Massachusetts Treasurer’s Office Readies Task Force to Examine Alcohol Laws

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In July, Massachusetts Treasurer Deborah Goldberg promised to assemble a task force that would examine the state’s decades-old liquor laws. Three months later, additional details have emerged on what that group will look like, and what it will be asked to accomplish.

“According to the treasurer’s office, it will be an autonomous body, free of all control, including the long reach of Bill Kelley and the wholesalers and the brewers,” John Connell, a Boston-based alcohol attorney who represents clients across all three tiers of the industry, told a room of more than 150 beer industry professionals attending last night’s Brew Talks meetup at Jack’s Abby.

Connell, who joined a panel discussion that included Kelley, the president of the Beer Distributors of Massachusetts, and Rob Burns, co-founder of Night Shift Brewing and the president of the Massachusetts Brewers Guild, said members of the proposed task force should be named before the end of the year.

According to Connell, the task force will be asked to take a “top to bottom look at the liquor control laws in Massachusetts,” including the contentious issue of franchise laws.

For several years, Massachusetts brewers and distributors have been at odds over reform proposals that would significantly alter the state’s franchise laws — strict rules that contractually bind manufacturers to their wholesaler partners.

“It is the seminal issue that divides this aspect of the industry,” Connell said.

The proposed task force, Connell said, will be charged with examining not only franchise laws, but every aspect of Chapter 138 (Alcoholic Liquors) of the Massachusetts General Laws. It will also be asked to review how the state’s Alcoholic Beverage Control Commission (ABCC) operates and interprets the law, he said.

“They are going to research manufacturers; they are going to research the ABCC; they are going to research filing fees; they are going to research every issue that we now know in liquor licensing,” Connell said.

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John Connell speaks at Brew Talks New England in October, 2016

Although specific individuals have not been named, the task force is expected to be made up of a volunteer group of “five to seven people of learned backgrounds, perhaps retired lawyers or retired judges or people in the industry,” he added.

The group is expected to convene before the end of 2016 and meet for as long as one year. The task force will then make recommendations to the Treasurer’s Office, which will then push those proposed changes to the Legislature, Connell said.

One specific area the task force is expected to scrutinize are brewery licenses, Connell said. Currently, the ABCC offers three types of brewery permits: farmer-brewery licenses, which include self-distribution and retail privileges, are currently the most popular type issued in Massachusetts. As of October 4, 91 of the 122 active brewing permits were farmer-brewery licenses, according to state records.

“The farmer-brewer [permit] really is in a golden age,” Connell said. “It’s $22 for a farmer-brewer license. Probably the cheapest fee that you can pay for anything in Massachusetts, and for that fee, you can self-distribute 50,000 gallons of beer a year, which is approximately 1,600 barrels of beer.”

But some Massachusetts brewers believe language in Chapter 138 that caps brewery wholesale privileges at 50,000 gallons per year is inaccurate. They point to other areas of the alcohol code where the annual fee for farmer-brewers is determined by the number of barrels — not gallons — those entities are making each year.

“I think what the Guild wants to see is just a clearer understanding of the rules,” Burns said during the discussion. “We don’t quite have that. We have all figured out how to navigate the system, but it is kind of confusing.”

Burns admitted that the permitting process is “imperfect,” but he added that the Massachusetts Brewers Guild hasn’t taken an official position on clearly defining how much beer a farmer-brewer should be allowed to self-distribute.

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Rob Burns speaks at Brew Talks New England in October, 2016

“I don’t know what the right number is,” he said. “I know there are states that have 25,000, 50,000 barrels as the cap. … We haven’t come to that conclusion.”

Connell, who also cited the ability for taproom-minded farmer-breweries to avoid paying the expensive liquor licensing fees commonly associated with owning a bar or restaurant, believes craft companies operating with farmer-brewery permits should be concerned about what the task will discover when it examines brewery licensing.

“I would say the farmer-brewers right now, under a long line of law, have it very well,” he said. “And I think the farmer-brewers should be out there and trying to protect the status quo.”

Burns said members of the Massachusetts Brewers Guild have discussed the idea of pushing for an “a la carte menu” of permitting in 2017.

“If you want to pour draft beer, you do this,” he said. “If you want to deliver your own beer — self-distribute — you can get this additional permit. I think that would make it very clear of the levels of what you can do and how you want to own your business and operate.”

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John Connell (left) and Bill Kelley at Brew Talks New England in October, 2016

Even though an “overhaul” of Chapter 138 remains at least 14 months away, Burns said the Massachusetts Brewers Guild would once again prioritize franchise reform in 2017.

If the relationship between a distributor and a brewery isn’t working, he argued, “there should be an exit.”

When asked questions about licensing, self-distribution and other reform initiatives, Kelley — who does not own or work for a beer distribution company but serves as a paid representative for the state’s wholesalers — reiterated numerous times that his constituency had not taken an official position on those issues.

“We’re not afraid to have a conversation with anyone,” Kelley said. “We don’t build walls. The beer distributors build brands.”

Asked why representatives from the distributorships themselves were unavailable to take part in the panel discussion, Kelley responded: “I am their representative; I am the distributors personified.”

“We’re on the same team, but, for some reason, we can’t come to an agreement on the littlest thing,” Burns said. “The sky is not going to fall if we have franchise law reform. We’re going to sell more beer.”

Shawn Collins, director of policy and legislative affairs for the Massachusetts Treasurer’s Office, was unavailable for comment at press time.