Legislative Update: Pennsylvania Brewers On Verge of Sales Tax Compromise; Connecticut Governor Signs Alcohol Reforms

Pennsylvania Brewers Say Compromise Reached on Taproom Sales Tax

Pennsylvania craft brewers believe they’re close to finalizing a deal with lawmakers and interest groups representing on- and off-premise retailers to lower an impending state sales tax on beer sold in taprooms, tasting rooms and brewpubs.

In an email to members, the Brewers of Pennsylvania said it is close to locking in “an agreement to be assessed a sales tax at 25% of the retail price of a pint.”

The news is significant for the state’s craft brewers as the Pennsylvania Department of Revenue (DOR) is scheduled to begin collecting a 6 percent sales tax for every dollar of beer sold directly to consumers via taprooms, tasting rooms and brewpubs on July 1. That tax is in addition to the $2.48 per barrel state excise tax that Pennsylvania beer companies already pay.

However, after about six months of negotiations, the Brewers of PA believes it has an agreement for a 1.5 percent sales tax on direct-to-consumer sales.

“At this rate, a $6 pint of beer sold at a PA brewpub or taproom would be assessed a $0.09 cent sales tax,” the guild explained. “That same tax as originally proposed by the Department of Revenue a year ago would have been $0.36 cents per pint.”

A bill to institute the change is expected to be introduced in the Pennsylvania General Assembly in the coming weeks, the guild said.

Connecticut Governor Signs Alcohol Reforms

Connecticut Gov. Ned Lamont today signed Senate Bill 647 into law, which increases the amount of beer a craft brewery can sell daily to consumers for off-premise consumption from nine liters (one case of 12 oz. cans) to nine gallons (four cases).

Other reforms in the law include:

  • Reducing the number of various manufacturing permits from nine to three, including cutting down the number of beer manufacturer permits from four to one.
  • Permitting wineries, cideries and distilleries to obtain to sell craft beer made in the state.
  • Allowing alcohol makers to hold multiple manufacturing permits in order to produce other types of alcoholic beverages at a single facility.

In a press release, Connecticut Brewers Guild executive director Phil Pappas called the legislation “the most significant updates to craft beer and alcohol laws since the Prohibition-era.”

However, the guild’s effort to provide affordable health care to brewery employees (H.B. 7260) fell short this session. In an email to the bill’s 52 bipartisan co-sponsors yesterday, Pappas wrote that the measure won’t be called for a vote due to the governor’s administration disliking the bill.

“It’s regrettable — especially since craft breweries are a high-growth industry in our state — and our numerous attempts to find common ground with the administration, which includes offering compromise multiple times on language, proved to be unsuccessful,” Pappas explained.

Maine Craft Brewers, Wholesalers Push for Broader Self-Distribution Rights

Maine craft brewers and wholesalers are supporting a bill that would expand the amount of beer small producers can self-distribute, according to the Press Herald.

Under Maine’s existing law, beer makers producing more than 1,600 barrels a year are required to sign contracts with wholesalers. However, L.D. 1761 would increase the self-distribution cap to 30,000 barrels annually.

The measure would also reform the state’s franchise laws by allowing small brewers making fewer than 30,000 barrels to exit their contracts with wholesalers as long as their brands account for less than three percent of the distributor’s sales. Breweries would also be required to provide 90 days’ notice and pay “fair market value.”

The Committee on Veterans and Legal Affairs voted the bill “ought to pass” on Tuesday evening. The measure still needs the approval of both chambers and the governor.

Illinois Gov. Proposes Increase to Beer Tax

Illinois Gov. J.B. Pritzker has proposed a 4.6 cent per gallon increase to the state’s beer tax that, coupled with increased taxes on wine and spirits, could generate $120 million annually, according to NPR.

The state currently taxes beer and cider at 23.1 cents per gallon, and the increase would push the tax to 27.7 centers per gallon, the outlet reported. The increase could cost beer companies around $70 million annually.

North Carolina Governor Signs Self-Distribution, Franchise Reform Bill

North Carolina Gov. Roy Cooper signed the Craft Beer Distribution and Modernization Act into law on May 30.

The new law creates an additional brewer classification for “mid-sized independent breweries” selling fewer than 100,000 barrels annually. North Carolina craft breweries producing more than 25,000 barrels a year will no longer be required to sign with a wholesaler. Those companies will be able to self-distribute up to 50,000 barrels. Although beer companies exceeding the 50,000-barrel threshold, they will retain self-distribution rights for the first 50,000 barrels.

The new law sets guidelines for terminating wholesaler contracts. Read Brewbound’s previous coverage for details.

Texas Legalizes Home Delivery of Beer and Wine

Texas bars, restaurants and other establishments holding a “mixed beverage permit” will be able to deliver beer and wine starting September 1, according to The Blaze. Texas Gov. Greg Abbott signed the law on June 3 that enables legal-drinking-age consumers to add beer and wine — in the original sealed containers — to delivery orders.

Abbott has yet to consider the bill legalizing beer-to-go sales at the state’s manufacturing breweries, which passed through the House and Senate prior to the Legislature adjourning. The governor has until June 16 to sign, veto or let the bill to become law without his signature.

Georgia Franchise Reform Bill Introduced on Final Day of Session

The Georgia legislative session wrapped up on April 2, but a bill aimed at instituting several reforms the state’s franchise laws (H.B. 738) was introduced prior to adjournment.

The legislation, sponsored by Rep. Chuck Martin, would let small beer companies that account for less than 15 percent of a distributor’s total sales terminate contracts by giving 30 days notice, providing the name of a successor wholesaler and paying fair market value. The measure would also permit beer companies to self-distribute up to 25,000 barrels annually. However, it would bar beer companies from extending credit to wholesalers.

Georgia’s General Assembly will convene next on January 13, 2020. In the meantime, the Georgia Craft Brewers Guild, and its members, plan to work on gaining support for the proposed legislation.

Alabama to Give ‘Wet Counties’ the Choice on Sunday Sales

A new law will give the 42 so-called “wet counties” in Alabama the choice to allow Sunday sales of alcoholic beverages, according to the Alabama Daily News. County commissions and municipalities will be able to permit and regulate Sunday sales through resolutions or referendums without the General Assembly’s approval.

Iowa Beer, Wine, Spirits Producers Can Make Other Alcohol Types

As of July 1, Iowa beer, wine and spirits makers can begin producing other types of alcoholic beverages, according to Radio Iowa. Iowa Gov. Kim Reynolds signed the law on May 21.

“This is removing barriers so our entrepreneurs and our small business owners can continue to not only invest in their company, but invest in Iowans and their communities and that is certainly what’s happening here with Toppling Goliath,” she told the outlet during a ceremony at the Decorah-based craft brewery.

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