Roanoke Island, on North Carolina's Outer Banks, hasn't always been hospitable to immigrants. In 1587 a group of British settlers sponsored by Sir Walter Raleigh landed there. Three years later, the colony had disappeared without a trace.
The climate for newcomers was appreciably less hostile by 1986, when German immigrant Uli Bennewitz started a brew pub there. Yet he encountered one obstacle after another, including jealous monopolists, archaic laws, bizarre federal regulations, and local suspicions. His story illustrates the unnecessary hardships that entrepreneurs face even when they are ultimately successful.
When Bennewitz decided to open a microbrewery and Bavarian restaurant in Manteo, Roanoke Island's largest town, the craft beer craze had barely begun, and he expected the difficulty of cultivating a market. But he never anticipated the regulatory and social hassles. "If I had had any idea of what I would have to go through, and still be going through," he says, "I just wouldn't have done it."
From the beginning, the deck was stacked against the Weeping Radish (named for a snack served in German beer halls). North Carolina law did not allow breweries to sell customers beer made on the premises. Brewers could sell only to wholesalers, who in turn would sell to retailers. The purpose of this rule was to check the power of large-volume brewers, but over time it created a group of powerful wholesalers.
With the naiveté of someone from another country, Bennewitz set out to change the law. He met with a representative of the state Alcoholic Beverage Control board, and together they drafted a simple bill that would allow small breweries to sell beer directly to the public. This would permit Bennewitz to bypass the wholesalers and sell his own beer in the Weeping Radish's restaurant and adjoining pub. The state senator for Manteo, sensing economic opportunity knocking on his district's door, gladly agreed to sponsor the bill.
Not so fast, said the wholesalers, who sent their lobbyist to find out how much beer the Weeping Radish planned to brew. The wholesalers wouldn't sign off on the bill unless it set a limit low enough to protect their monopoly. New to the business of brewing beer, Bennewitz had no idea what quantity he would make. He called his brother in Germany, who had arranged for him to buy and ship the necessary equipment to America, and asked him. No more than 10,000 gallons a year, his brother said.
Bennewitz shrewdly told the wholesalers' representative he intended to brew 100,000 gallons a year. After some tense negotiations, they agreed on a ceiling of 62,000 gallons. The wholesalers' lobbyist, Bennewitz notes, "could go back to his bosses and brag about knocking us down a third. Meanwhile, we were allowed to sell six times more than we would ever be able to make."
That was only one hurdle. Next, the Weeping Radish had to satisfy officials at the Bureau of Alcohol, Tobacco, and Firearms, who were as unaccustomed to dealing with microbreweries as Bennewitz was to running one. Far from being "jackbooted thugs," as some gun rights activists have dubbed the bureau's representatives, the agents he dealt with were helpful and easygoing. The problem was that BATF rules and regulations were meant for large breweries capable of producing more beer in one day than the Weeping Radish could make in a year. Most federal laws concerning alcohol dated back to the end of Prohibition and hadn't been updated much since.
One regulation required brewers to handle and transport their beer in sealed, portable containers. To comply, the Weeping Radish tore down its tanks and put them on wheels, despite the fact that they would never move an inch.
Another regulation demanded that certain production areas be walled off so that beer would not be served in the same area where it was dispensed from tanks. The BATF had long allowed cigarette manufacturers to skirt similar requirements by pasting white lines on the floor in lieu of walls. The Weeping Radish followed suit, even running one line through the dining room. Kegs couldn't be moved on trucks or dollies from the brewing area to the bar without being unloaded, carried by hand over these "walls," and then reloaded for the remaining few feet of the journey.
In Germany, where the government is the arbiter of quality, brewers have to comply with the Reinheitsgebot, or purity law. The state decides which beer is good enough to be sold, rather than letting consumers judge for themselves. In Dare County, North Carolina (which includes Roanoke Island), the government has declared itself the arbiter of morality. That means using the law to curtail activities that offend people's sensibilities.
This mission has led to some perverse consequences. In North Carolina, some counties remain dry 65 years after the repeal of Prohibition. Others prohibit liquor from being sold anywhere but in state-run stores. Under a Dare County ordinance, restaurant patrons may bring their own liquor, but the bottle has to be kept in a brown bag, and it has to stay under the table at all times, even for pouring. When a customer finishes his meal, he may not take the bottle out with him because another law forbids carrying an open bottle of booze. But he's not allowed to leave liquor behind, either. So he has to drink every drop to legally exit the establishment.
Since Bennewitz was in the business of selling beer, such restrictions did not bother him much. But the brown bag rule reflects anti-alcohol attitudes with which he did have to contend. A local newspaper made much of the Weeping Radish's attempt to rent space in a state-owned seafood warehouse, implying that such an arrangement might send an approving message about alcohol. Never mind that the warehouse had sat mostly empty since it was built 15 years before. Bennewitz also complains about the billboard owner who wouldn't allow him to mention the words beer or brewery in his ad, though the local Holiday Inn was permitted to tout its "lounge."
Despite the regulatory hoops and anti-alcohol sentiment that Bennewitz had to battle, after 12 years the Weeping Radish seems unlikely to go the way of the first Roanoke colony. He has opened a restaurant further north on the Outer Banks, and a new facility in Wanchese, North Carolina, stores his beer for aging and handles shipping orders. He hopes to expand his distribution into the lucrative market in the nearby Tidewater region, which will mean navigating the maze of Virginia's state and local regulations.
Despite his assertion that he wouldn't do it again, Bennewitz marvels at his only-in-America success: "What could be more ridiculous, after all, than opening a Bavarian restaurant on the Outer Banks!" Entrepreneurs who are brave enough to imagine such possibilities face a big enough challenge without the meddling of bureaucrats and busybodies.
Max Schulz (email@example.com) is an adjunct scholar with the Frontiers of Freedom Institute.