Thursday, February 23, 2012

Baby steps in local beer laws

Posted By on Thu, Feb 23, 2012 at 1:46 PM

House Bill 472 was passed by the Georgia House of Representatives Tues., by a margin of 152-6. According to the First Reader Summary, the bill is meant to:

amend Code Section 3-5-36 of the Official Code of Georgia Annotated, relating to the brewpub exception to the three-tier distribution system, so as to amend the terms and conditions that exist for owners and operators of brewpubs; to increase the maximum quantity of barrels of beer that may be manufactured and sold; to remove that requirement that beer be sold solely in draft form; to provide for related matters; to repeal conflicting laws; and for other purposes.


Say what?

Previously, a brewpub in the State of Ga. could only manufacture 5,000 barrels for sale on premises, up to 500 of which could be sold to a licensed wholesaler for distribution to retailers.

We caught up with one of the bill's sponsors, Rep. Richard Smith, who explained that the previous law inhibited a brewpub's desire to manufacture enough beer to both sell in their restaurants and to wholesalers for retail distribution. In other words, both amounts were too small to make economic sense to small business owners.

The adoption of HB 472 would mean that brewpubs could legally manufacture up to 10,000 barrels per year for sale on the premises, and sell up to 5,000 barrels to a wholesaler in keg form.

Section 2, lines 21-25 of HB 472 read:

21 Said title is further amended by revising paragraph (2) of Code Section 3-5-36, relating to
22 the brewpub exception to the three-tier distribution system, as follows:
23 "(2) A brewpub license authorizes the holder of such license to:
24 (A) Manufacture on the licensed premises not more than 5,000 10,000 barrels of beer
25 in a calendar year solely for retail sale on the premises and solely in draft form ;

Followed by lines 34-36:

34 (C) Notwithstanding any other provision of this paragraph, sell up to a maximum of
35 500 5,000 barrels annually of such beer to licensed wholesale dealers for distribution 36 to retailers and retail consumption dealers;"

It's a bit confusing because the words "and solely in draft form" are crossed out, which seem to imply that other forms, namely bottles or growlers, for self-distribution might be permitted under HB 472. However, Rep. Smith made it clear that the bill in no way would allow brewpubs to bottle and sell their own beer. HB 472 is only meant to increase the amount of beer a brewpub can manufacture and sell through a licensed distributor (referred to as wholesalers in the literature).

According to Rep. Smith, the bill, which must be approved by the Senate, and signed into law by the Governor, would create economic growth as brewpubs gain the incentive to hire more employees to manufacture more beer.

However, it seems that the bill's supporters are only interested in economic growth as long as the state's current three-tier distribution system continues to reign supreme. When it was suggested that the economic growth of local breweries could be maximized by allowing brewpubs and local microbreweries to bypass the three-tier system by bottling their own beer and self-distributing on their premises, Rep. Smith's tone went from expository to resistive in two seconds flat.

"In no way will this affect the three-tier system" Smith said, "not ever as far as I'm concerned. This has absolutely nothing to do with the three-tiers."

I guess we struck a nerve with that one.

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