Posted On March 17, 2013
Tension between the Montana Tavern Association and Montana Brewers Association has been too common in recent legislative sessions. And this year is no different, as two bills are about to be introduced.
The tension between the two organizations has its roots in Montana’s liquor licensing laws.
During this legislative session, the main friction between taverns and breweries is focused on a bill sponsored by Roger Hagen, R-Great Falls. Hagen’s bill, which has the full support of the MTA, is expected to be introduced next week and would dramatically change the way small breweries are governed.
The main change this legislation would bring is the requirement that small breweries producing more than 300 barrels a year to be licensed through the state liquor control division, similar to a bar, if they want to sell their product in their tap room.
MTA says the bill will level the playing field between bars and brewery tap rooms, which have seen a huge increase in popularity in the last few years.
MTA’s main problem with tap rooms is that, in their opinion, they have become defacto bars, rather than just places to sell a local brewery’s product.
“The sample rooms were never supposed to be operated as bars,” said John Iverson, MTA’s lobbyist. “The sample room privilege was never designed to be used the way it is being used.”
Iverson contends that many breweries sell the vast majority of their product through their tap rooms, or sample rooms. The privilege he refers to was a 1999 law that allowed breweries to sell their beer in the tap rooms, but only between the hours of 10 a.m. and 8 p.m. Additionally, breweries can only sell 48 ounces of beer per day to an individual.
The idea with the 1999 exemption was that breweries would focus more on the production of beer and leave the serving of it largely to the taverns.
However, local breweries tapped into a need with consumers in many communities to have a place to gather for a beer that didn’t have gaming machines, hard liquor and was family friendly. Breweries in many communities have become a social hang out for people who don’t frequent bars, but still like a low-key place to socialize.
And though Iverson claims the tap rooms are being operated as taverns, Brad Simshaw from Blackfoot brewing in Helena disagrees.
For breweries, the successful business model is one that is in many ways the antithesis of a bar, Simshaw said.
The Blackfoot Brewery for example doesn’t have televisions and is well-lit and since it doesn’t have an all beverage liquor license, like a typical bar, there are no gambling machines.
And unlike a bar, Simshaw has to stop serving beer at 8 p.m. and has to keep track of how much beer he serves each patron.
If MTA’s legislation were to pass breweries, like the Blackfoot, would need to buy on premises beer sales license from the state. Like all liquor licenses, these are available on a quota system in Montana’s incorporated communities. That means the number available is based on population. By limiting the quantity, the quota system makes liquor licenses expensive in many Montana cities.
However, with the license, breweries could operate essentially like a bar – sell as much beer as they’d like and stay open as long as they’d want, Iverson said.
Under current law, breweries that produce more than 10,000 barrels a year cannot sell beer in a tap room. They can still have tap rooms, but they must provide the samples for free.
With MTA’s bill, this restriction would be lifted by requiring the on premise sales beer license. The bill actually gives breweries an opportunity for growth that currently doesn’t exist, Iverson said.
If a license isn’t available to a brewery, under the proposed legislation, the state would offer a new license for the kingly price of $100,000.
“This guarantees no brewers will be pushed out of business by this revision in law,” he said.
However, the interesting thing about MTA’s bill is that it really has nothing to do with taverns owners – the group the organization is supposed to represent. The goal of the legislation is simply to further regulate breweries, which MTA sees as the chief competition for their members.
Ultimately, MTA’s bill misses the point. The problem isn’t the lack of regulations on breweries, it’s Montana’s liquor licensing system in general.
It’s time to take a complete look at how liquor licenses are issued in Montana. The quota system for licenses is in direct opposition to the free market. It limits the availability of licenses, which then drives the cost up. In some larger Montana communities, all beverage liquor licenses can go for more than $1 million.
However, since the system has been in place since 1947, tavern owners have made substantial investments into the licenses they own. For many it’s their retirement investment.
But the difficulty in obtaining a liquor license stifles economic development by making it far too difficult to open new bars and restaurants. It also makes it necessary for the MTA to try and keep their thumb on breweries because they are trying to do whatever they can to protect the value of their licenses.
But if you step back and think about it, taverns and breweries ought to easily find ways to work together. Montana is becoming known for its small breweries and their high quality product. Owning a tavern with a line of taps from Montana brewers should be profitable business model.
There’s another bill that is getting ready to be introduced in the legislature by Christy Clark, R-Choteau, which would call for an interim committee to study the liquor licensing laws. We support the idea of an interim study and look for lawmakers and folks from both MTA and MBA to sit down and find a better way forward.
Eventually Montana needs to make liquor licenses more readily available, continue to enable and support Montana’s blossoming craft beer, wine and spirits industries, and protect the investments made by current liquor license holders.
Posted On March 7, 2013
The anti-brewery bill that you’ve been hearing about is still coming, and a new article in The Tavern Times makes that very clear. LC1429 by Roger Hagan (R-Great Falls) intends to shackle the craft brewing industry. This bill will make a mockery of all the good the craft brewing industry has brought in the last 10 years. Large established breweries are somewhat protected from some aspects of the bill, but this legislation will stop or seriously hinder any new brewery entering the market, eliminate any start-ups, and let the MTA call the shots on what breweries can grow and when. Odd how these things happen when you have a sanctioned monopoly at play. The final language or a bill number are not yet available, but this is what we have learned thus far:
We are watching the MTA very closely and will let everyone know when the details of the bill are finalized, who you can contact, and when. This Bill is likely to be heard in the House Business and Labor Committee. Many of the committee members have already indicated support for brewers and possess no interest in this type of bill coming forward (Republicans and many Democrats alike). Roger Hagan is obviously not one of those, and Rep. Rob Cook (R-Conrad) may still carry this bad legislation forward. We are told to expect a bill draft to be available for a hearing late next week (March 14th, 15th, or the following week). Please be prepared to come to Helena if you can, and certainly ready to contact committee members
when the time is right!
Stay tuned and keep your pencils sharp!
Posted On February 26, 2013
Well, we are almost at transmittal date, the midway point of the legislature, and brewers are still breathing. We continue to need your attention and support for our issues as we are told another anti-brewery bill is on its way. Representative Roger Hagan (R-Great Falls) has indicated that he intends to introduce a bill on behalf of the Montana Tavern Association that will further limit existing brewery retail abilities.
Rep. Hagan explains that his bill, potentially to be carried by Rep. Rob Cook (R-Conrad), would provide new marketing opportunities for brewers, distributors, and retailers, by allowing brewers to buy retail licenses and tavern owners to buy brewery licenses. Oh, there was also the point that in order to curtail the burgeoning and successful brewery industry, brewers would have to abide by limits that dictate how much beer can be sold on premise versus through the distribution tier. The limits would start when a brewer sells more that 300 barrels a year (a very small amount)! Thank you very much. Once over 300 barrels, brewers can only sell a certain percentage of their production on premise till 500 barrels, then a lesser percent till 1,000, then a lesser percent still till you reach 10,000. Clear as a bell? I’m waiting to see the next brewer’s business plan and how it is received by his investors and his banker.
Another meeting was held recently between the 3 tier representatives (brewers, taverns, distributors), along with Rep. Hagan, Rep. Cook and Sen. Tropila (D-Great Falls with tavern connections). As in prior meetings, this one ended with both the brewer (Brian Smith, Blackfoot River Brewing, Helena) and the distributor (Brian Clark, Fun Beverage, Kalispell) counseling the legislators and the tavern owner (Steve Morris, Jorgenson’s, Helena) that anything proposed in the next 20 days would do nothing to create desired effects for the group as a whole. One does wonder; however, that the end result of such a bill must be so that attractive to the Montana Taverns Association that they will stop at nothing to introduce a bill that almost all legislators you speak with say, “give it a rest, take it out of the building, and bring back a comprehensive and agreed to solution next session.”
Think about it. If this were to pass, the brewing industry as we know it would be stopped in its tracks ($50 million in output, 450 jobs, double digit growth in production and jobs, etc., etc.), and taverns could start building breweries across the state. They have the retail licenses to sell ad nauseam, and they could hire brewers, buy breweries, and make it a part of their motif.
We are told a bill is on its way following transmittal (LC1429 is the placeholder), so please stay tuned so that you can express your feelings to the House Business and Labor Committee at the right time. As we see a bill and have a hearing date, we will try to tell you which committee members have indicated their support and which ones are important to reach out to.
Posted On February 11, 2013
On February 5th, there was a meeting held among members of the alcoholic beverage industry in Montana that I am told has never happened before. The tavern guys, the brewery guys, and the distributor guys (well one gal), sat at a table for the first time ever. Wow! Everyone thought it was a great start to something new, felt that the dialogue was real and respectful, and that everyone’s participation was genuine. There was no fist pounding, no accusations, but a great deal of dialogue and sensibility to each party’s positions.
There were three representatives from each of the Montana Brewers Association, Montana Tavern Association, and the Montana Beer & Wine Wholesalers Association. A good, diverse group representing the majority of adult beverage related industries in Montana.
At the end of the meeting, the majority of the parties were counseling an approach that would entail continuation of these meetings on a monthly basis. All parties agreed on an approach that would develop the details of an agreement on how the brewing industry, tavern industry, and distributors should proceed, with the goal of defining legislation for the 2015 Legislature. Most felt that there has not been the proper dialogue as of yet, and trying anything in the 2013 Legislature would create more issues, not fewer.
Nonetheless, the Montana Tavern Association still intends to sponsor legislation during this session to attack Montana’s small breweries. They are apparently so bent on the position that our businesses are running amok, not paying for licenses, and skirting the system, that they feel that they must carry a bill to limit our abilities, in return for allowing a brewer to purchase a retail license. The entire room was counseling caution and the continuation of these meetings, but two of the three representatives of the MTA indicated that their board already made up its mind to further restrict small breweries. So much for detente, I guess.
So what we are told is that a bill would be coming, in spite of our efforts, that would place some further restrictions on brewers. We heard about 40% of sales can only be on premise, but we don’t know for sure; haven’t seen any language. We do know, we must resist any changes that bring further restrictions to brewers.
Representative Roger Hagan (Great Falls) is apparently introducing this bill. Tell Rep. Hagen that this bill will stop entry into this growing market, affect the majority of brewers in the state of Montana today, shut down several breweries, and stop ANY new businesses for starting. This in an anti-jobs, anti-economic development bill, and they should tell the MTA to come to their senses and get back to the table.
Representative Rodger Hagan: [email protected]
Please also contact the members of the House Business and Labor Committee, below. Tell them you are against any bills that place further restrictions on brewers than they already have!
| Tom Berry | [email protected] |
| Carlie Boland | [email protected] |
| Christy Clark | [email protected] |
| Amanda Curtis | [email protected] |
| Steve Fitzpatrick | [email protected] |
| Edward Greef | [email protected] |
| Roger A Hagan | [email protected] |
| Chuck Hunter | [email protected] |
| Mike Lang | [email protected] |
| Jonathan McNive | [email protected] |
| David Moore | [email protected] |
| Daniel Salomon | [email protected] |
| Reilly Neill | [email protected] |
| Rae Peppers | [email protected] |
| Gordon Pierson | [email protected] |
| Scott Reichner | [email protected] |
| Cary Smith | [email protected] |
| Carolyn Squires | [email protected] |
| Tom Steenberg | [email protected] |
| Jeffrey W Welborn | [email protected] |