Posted By: Leah
While learning about the ever expanding world of Craft Beer, I’ve found it odd that a state the size of Texas has very few craft breweries per capita compared to other states. I feel that this is very likely caused by the restrictive brewing laws that currently exist in here.
There are three types of permits that are currently offered for brewing in Texas, a Brewer‘s Permit, a Manufacturer’s License, or a Brewpub Permit. A Brewer’s Permit must be obtained to produce “Ale and Malt Liquor” (above 4%ABW/5%ABV) and a Manufacturer’s License is required to produce “Beer” (below 4%ABW/5%ABV), but they are are similar in distribution regulations. If holding either (or both, as is allowed) of these, you may not sell directly to a consumer in any fashion, and you must use a distributor through the three tier system, who then sells to bars and wholesalers, who in turn sell to consumers. Texas brewers holding this permit are unable to sell any of their beers directly to consumers at their breweries or at any other venue. In contrast, a Brewpub Permit enables a brewer to sell on the premises of their brewery to consumers for consumption there or to take with them (in sealed containers) as long as they do not produce more than 5,000 bbls per year. These brewpubs are prohibited from selling through the distributors. Thus they are limited to this 5,000 bbl per year maximum production. If a brewpub were to wish to expand their brewery, they would have to discontinue selling to the community that made them who they have become and obtain a Brewer’s Permit to distribute through the three tier system.
In addition, Texas does not prohibit the distribution of beers from brewpubs located in other states as long as they have acquired a “Non-Resident Brewer’s Permit and/or Manufacturing Licenses” and the labeling of their products meets the Texas Alcoholic Beverage Code (TABC) requirements. Again, this requires that any beverage above 5% ABV must be labeled an “Ale,” regardless of the method and ingredients (yeast) used for brewing. Texas Brewpubs are not eligible for this option as they are residents. As you can imagine, this is quite the dilemna for anyone who wishes to set up or expand a brewery in Texas. Not only do you need to expect to compete with the majors already established in the public sector, but you then must also compete with others of the same size from other states who have more rights than you do yourself, in your own state.
To combat this inefficiency of structure, San Antonio Representative Mike Villarreal has introduced HB 660 for consideration during this legislative session. This bill has been written in part by San Antonio Businessman and Freetail Brewing Company owner, Scott Metzger, and his peers in the industry. HB 660 supports both of the constraints faced by Texas small Craft Breweries today. It proposes that anyone with a Brewpub Permit may sell consumers on site up to 5,000 bbls per year, as is currently available, but also allows them to self distribute to retailers as long as their production does not exceed 10,000 bbls per year. In addition, anyone who holds a Brewpub Permit may distribute through the normal distribution channels of the three tier system until they reach 75,000 bbls per year, at which time they will need to file for a Brewer’s Permit.
House Bill 660 proposes to allow small Texas Brewpubs to distribute to qualified persons outside of Texas to proper if they desire. This means more great Texas beer available to all craft beer lovers throughout the United States. This bill will allow these brewpubs to compete with those of the same scale in other states that they cannot currently compete with even in their home state.
Full text of of HB 660.
Photo courtesy of The Dallas Observer
HB 602 presented by Jessica Farrar (D-Houston) is another bill being presented to the house this session regarding Texas Brewing laws. I do not believe this bill is not as comprehensive as HB 660, and feel it will mostly help the large breweries currently existing in Texas, including majors AB-InBev, MillerCoors, and Spoetzel (Shiner), and established micros St Arnold Brewing, Real Ale, and Rahr. HB602 would allow these “distribution only” breweries to continue to provide tours while charging (potentially increased) admission while still offering free samples as they currently do, but they would also be allowed to send each tour participant home with up to 48 twelve ounce bottles after their tour free of charge.
Click here to read the full text on HB602.
It is my opinion that HB660 is more comprehensive because it will allow any Brewery less than 75,000 bbls per year (including the established micros above) to obtain a Brewpub Permit and then sell up to 5,000 bbls per year at their brewery, whether it be during tours or by setting up an actual pub, along with allowing existing small brewpubs to expand their distribution options and audiences.
Scott Metzger has been blogging each day since the Texas Congressional session has begun and HB660 was introduced. You can follow his daily updates at his site Brewed and Never Battered.
If you are interested in showing your support for Texas Craft Breweries, please send letters to the Texas House Representatives to show them that this bill will be good for Texas business and for Craft Beer lovers in every state who do not want their options limited by antiquated laws and lobbying of the majors. You can reference Metzger’s sample letter for Texas residents and info for contacting representatives. If you are not a resident of Texas, but feel that the world of Craft Beer would be bettered by the passing of HB660, please write to these representatives and ask them to support it. I’ve amended the sample letter on Brewed and Never Battered (shown below) to give example for out of state supporters. As we saw with the overwhelming support our web community garnered for Cigar City Brewing against the city council, your efforts do make a difference.
Thank you for taking the time to read this and for your support of this cause that I firmly believe in.
Sample Letter:
Representative [Representative's Full Name]
[Representative's Address]Dear Representative [Representative's Last Name],
[First Paragraph, briefly introduce yourself. Give your name and the name of your organization if it is relevant to the cause. Mention if you are personally a constituent of the Representative or what your connection to him/her is].
I am writing you today in regards to H.B. 660 relating to the sale of malt liquor, ale, and beer by the holder of a brewpub license, filed by Representative Mike Villarreal of San Antonio. This bill would allow Texas brewpubs the right to make their products available for sale off-premise, a right that out-of-state brewpubs already enjoy within the borders of Texas.
This bill would help Texas brewpubs grow and remain competitive in a rapidly growing industry and provide benefit to your state by, helping Texas wholesale permit and distributors license holders by expanding their product portfolios, helping retailers by allowing them to highlight product variety including local products, give Texas consumers greater access to the products they want, and help the state by creating new jobs and increasing the tax base.
The craft brewing industry is beginning to garner national attention, and Texas laws must not prevent their own small businesses from flourishing – especially with increased competition from out of state breweries distributing within Texas, and growing interest from out of state consumers. It could even increase tourism to Texas as craft beer enthusiasts travel to visit the pub or brewery where their favorite beverage is made.
I hope you will Vote Yes for HB 660 should you be given the opportunity either on a committee or on the house floor.
Thank you for your time and service to this great state.
Sincerely,
[Your Signature if Mailing or Faxing]
[Your Name]
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HB 660 = Good