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.
Posted On April 24, 2013
Posted On April 19, 2013
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.
Posted On April 16, 2013
The House voted down HJ18 with a 50 to 50 vote with the full House on third reading today, showing the strength of the Montana Taverns Association and the Montana Gaming Industry Association lobbies. The bill, which would have provided for the study of licensing issues within the alcohol code had passed second reading on Monday, April 15, with a vote of 62-37.
Obviously there are those industry members who didn’t really want to work together during the interim to develop proper, long-term solutions to licensing and retail issues which have been so controversial. Even though these industry members requested amendments to the Study Resolution, which were accepted in committee, they worked hard to kill the measure in the House and apparently never intended to work within the confines of the legislative interim process. Representative Christy Clark was surprised by the turn of votes in the House, and also surprised at how some do not want any daylight brought to the current outdated alcohol control laws.
The Montana Brewers Association and its members want to extend our heartfelt thanks to all Montana craft beer fans that have taken time out to let your voices be heard, and written to legislators or placed editorials in newspapers statewide. Your hard work and enthusiasm has set the stage for the Montana Brewers Association to continue working towards sensible solutions that meet the needs of Montanans, and to take advantage of the time provided.
Please stay tuned to our webpage and Facebook page for updates on next steps on important policy issues that will affect Montana brewers and all the craft beer fans in Montana!