63rd Legislature Adjourns and the Beer Still Flows

Posted On April 25, 2013

The 63rd Legislature adjourned yesterday a few days before their scheduled 90th day, wrapping up all the major pieces of legislation including the state’s budget, pay plans, tax bills, etc. Importantly, there was no attempt in the waning days to resurrect the dreaded anti-brewery 60/40 bill, HB616. Fortunately, no brewery legislation passed this session after a hard fought effort by the Montana Brewers Association and by craft beer fans statewide. HB616 was tabled in committee after the sponsor realized he couldn’t muster the votes to get it out of committee.

However, HJ18, the Joint Study Resolution designed to study the alcohol licensing system was killed on the House floor. HJ18 left the House Business and Labor Committee with a unanimous 19-0 vote, but suddenly ran into trouble in the House when on second reading it received only 37 favorable votes. The Montana Tavern Association and the Montana Gaming Association worked to defeat this bill even though we had earlier agreed to amendments they had proposed in committee. When 3rd reading came up the next day, it died on a 50 – 50 vote (8 House Business Committee and Labor Members changed their votes).  The Montana Tavern Association, Montana Gaming Association, and others evidently don’t want “sunlight” shed on our current broken system, which was a primary goal that the study resolution would have achieved.

So we now head into the interim with a great amount of work ahead of us. The Montana Brewers Association is committed to working with our members and our patrons to develop a sound solution to these issues.  We intend to key a sharp eye towards maintaining a strong and growing craft beer industry with open entry into the marketplace, and will continue working with industry partners in the development of workable solutions. We still need your help in this regard, so please stay tuned to our Newsletters, website, our Facebook posts, and join us at our festivals in Billings (May 31) and Missoula (September 28) to show your support of Montana-made beer. Thanks again for all the support you have provided to the craft beer industry during this legislative session.

The Beer Still Flows!

A Montana Loophole Leaves a Bitter Taste With Bar Owners

Posted On April 24, 2013

Tony Demin for The New York Times

Jeff Grant, the owner of Draught Works in Missoula, Mont. Many of the state’s brewers have embraced a law as a chance to sell directly to the public.=

By JACK HEALY

MISSOULA, Mont. — It was Saturday afternoon, and that meant the pale ale was flowing inside Draught Works, the latest brewery to open in this beer-loving college town. People swooned over the Czech pilsner and the coffee stout. A string band plucked away. As parents ordered another round, their children darted around the tables like giggling schools of fish.It could have been a scene from any thriving upscale neighborhood brew pub. And that is precisely what has ignited a beer war in Montana.

Two decades ago, there were a handful of small brewers across the state. But as the American love affair with homemade beer and microbreweries spreads, Montana breweries have popped up from Wibaux to Whitefish, with frontier monikers like Blacksmith, Outlaw and Glacier.

Today, this state of wheat and barley fields has more than 30 small breweries, serving up pints for oil workers on the eastern plains, skiers in the mountains and summer travelers bound for national parks. It had the makings of a golden age for bars, beer makers and tipplers across the state.

Then things got ugly.

To entice customers and to promote their beers, many of Montana’s brewers have seized on a 1999 law that lets them open tasting rooms without having to buy a liquor license. There are strict limits — they can sell only three pints per person, and they have to close by 8 p.m. — but the brewers embraced the chance to sell directly to the public. They hired bands, sponsored art events and invited food trucks to park outside. Then they watched as the crowds came, with wallets out.

“It’s literally our billboard,” said Jeff Grant, 30, who opened Draught Works a year and a half ago.

Montana’s bar owners and their powerful tavern lobby howled in protest at what they called unfair new competition. Giving away a few thimble-size samples of amber ale was one thing. But the shiny new tap rooms were bars by another name, they said, and threatened to drain business from bar owners who had paid $100,000 or more for one of the state’s scarce liquor licenses.

“There are two different sets of rules,” said John Iverson, a lobbyist for the Montana Tavern Association. “We’re asking to be treated fairly.”

So they took the battle to the State House. Tavern owners proposed a bill that would limit breweries’ retail business to 10 percent of their overall sales. When that effort failed, they unsuccessfully urged lawmakers to require nearly all breweries to buy a liquor license.

“If you want to act like a bar, be a bar,” said Dax Cetraro, whose family runs the Rialto bar in Helena, the capital.

Montana’s brewers cast their fight in the Legislature as a hoppy version of David and Goliath, saying the laws could drive them out of business and would stifle a fast-growing industry that employs at least 320 people.

“We are not breaking the law,” said Tony Herbert, the executive director of the Montana Brewers Association. “We thought that when you created a $50 million industry, you’d get a pat on the back. Instead, we’ve had nothing but people coming in to stop it and slow it.”

But Mr. Cetraro said some of the breweries had not been playing fair. Some tasting rooms are now bigger than an average bar, he said. Other beer makers have stopped distributing their beer to him because they can sell it for higher profits from their own taps. He said he lost out on the chance to cater a wedding because a brewery in Missoula would not sell him the kegs his customers wanted.

The efforts by the tavern owners failed this year, but they may yet succeed in passing new limits in the next legislative session. For now, the small breweries appear to be winning the battle of public sentiment.

Back at Draught Works, the mood was decidedly more upbeat as the band tuned up. Mr. Grant’s father once ran a brewery in eastern Montana and gave his son a home-brewing kit when he turned 21. Mr. Grant served as an apprentice to an Arizona brewer, worked on an oil rig in the summers to save money and attended brewery school, all with the goal of being here, surrounded by silver tanks of Clothing Optional pale ale and Quill Pig pilsner.

Bottling and canning beer is expensive, and building a distribution network takes time. For now, Mr. Grant is selling all of his beer out of his shop. He said he had been overwhelmed by the business inside the tap room, more packed than just about any bar in town.

“Walk in here on a Friday night and see,” he said.

Montana’s rich brewing tradition at risk

Posted On April 24, 2013

By Steve Lozar Independent Record

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

Some breweries act as non-licensed bars

Posted On April 24, 2013

By JoAnn Fuller Independent Record

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.