Good Beer Hunting

Fervent Few

Fervent Few — Breaking Down The Law

Beer, being alcoholic, is a regulated beverage. But the laws to sell beer change from country to country, state to state, sometimes even county to county. In places like Maryland, Louisiana, and Georgia, there’s increasing pushback to pass progressive beer legislation. This week, we asked the Fervent Few what the laws are like near them, how they’ve changed, and how they impact the way these folks buy and consume beer.

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Zack Rothman: “It’s been almost 100 years since Prohibition was repealed, yet it continues to live on in the laws regulating beer throughout the country. The three-tier system itself is a remnant of that time and, like many of today’s beer laws, is outdated. There is an extensive need for legal reform in order to modernize the regulatory scheme around today’s craft beer industry.

During my time in Massachusetts, I’ve seen our so-called ‘blue laws’ change to allow liquor stores to open at 10am on Sundays as opposed to opening at noon as they had to before. This is a small reform, and could be improved upon, but it’s better than nothing.

Perhaps the biggest need for reform is related to the laws governing the relationships between brewers and distributors in Massachusetts. The franchise law put in place in the ‘70s was enacted to protect distributors when there were only a few large breweries and many small distributors fighting over them. The industry has now flipped, yet the law still makes it very difficult for a brewer to leave a distributor, enriching large distributors and preventing competition. This, in turn, hurts both craft brewers and their consumers.

The Massachusetts Brewers Guild has been pushing for franchise reform to make it easier for brewers to change distributors, but have run into opposition from the distributors. Their current proposal would allow private contracts to govern the distribution relationship, as they do in many other states. Their support is growing, and I am hopeful that reform is coming in the near future. Until then, several craft brewers in Massachusetts are opting to self-distribute or to sign on with one of the local small and independent distributors.”

Michael Graham: “Texas is the last state where production breweries cannot sell beer to-go from their taprooms. Wineries can, distilleries can, and brewpubs can—just not production breweries.  Texas does allow parents to buy beer for their children, regardless of age, as long as the parents are present while it's consumed. A parent could buy their toddler a beer in our taproom and face no consequences unless the toddler took the beer to-go.”

Kimberly Clements: “I work on beer law issues all the time. There are so many state disputes and disputes between brewers and distributors going on all of the time. However, it’s interesting to me when a brewery complains that they can’t do this or they can’t do that in their home state.  They knew the rules going into it. Or, maybe they didn’t, which is really their own fault. By far, I think that the most ridiculous laws out there are those that make a brewer who is brewing onsite sell their beer from their brewery taproom to a distributor, and for the distributor to sell it back to the brewery themselves. As a former distributor, that makes absolutely no sense to me. It never has. In my opinion, that is really a law that needs to go. That’s the worst. It kinda goes against the spirit of the partnership between a brewer and an independent distributor. If you are brewing and selling in your own taproom, I think that you should be able to sell as much as you can in the taproom before you get the middleman involved. I have always supported this.  Let the distributor, if you so choose, sell to retail.”

Brendan Palfreyman: “Though the ABC laws in New York are still antiquated in my opinion, after having read some of the nightmare stories here on Good Beer Hunting and other places about the laws in TX, LA, MD, etc., I realize how good we have it. Breweries in New York can sell pints in the taproom, sell packaged beer and growlers to-go, and even self-distribute to retail accounts with just their microbrewery or farm brewery license. New York is also progressive with regard to the ability of small brewers to exit distribution contracts. It is still quite onerous relative to other industries, but NY at least has an option for any brewery with an annual volume of less than 300,000 BBLs (so everyone but the big dogs) who makes up 3% or less of the distributor's total sales can terminate a distribution contract without cause upon payment to the distributor of ‘fair market value’ of the distribution rights.  What is ‘fair market value?’ It's not defined in the statute, and oftentimes in practice, the payment is made by the new incoming distributor.”

Ian Davis: “Ohio had this whacky law for as long as I could remember that beer was capped at 12%. That was production, sales, the whole gambit. That’s how it was for as long as I have been of age to consume, until 2016 when they replaced it with an unlimited ABV. I personally thought this was great. It was a large factor, in my opinion, why BrewDog opened their location in Canal Winchester. Now I can buy Prairie Bomb without having to trade across state lines for it!”

Nick Yoder: “Indiana finally did away with one of the most antiquated laws in the nation: no Sunday sales. It's still limited to 12-8pm, but it's a start. Only liquor stores are able to sell cold beer, though. The biggest law change I would like to see has to do with interstate shipping. It's amazing that wineries are able to ship direct-to-consumer but breweries still cannot.”

Linus Hall: “TN’s state beer taxes are $39.89 a barrel—#1 in the country and 20% higher than #2 Alaska. We have never had a state income tax, and the liquor lobby is very strong, so we have a 9.25% sales tax and the highest beer taxes to make it up.”

Peter Campen: “Ohio used to be a fairly old-fashioned three-tier state. You couldn’t self-distribute, taprooms cost an extra $4000 on top of the $4000 you had to pay for your brewery license. A 2011 law that went into effect in 2012 changed all that. Breweries under one million BBLs could self-distribute and open a taproom on their brewery license. That license fee was reduced to $1000/year for breweries under the million BBLs threshold. More licenses for micro distillers under 10,000 BBLs were also created. In 2016, as was mentioned previously in this thread, the 12% ABV cap was lifted. Last year, free samples were legally allowed for the first time. The current law being pushed is trying to allow dogs in taprooms. I’m not sure where that stands right now. The next push is supposed to be the legalization of homebrew outside of the home. Currently in Ohio, you can make your legal limit of homebrew, but taking it anywhere is illegal. That means that every homebrew club meeting is operating in the grey. Special licenses have been issued in the past for events such as NHCs in Cleveland and Cincinnati.”

Jaron Wright: “I live in California. Our biggest complaint used to be growler laws. Living the good life.”

Rob Cartwright: “Indiana has another interesting quirk. Consumers can't purchase cold beer at a c-store, but can buy cider or wine nice and chilled. It's odd that the state allows you to purchase a 7% or 12% ABV beverage at a gas station, but not buy a cold 4.7% Lager. Oh, and not sure if this is common elsewhere, but our liquor stores can't sell soda pop, so a Jack & Coke requires stopping in two separate stores.”

Rick Owens: “Prior to September 2017, breweries in Georgia technically had one customer—their distributor. This relationship, in my opinion, quelled breweries ambitions to grow and run their businesses since a majority of their salesforce was dependent on a third party who also sold a multitude of other brands in conjunction with their own. Breweries were beholden to the ‘tour system’ where patrons would come to the brewery, purchase tokens which were used in exchange for a beer pouring. Breweries were only allowed to provide individual patrons up to 36 oz. of free beer per day—free beer which brewery owners were also taxed on.

A frustrating system which has finally changed and now allows breweries to sell up to 3,000 BBLs/year (288 oz. per day) directly to customers from the brewery to take home. (There is no limit for on-site consumption draft pours.) This has allowed countless breweries to hire more staff, increase production, and market more products to their customers. It’s wonderful to see the fruitful changes being passed down to business owners. Georgia is now also moving forward and we are about to witness our first own-premise brewery, Halfway Crooks Brewing and Blending. Looking forward to drinking delicious Pilsner downtown.”

What are the laws like near you? Do they affect the kinds of beers you drink, or do you work around them? Join us in the Fervent Few and let us know!

Hosted by Jim Plachy