the pandemic that the need for them became apparent.

“We always felt like we needed to have it, but COVID exposed that in ways that were more understandable,” she said.

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