How States and Businesses Can Collaborate to Support Growth

Colorado governor, brewery co-founder discuss opportunities to improve regulation while ensuring key protections

How States and Businesses Can Collaborate to Support Growth
Pew
Pew Vice President Michael Thompson (left), with New Belgium Brewing Co. co-founder Kim Jordan and Colorado Governor John Hickenlooper (D), discussing strategies for improving regulatory processes.
The Pew Charitable Trusts

With a background in beer brewing and entrepreneurship, Colorado Governor John Hickenlooper (D) set out to prove that it is possible for the state to be pro-business and maintain high standards. Under his leadership, state agencies have reduced permitting timelines and improved business-facing regulatory processes and government services.

On Nov. 27, The Pew Charitable Trusts hosted a conversation with Hickenlooper, governor since 2011, and Kim Jordan, co-founder of New Belgium Brewing Co., about how states—and local governments—can work collaboratively with businesses to help them navigate and comply with regulatory requirements. Jordan’s brewery, best-known for Fat Tire Amber Ale, is based in Fort Collins, Colorado.

How Reinventing Regulation Can Boost Economic Growth
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The session, held at the History Colorado Center in Denver, built on Pew’s recent report, “State Strategies to Help Business Launch and Expand.” The research explains how improving regulatory processes can make it quicker and easier for entrepreneurs to start a business or bring an innovative product to market.

Gov. Hickenlooper described Colorado’s statewide effort to set and meet annual goals for reducing compliance costs for businesses while protecting public health and the environment. After conducting outreach to businesses to identify problem areas, the state has leveraged process improvement tools—such as its Lean program—to simplify regulatory operations by removing time-consuming steps that were not adding any value. Improving regulatory operations “is not politically valuable, and yet I think it is powerfully essential for a state to grow their economy,” he said.

In 2017, Colorado agencies reported saving businesses 2.3 million hours, largely by eliminating unnecessary administrative tasks and making their dealings with the state more user-friendly.

“It’s crazy,’’ Hickenlooper said of the tasks that businesses had faced. “That’s just a lot of time and a lot of efficiency that we didn’t know was being wasted out there.”

Jordan launched New Belgium in 1991 with her then-husband, Jeff Lebesch, out of the basement of their home, and the company has grown into one of the largest and most innovative craft breweries in the country. Now employee-owned, New Belgium has a workforce of more than 700 and brews 950,752 barrels of beer a year for sale around the world.

Jordan noted that she is not antiregulation but stressed that regulators should work with businesses to identify areas of most risk and enforce necessary regulations consistently. Ineffective enforcement can cause problems for businesses, she said. “It creates a chaotic marketplace if there’s not a sense that we are all supposed to be paying attention to the law.”

Jordan and the governor recounted personal experiences interacting with regulators as they worked to get their breweries open as quickly as possible. (Gov. Hickenlooper launched Denver’s Wynkoop Brewing Co. in 1988 and is the first brewer to be elected a governor since Samuel Adams in Massachusetts in 1792.)

“Every day that you’re not opening and bringing in revenue is a day that whatever small amount of capital you’ve amassed to get this thing off the ground is [just sitting there],” Jordan said.

Neither of their breweries could afford to hire lawyers to help at the time, so both founders spent a lot of time wading through complicated paperwork and navigating unexpected obstacles on their own. Federal regulators initially denied New Belgium’s application for a brewer’s permit because it was attached to Jordan’s home. She had to thoroughly research and document precedents in other states to successfully appeal the decision. “Sometimes you have to keep going even when you think that it’s not going to be possible,” Jordan said.

Gov. Hickenlooper had to rely on the graciousness of local officials when he launched Wynkoop 30 years ago. In part because there were no other brewpubs operating in Denver at the time, the administrative requirements were confusing and didn’t seem to apply to the brewery’s circumstances.

The director of the city office that oversees licensing spent two hours working through the details with him. The governor remembered that during an inspection scheduled right before a launch party, a city official found a handrail that was too high. Instead of preventing the brewery from opening, the inspector grabbed a screw gun from his car and helped lower the railing.

Jordan described how New Belgium’s dramatic expansion has been helped by those state and local government officials who demonstrated that they were interested in working as partners, rather than in surprising the company with penalties after management had already implemented key decisions.

For example, Fort Collins regulators have been willing to set time aside to meet with New Belgium to review and discuss potential business decisions while they are still in the planning stages. “You get an opportunity early on to understand where the hurdles are going to be,” Jordan said. “That’s the elegant path, as opposed to the ‘gotcha’ path.”

As New Belgium scoped out sites for its second major location, Asheville, North Carolina, won officials over in part by emphasizing that regulators there were willing to work with the team to understand the company’s vision and make it a reality, even if that occasionally required deviating from standard protocols.

“At every level—the city, the county, and the state—Asheville made it clear to us that they were going to clear the way for innovation,” Jordan said. “They knew that we were innovative. They trusted that we wanted to continue to be innovative.”

Jeff Chapman is a project director and Melissa Maynard is an officer with The Pew Charitable Trusts’ states’ fiscal health initiative.

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State Strategies to Help Businesses Launch and Expand

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State Strategies to Help Businesses Launch and Expand

State governments can undermine opportunities for investment and job creation when businesses spend too much time or money on inefficient regulatory processes, or when new business projects get delayed because firms don’t understand how to comply with the rules. To address this challenge, state policymakers can focus on two types of reforms.