Throughout the 63rd legislative session, members of both parties have touted their efforts to create jobs and strengthen Montana’s economy. Whether it is reducing tax burdens on small business or making new investments in education, there is good news coming out of the legislature.

But occasionally ideas emerge that are contrary to the goal of economic development. Case in point is the recent legislative attempt to stifle Montana’s flourishing brewery industry. A bill was introduced that would impose an additional $100,000 tax on all existing breweries and cap the creation of new breweries. The obvious aim of this bill was to shut down existing breweries and prevent future expansion.

To appreciate how strange this legislation is, you must understand the history of Montana’s brewing industry and the extremely restrictive rules under which it operates. In 1999, the legislature permitted breweries to operate under some of the most restrictive regulations in the country. These rules require that breweries serve no person more than 48 ounces of beer, close their doors at 8 p.m., and sell only beers they create on their premises. Unlike most bars and casinos, breweries are prohibited from serving liquor or allowing gambling.

Given these tight regulations and the high cost of brewing equipment, which can exceed $500,000, the breweries initially limped along. In recent years, however, breweries around Montana have miraculously innovated, despite the confines of the law, to create thriving small businesses with unique ambiances and high quality beers which are sold on site and distributed to stores and bars.

Thirty-eight breweries now exist in Montana and many more would like to open. Beer manufacturers have created over 450 jobs and generated more than $50 million in Montana-made products. Breweries utilize wheat and barley from Montana farmers and create value-added products which are sold locally. This is precisely the model of manufacturing our state needs to follow in order to expand its economy.

Many bar owners appreciate the opportunity to serve Montana-made brews their patrons enjoy. However, other bar owners feel threatened by the success of these taprooms. For these owners, several lobbyists were hired in Helena to try to effectively write breweries out of the law and tax them out of existence with a new $100,000 fee.

When the brewers purchased their equipment and invested in their buildings, they had no way of knowing that that the legislature would attempt to arbitrarily saddle them with a $100,000 tax. The threat of this legislation even delayed the opening of a brewery in downtown Great Falls and would prevent the opening of many more across the state.

We understand that some tavern owners invested heavily in their licenses and are unsure how their business may fit in with local breweries. However, the solution is not to use governmental regulation to destroy the breweries. Thankfully, a bipartisan group of legislators ended a law that would do just that. As an alternative, we proposed a study resolution which aims to equitably resolve the concerns of the tavern owners while creating a clear path forward for Montana’s brewing industry. Unfortunately, this resolution was killed on the House floor Tuesday.

Both Democrats and Republicans value the new and thriving craft beer industry. As we seek to find ways to expand Montana’s economy, add value to our agriculture products, and grow local jobs, we prefer to nurture this burgeoning industry in our state - not burden it with more licensing and regulation.

Christy Clark is a Republican State Representative from Choteau. Anders Blewett is a Democratic State Senator from Great Falls.

Tavern owners faced off against craft brewers at the Capitol on Tuesday, arguing that the upstart competition has been allowed to unfairly flourish with too few restrictions.

Both sides packed a state House Business and Labor Committee hearing looking at two bills.

One brought by the tavern owners, House Bill 616, would put new licensing requirements on the brewing industry. The tavern owners argue that some breweries have grown into full-scale retail establishments not envisioned by the original law that allows tasting rooms.

Another bill to study the issue, House Joint Resolution 18, was backed by brewers who said more conversation is needed to fairly reconcile differences.

Rep. Roger Hagan, R-Great Falls, said stricter restrictions are needed on the brewers. He said brewers are taking advantage of laws, revised in the late 1990s, that allowed the breweries to retail beer sell up to 48 ounces of beer a day to customers before 8 p.m.

He said that law was intended to let wholesale breweries offer a little taste to retail customers. The lawmaker argued that some breweries now sell almost all their product to customers and resemble bars.

Tavern owners testified that they enjoy selling locally made beers to customers. They argued that unfair retail competition from the breweries, however, is limiting the availability of such beers for the retail bars.

Hagan's bill would require many retail breweries to buy a new state license for $100,000. Wholesale operations would not need the license.

The bill received support from one large brewery, Big Sky Brewing Co. in Missoula, which said it is too large and exceeds production limits to open a tasting room under the current law. The brewery supported the way the new bill would allow it to open a tasting room with the new special license, or perhaps even buy an all-beverage license that would allow expansion perhaps into food or other businesses.

But the rest of the brewers in the state opposed the law. They argued it would stifle growth in the industry.

The brewers are instead suggesting a two-year study with the aim of producing new rules that everyone can support. They said Hagan's bill is being wrongly sold as a way to help the industry expand with new licensing rights.

Farmers who sell grain to the breweries and customers who enjoy the beer also opposed the bill.

"It was crafted by the Tavern Owners Association, and it is meant to benefit the Tavern Owners and it will crush many of the small-town mom-and-pop breweries in Montana," said Helena attorney David Hull, who said he enjoys the breweries.

Hull argued tavern owners get a lot of extra rights with their liquor license, including the ability to sell all beverages and profit from gaming.

The breweries argued that they don't want the rights to those businesses and enjoy the current model that limits hours and consumption. Many of the very small brewers said they have built modest retail business plans that would be jeopardized under the proposed bill.

"It is flawed in many ways and it would put us out of business," said Rob Jarvis of Philipsburg Brewing.

The committee did not take immediate action on either bill.

Montana’s brewing history has been a mirror reflection of the history of our territory and state from Johnny Grants’ first brewery on Cotton Wood Creek in 1859 to today.

Montanans have celebrated beer made by Montanans in their own mining camps, logging towns, ethnic neighborhoods and cow towns. Beer brewed locally and sold in each breweries sample room with its customary “Dutch Lunch” was a Montana tradition. The local brewery was often our floor of political debate, public meeting hall and occasional wedding chapel and court room. Each small Montana community took great pride in the fact that they had a local brewery. That fact was often proclaimed in real estate pamphlets used to entice easterners to come west and invest in Big Sky country. Many Montana brewers served the state and territory as legislators, mayors and lawmen. Montana breweries sponsored civic organizations, youth activities and helped the less fortunate.

In 1919 the breweries and their respective towns and cities were rocked with poor state and national law known as Prohibition. It became known as “The Great Mistake.” The short-sighted lawmaker’s who voted Montana dry, hurt Montana business in many ways. Montana farmers had nowhere to sell their malting barley. Truckers and railways no longer delivered Montana made beer around our state. A huge state revenue in taxes no longer existed. The time honored “Public House or sample room” no longer served the citizens of countless burghs. The thriving Montana brewing business was the victim of self- serving politics and a national campaign of fear and mistruth. With the repeal of the Volstad Act in 1933 brewers, could once again ply their trade legally in the United States. Many Montana breweries however, did not survive the 14 years of government prohibition.

The jobs lost, payrolls gone and the lost city, county and state taxes and licensing fees were painful. The legislative attack on the independent Montana spirit of a man building his own business on the sweat of this brow was the most painful experience of all. Repeal legislation made it illegal for Montana brewers to own their own tasting rooms. Montana laws favored large out-of-state breweries and made it very difficult for local brewers to compete. By 1968, local Montana brewing was reduced to a memory. No Montana breweries existed. A few local brand names were produced out of state for sale in Montana as “discount” beer but they were not brewed with the original Montana receipts or materials.

By the 1980’s breweries again began to grow in Montana. After 20 years of no Montana breweries a few pioneering craft brewers were again looking to local farmers to purchase materials for local brewing. The industry has rebounded here in our homeland with new breweries catering once again to our local tastes, paying local taxes and most offering the public house sample rooms so vitally connected to our communities’ histories and futures.

As in Montana’s past however, there lurks today an element that seeks to use restrictive legislation and a self-serving agenda to seriously harm or unfairly eliminate our local community based breweries. Representative Roger Hagan (R–Great Falls) is carrying a bill for the Montana Tavern Association often referred to as the 60/40 or anti-brewery bill. Much like the disastrous history of government catering to special interests that has plagued Montana brewing history, this bill restricts the hours of operation, the amounts of product sold, eliminates food from the sample rooms, and ultimately seeks to eliminate a Montana industry that generates in excess of 450 Montana jobs and $50 million dollars annually to our states struggling economy.

Rep. Roger Hagan’s bill is wrong for Montana. It flies in the face of our state’s history of honoring a man who is willing to build his business with his own hands. Don’t be fooled by the Montana Tavern Association’s attempt to ruin a growing community based industry. Please call your legislators (444-4800) and encourage them to vote no on this unfair bill.

Steve Lozar is a published Montana brewery historian

In Montana, all taverns are licensed for the retail sale of alcohol, with different privileges available depending on the license held. Breweries in Montana are licensed as beer manufacturers. Since 1999 breweries have been allowed to sell samples of their beer through a special exception to the licensing requirements. Tavern owners across Montana helped support this special exception for Montana’s small breweries so that they could introduce people to their products and develop a market for them. We continue to support this special exception for that purpose.

However, something has changed in Montana in recent years. Some breweries have begun to operate their sample rooms in ways that are virtually indistinguishable from that of a bar. These bars take up more space than the brewing operations. They may have pool tables, juke boxes and sometimes cover charges just to get in the door. They look and feel like nearby licensed establishments.

The shift in market focus of these breweries is clear. Some of these breweries sell all, or nearly all, of their production through their sample rooms. Their focus is on the retail sale of alcohol, not manufacturing. Just a few years ago, we would see breweries with a small sample room attached; now we see sample rooms with a small brewery attached. This retail focus is an abuse of the sample room special exception.

The market has changed in ways that the licensing system should catch up with. The Montana Tavern Association suggests the following change to the licensing system:

Breweries that want to operate as bars should be allowed to. They should, however, have to comply with the same regulatory and licensing requirements as those that are currently in that retail market.

If you want to follow our proposal more closely, it is currently LC 1429 in the Montana Legislature. The bill proposes that the sample room special exception is not a retail license. It is a privilege to retail a limited amount of beer production. Those breweries that want a retail-focused business will need a retail license. Breweries that have a manufacturing and distribution focus are not impacted.

The bill maintains the low barriers to entry that has allowed breweries to flourish in Montana, and it gives existing breweries years to adjust.

Our proposal does not dictate or change in any way the amount or type of beer brewers can brew. In fact, our proposal has nothing to do with the manufacturing of beer in Montana. Our proposal relates only to the retail sale of beer, and our thesis is that if you want to be a retail focused business you need a retail license, just like every other beer retailer.

Some people will certainly argue that the current licensing system in Montana is broken and should be scraped. However, if we look to the other states to find a better way, we will find 49 other imperfect systems. No state has a monopoly on the “right way” to regulate alcohol sales. The system we have is ours. It was created in Montana by Montanans. Montana’s tavern owners simply participate in the current system, and they ask that if others are going to participate too, they should have to play by the same rules.

JoAnn Fuller is the Montana Tavern Association president and represents the Timber Bar in Big Timber. Also co-signing this column is Ray Thares, Papa Rays, president of Tri-County Tavern Association, Helena.