Texas craft brewers’ efforts to legalize beer-to-go sales is closer to passage than ever before.
On Wednesday, Texas Senators unanimously passed sweeping legislation to maintain operations of the state’s alcohol regulatory body, the Texas Alcoholic Beverage Commission (TABC), along with several changes to the state’s alcoholic beverage code, including an amendment that would permit a majority of the state’s manufacturing breweries to sell their offerings for off-premise consumption.
The measure now returns to the House of Representatives for concurrence. Those familiar with the process expect the measure to easily pass through the chamber and then advance to Gov. Greg Abbott’s desk.
Speaking to Brewbound, Austin Beerworks co-founder Adam DeBower said he’s confident of the legislation’s chances of becoming law.
“Five weeks ago I would have told you that we had a 1 percent chance, and now I feel like we have a 1 percent chance of not doing it,” he said. “We’re on the goal line, and we’ve got a kick-ass offensive line, and we’ve got a running back who’s already had a 200-yard game. So let’s give it to him one more time.”
Texas is the only state in the country that does not allow beer-to-go sales at manufacturing breweries, but the state does allow brewpubs, wineries and distilleries with similar permits to sell their products for off-premise consumption.
If passed, the bill would allow consumers to purchase up to one case of beer (288 fl. oz.) per day from the state’s manufacturing breweries, beginning September 1, 2019. Those sales would count against a5,000-barrel cap that is already in place for on-premise taproom sales at those breweries.
The advancement of the beer-to-go sales bill comes a week after the Wholesale Beer Distributors of Texas (WBDT), a powerful lobbying group, agreed to back the measure. In February, the Texas Craft Brewers Guild and Texas’ other wholesaler group, the Beer Alliance of Texas, reached a “stakeholder agreement” on to-go sales.
The proposed legislation would also mark the beginning of a 12-year moratorium between the guild and the wholesaler groups that would preclude those parties from seeking changes to barrelage caps or limits on the amount of breweries can sell to-go.
Speaking to Brewbound, Texas Craft Brewers Guild executive director Charles Vallhonrat said the guild’s members are excited about the “overall package of rights.”
“We believe that the 12-year agreement we signed with the distributors will help create stability for our members and their business plans so they can actually develop their plans with a clear vision of how the market will work for the next 12 years,” he added.
Although the legislation covers the majority of Texas’ 105 manufacturing breweries, language in the amendment was changed last week to exclude larger beer manufacturers, such as Anheuser-Busch, MillerCoors and Gambrinus (Shiner), as well as craft breweries acquired by bigger beer makers, including Four Corners (Constellation Brands), Revolver (MillerCoors), Karbach (A-B), Independence Brewing (Lagunitas) and Deep Ellum (Canarchy).
According to Vallhonrat, those changes were made outside of the guild’s “stakeholder agreement” with the two wholesaler groups and presented by legislative leaders. The framework for those exclusions was taken from a law enacted in 2017 that requires breweries making more than 225,000 combined barrels annually across multiple operations in the U.S. to repurchase their own product from a wholesaler in order to continue selling beer for on-premise consumption in their taprooms.
“It’s not where we want to be at the end of the day, but for the broader, overall sunset bill, there are benefits all around in that legislation,” Vallhonrat said. “They won’t unfortunately be able to take part in the beer-to-go sales, but they’ll benefit from the beer-ale harmonization, they’ll certainly benefit from the label approval improvements. Overall, they don’t get to participate in the full victory, but it’s still a major victory.”
The effort to reform Texas’s direct-sales laws date back to 2015 when Dallas-based Deep Ellum Brewing sued the TABC, arguing that manufacturing breweries were at a competitive disadvantage. Deep Ellum Brewing founder John Reardon called the Senate’s passage of the beer-to-go amendment “bittersweet.”
Reardon, who praised the work of the guild, Debower, the Craft PAC political action committee and lobbying firm Crossoak Group, said he doesn’t believe there was any way to stop the inclusion of the exclusionary language.
“I’m incredibly happy for the industry, but on the whole, a black cloud has been left by ambiguous language, exclusions and carve outs,” Reardon told Brewbound. “Here we are again at the witching hour of another session and just a couple of breweries get left out of massive reform to the Texas Alcoholic Beverage Code.
“If anyone was going to get excluded, I’m probably the right guy for the job, because I’m not afraid of telling everyone what I think is wrong,” he added. “I’ll fight this as necessary.”
Reardon said his interpretation of the legislation is that Deep Ellum — which sold to Fireman Capital-backed Canarchy Craft Brewery Collective last June — would not be excluded from to-go-sales privileges because the company’s Texas brewing locations produced just 55,000 barrels of beer in 2018, falling below the 225,000-barrel cap. The Canarchy brewery consortium — whose other brands include Oskar Blues, Cigar City, Perrin Brewing, Three Weavers, and Utah Brewers Cooperative (Wasatch and Squatters) — produced 421,222 barrels last year.
“In my opinion, once the state starts asking about production over state lines, they become the TTB [Alcohol and Tobacco Tax and Trade Bureau], and they don’t have that right,” he said.
Reardon said he’s considering a constitutional challenge should the state exclude Deep Ellum from off-premise sales privileges. Nevertheless, Reardon said he plans to sell beer-to-go on September 1, if the measure passes.
“If they [the TABC] feel different, they can meet me at my taproom, and we can start the fight from there,” he said. “But they’ve got to bring enforcement, and they have to tell me why I’m wrong, and at some point, I’ll get to argue that in front of a judge.”