New laws could boost South Dakota's craft beer industry

KSFY Governor Dennis Daugaard is making South Dakota’s craft beer industry a priority during this year's legislative session.

“One area where regulation continues to stifle economic development is micro brewing,” Daugaard said.

During his state of the state address last week, Daugaard outlined several changes to state law that could help South Dakota’s craft breweries grow.

Right now there are more than 20 craft brewers across South Dakota, including the newly opened Remedy Brewing Company at 8th and Railroad in Sioux Falls.

“Getting to wake up every single morning and do something like this is a dream come true,” Co-owner Jason Davenport said.

The three partners behind Remedy Brewing Company love what they're doing, but it took a lot of work to get to this point.

“It’s very capital intensive to actually start brewing,” Co-owner Matthew Hastad said. “So with something that is that intensive to get into, being able to sell your product is one of the biggest things you want to be able to do.”

Right now local brewers say South Dakota’s state law can make it difficult for small breweries to get started.

“South Dakota does not allow an in-state, microbrewery to sell its product directly to a retailer,” Daugaard said.

This legislative session, governor Daugaard hopes to change that.

“Allowing small producers to self-distribute beer, which means I can take a keg of my beer into a local bar who can then sell it to the customer,” Hastad said.

Daugaard also hopes to increase the state's barrel cap limit.

“Current law caps microbreweries at 5,000 barrels per year. Compare that to Montana’s cap of 60,000, Wyoming 50,000 and North Dakota’s 25,000,” Daugaard said.

“If I were to produce more than 5000 barrels, I would not be able to keep my tap room,” Hastad said.

Hastad says these tap rooms are a big part of the craft brewing business.

“Our tap room is by far our more profitable side when it comes to margins,” Hastad said.

It’s also the biggest draw for consumers nationwide.

“It’s not just a business that makes beer, it's a tourist attraction. It’s not just something the locals go to, it's a destination,” Daugaard said.

Governor Daugaard said his interest in the industry was sparked by a conversation with Montana’s governor, who said some of the most popular tourist attractions in Montana’s cities are craft beer tap rooms.

The Governor’s proposed craft beer bills have not made it to the state legislature yet, but KSFY will continue to follow their progress throughout the session.