Legislative Update: New Satellite Location Laws in Michigan; South Carolina Brewers Seek Reform

Michigan Governor Signs Law Enacting Requirements for Satellite Brewing Locations

Outgoing Michigan Gov. Rick Snyder signed a package of bills last month limiting how licensed microbreweries expand with additional locations.

The new law established production and equipment requirements for satellite facilities, and created a tasting room license for the state’s alcoholic beverage makers.

Michigan didn’t previously have minimum production requirements or equipment mandates for secondary locations. However, the state will now require licensed microbreweries to either install at least a 3-barrel brewhouse, or produce at least 50 percent of the beer sold on-site at the secondary location. The bills were backed by trade groups representing the state’s wholesalers, winemakers and restaurants, but the Michigan Brewers Guild also supported the legislation.

“The Guild’s basic position is that a brewery opening a tied house — a retail operation without a brewery with exclusive focus to them — has not proven to be a good model for small craft brewers,” Michigan Brewers Guild executive director Scott Graham told Brewbound.

Graham added that the new laws give “some definition” to secondary locations licensed as microbreweries that are supposed to be producing beer in a “bonafide way.”

The new law is aimed at preventing beer manufacturers from opening up satellite bars with little or no production occurring on-site, while still allowing nano-breweries and wineries to produce small amounts of beer without running afoul of the law.

Similar laws are already in place in California, where brewpubs with a Type 75 license are required to produce at least 200 barrels of beer annually and have at least a 7-barrel brewing system. In late November, the California ABC officials investigated 70 companies with Type 75 licenses and found that nearly 50 were in violation of the law.

South Carolina Brewers Attempt Legislative Reform

South Carolina’s craft brewers are seeking a number of legislative changes in the New Year, including lowering the state’s beer tax, bypassing so-called “come-to-rest laws,” eliminating limits on at-the-brewer to-go sales and permitting standalone taprooms without on-site brewing, according to The Charleston Post and Courier.

State Sen. Sean Bennett, a Republican from Summerville, is sponsoring the reform effort. According to The Post and Courier, specific provisions include a decrease in the state’s beer tax from 77 cents per gallon to 29 cents per gallon; the ability to transfer beer between locations without going through a wholesaler; the ability to open standalone tasting rooms without on-site brewing; and the removal of a 288 oz. limit on the amount of beer consumers can purchase from a brewery to-go.

Although the legislation is expected to receive opposition from the South Carolina Beer Wholesalers Association, The Post and Courier reported that the South Carolina Brewers Guild has met with distributors to iron out differences.

Full-Strength Beer Now Available in Colorado

As the calendar flipped to January 1, Colorado grocery stores were finally allowed to sell full-strength beer.

The sale of full-strength beer — products with more than 3.2 percent alcohol by weight (ABW) — in grocery, convenience and big box stores had been barred since the repeal of Prohibition in 1933.

Colorado lawmakers passed legislation — S.B. 197 — in 2016 to allow the sale of full-strength beer outside of liquor stores.

Safeway spokeswoman Kris Staaf told the Colorado Springs Gazette that the grocery chain plans to be “hyper-local” with the offerings at its 100 stores in the state.

“We see a real opportunity with Colorado craft,” she told the outlet. “It’s something that our customers have been asking for for a long time. And so to be able to work with large brewers, small brewers and really everything in between and to bring that variety and selection of Colorado craft to the customer, it’s a big deal.”With Kansas soon to drop its restrictions on beer above 3.2 percent ABW, Minnesota and Utah will be the final states to prohibit the sale of full-strength beer at large chain retailers.

To celebrate the change, Anheuser-Busch sent the Budweiser Clydesdales to the Colorado state Capitol building on Monday, the Denver Post reported.

Glassware Giveaway Amendment Excluded from Ohio Bill

An amendment that would have allowed beer companies to give glassware to Ohio’s on-premise retailers was recently stripped out of a bill aimed at revising the state’s liquor control laws.

The Ohio Craft Brewers Association successfully lobbied against the provision in House Bill 522 — which was supported by Anheuser-Busch InBev — prior to a vote in the Senate Agriculture Committee.

Had the amendment been attached, the amount of branded glassware a manufacturing brewery could provide to a retailer free of charge would have doubled from two to four cases a year. The total number of cases a retailer could have accepted annually would have been capped at seven.

The guild called the amendment “a direct assault” by A-B on Ohio’s craft beer industry and urged its members to lobby their lawmakers. The guild also argued the giveaway would have allowed larger brewers such as A-B to “use their considerable financial resources to unduly influence retailers in their selection of which beers to carry.”

“Craft brewers would see limited access to store shelves and taps at bars and restaurants, ultimately decreasing your craft beer options in the marketplace,” the guild argued.

A-B’s attempts to pass similar legislation has been hit-or-miss. In California, Gov. Jerry Brown vetoed a bill last year that would have allowed on-premise retailers to accept up to 10 cases of free glassware per year from beer manufacturers.

In Florida, A-B successfully lobbied for a glassware bill that allowed wholesalers to give on-premise retailers up to 10 cases of branded glassware a year. That law went into effect October 1.

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