Details of the substitute

Perhaps the biggest thing we conceded, in the eyes of the distributors, is maintaining the separation between brewpubs and production breweries. Alcohol laws are very specific to individual states, and in Alabama the brewpub license is a special class of license which allows a manufacturer of beer to sell directly to the public. It is important to the wholesalers that the license retain its “special” status by being limited.

For us as consumers, it is important that the brewpub license be more available and that production breweries (like Good People and Straight to Ale) be able to have tasting rooms on their premise.

With that in mind, here is an overview of the compromise substitute we worked out, with explanation. The explanation is based on discussions between the Free the Hops, the ABC, the distributors, our lobbyist, our Senate sponsor, and an attorney who specializes in Alabama’s alcohol code.

Production Breweries

  • Allowed to have tastings and samplings without ABC restriction on time or sample size

This will allow for production breweries to have tours and tasting rooms without being compromised by arbitrary restrictions from the ABC. All of the production breweries seem very happy with this side of the bill – they don’t even have to buy an additional license.

Brewpubs

  • Must be located either in a historic building,  in a registered historic district, or in any economically distressed area as defined by city council or county commission.
  • 10,000 barrel production limit
  • May sell to wholesalers for distribution outside of brewpub
  • Must be in a county that produced beer before 1918
  • Requires restaurant or food operations – no kitchen or minimum seating requirement

This is where we conceded the most to keep the brewpub license “special.” Instead of removing all the seemingly ridiculous restrictions, we’re only tweaking them to be more expansive. It’s less than ideal, but we believe it will accomplish the goal of providing an environment more conducive for brewpubs to open as well as our goal of passing a bill which allows for real brewery reform in Alabama.

The main change is adding “economically distressed” to the list of allowed premises. The city council will be able to deem an area economically distressed if they want to approve a brewpub location. It was purposely drafted that way to make it very subjective but still preserve the class distinction. The term appears to have no consequences other than allowing a brewpub to be located there and was favored by our sponsor, Senator Holtzclaw, who is a former city councilman. Does an area with an empty building – a building that would be perfect for a brewpub – constitute an economically distressed area? That’s up to a city council.

The silly county restriction is still in there. Not happy about it, but we’re being practical and know of no business plan which wants to open in a county not covered by this aspect of the law.

We were also able to remove the 80 seat restaurant requirement. In fact, the substitute reads “The brewpub must contain and operate a restaurant or otherwise provide food for consumption on the premises.”

Summary

Again, this is not everything we wanted. We will likely be criticized by our supporters for not sticking to our guns and engaging in a slug match to get on the calendar and get final passage. But this is the real world. We can almost guarantee that this substitute will pass in the few legislative days left this year. After  the homebrew bill failed last week, it is clear that even common-sense beer legislation will have a tough fight. This substitute will reduce our enemies as we move toward final passage with this legislature.

There are real businesses out there that can grow with the changes this bill provides. There are real business plans out there that can begin only if the changes in this substitute happen. We fought for the provisions in this substitute that they need. We got them all.

This is a substantive first step. If we later determine that other restrictions need to be removed from the brewpub license or that new provisions need to be provided for the production breweries, either Free the Hops, the Alabama Brewers’ Guild, or another entity may address those in the future.

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33 Comments

  1. OldJoe
    Posted May 3, 2011 at 11:44 am | Permalink

    The location restrictions render this Bill a failure. I fear that there has become a too close relationship between the advocates of change and the Distributor Cartel.

    • Posted May 3, 2011 at 11:51 am | Permalink

      While I can’t speak for everyone involved, I can assure you that the “Distributor Cartel” is not very fond of me or Free the Hops.

    • Posted May 3, 2011 at 11:54 am | Permalink

      Let me ask this. If the bill only dealt with production breweries – allowing them to have a tap room – would you consider it a success?

      I’m not 100% thrilled with the brewpub part of this bill. But I think it will allow all planned brewpubs to open. If it is determined that it is still too restrictive, we or the ABG will address it next year.

  2. Joe Donahue
    Posted May 3, 2011 at 11:57 am | Permalink

    “The silly county restriction is still in there. Not happy about it, but we’re being practical and know of no business plan which wants to open in a county not covered by this aspect of the law.”

    Wow…ummm…I’m completely blindsided by this. I still support Free the Hops and wish the best of luck for you guys, but I know people know that I have plans of opening a brewpub in Jacksonville, AL. I even mentioned it at the very beginning of my presentation last week. I am very frustrated to hear I’m going to be left out in the cold on this. I guess any progress is good though, but still… Wow

    • Posted May 3, 2011 at 12:00 pm | Permalink

      I thought you were going to be a production brewery. Great. We sold ourselves on this because we thought it included everyone’s plans. Standby.

    • Todd Hicks
      Posted May 5, 2011 at 1:49 pm | Permalink

      I am not sure that you will not be able to operate as a psuedo-brewpub by operating under an Alcohol Manufacturer License and also getting a Restaurant Food License. You will not be able to get the Restaurant Beer, Wine, and Liquor though. You will have to make your own beer, wine, and cider for on-premises customer sales.

  3. CNic
    Posted May 3, 2011 at 12:02 pm | Permalink

    Sometimes change has to be incremental. This allows people to get up and running. It’s one battle in a longer war.

  4. pavlov
    Posted May 3, 2011 at 12:48 pm | Permalink

    Does this mean that the guys over at Avondale Brewing Company will be able to have a brewpub on site (that serves food as well as their own beers) AND still distribute beer to other bars and grocery outlets in the area?

    I am also curious as to why the wholesalers care that the brewpub license remain “special”. It just seems like they are hiding behind that phrase in order to keep these breweries from competing with the brands they distribute. How is that not monopolistic behavior? Of course they want to keep the 3-tier system. They have figured out how to game it to get exactly what they want and stifle competition.

  5. Riley
    Posted May 3, 2011 at 1:30 pm | Permalink

    Am I correct in assuming neither brewpub or brewery locations will be able to sell bottles/growlers for off-premise consumption?

    • Posted May 3, 2011 at 2:42 pm | Permalink

      That was never an option with this bill. Baby steps.

  6. Thomas M
    Posted May 3, 2011 at 1:32 pm | Permalink

    What about all of the business plans that were never even begun because of all these crazy restrictions? I’m not happy with this bill as it stands now. HOWEVER, I do think that it is a step in the right direction. Perhaps the other restrictions will be lifted when people begin to see that this is not the end of the world as we know it.

    On another note, does anyone know of a list of counties that produced beer before 1918? I think this could be helpful for people who may be interested in starting a brewpub that haven’t really begun that process yet.

  7. Posted May 3, 2011 at 2:18 pm | Permalink

    Who is the attorney who specializes in Title 28? I’d like to meet him.

    For reference:

    Title 11. COUNTIES AND MUNICIPAL CORPORATIONS
    Subtitle 3. PROVISIONS APPLICABLE TO COUNTIES AND MUNICIPAL CORPORATIONS
    Chapter 99. TAX INCREMENT DISTRICTS

    § 11-99-2. Definitions

    (1) BLIGHTED OR ECONOMICALLY DISTRESSED AREA:

    a. An area in which the structures, buildings, or improvements, by reason of dilapidation, deterioration, age, or obsolescence, inadequate provision for ventilation, light, air, sanitation, or open spaces, high density of population and overcrowding, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, are conducive to ill health, transmission of disease, infant mortality, juvenile delinquency, or crime, and are detrimental to the public health, safety, morals, or welfare, or

    b. Any area which by reason of the presence of a substantial number of substandard, slum, deteriorated, or deteriorating structures, predominance of defective or inadequate street layout, faulty lot layout in relation to size, adequacy, accessibility, or usefulness, unsanitary or unsafe conditions, deterioration of site or other improvements, diversity of ownership, tax or special assessment delinquencies exceeding the fair value of the land, defective or unusual conditions of title, or the existence of conditions which endanger life or property by fire and other causes, or any combination of the foregoing, substantially impairs or arrests the sound economic growth of an area, retards the provision of housing accommodations, or constitutes an economic or social liability and is a detriment to the public health, safety, morals, or welfare in its present condition and use, or

    c. Any area which is predominantly open and which because of obsolete platting, diversity of ownership, deterioration of structures or of site improvements, or otherwise, substantially impairs or arrests the sound economic growth of an area, or

    d. Any area which the local governing body certifies is in need of redevelopment or rehabilitation as a result of flood, fire, hurricane, tornado, earthquake, storm, or other catastrophe respecting which the Governor of the state has certified the need for disaster assistance under federal law, or

    e. Any area containing excessive vacant land on which structures were previously located, or on which are located abandoned or vacant buildings or old buildings, or where excessive vacancies exist in existing buildings, or which contains substandard structures, or with respect to which there exist delinquencies in payment of real property taxes.

    • Posted May 3, 2011 at 2:45 pm | Permalink

      Thank you, John. I don’t want to jump to conclusions, but I’m currently trying to think of a way we can boycott all beer distributors in Alabama.

      I’m starting to think judgement has been affected by tornadoes and days without power. Let us look into this. I still think the substitute represents an improvement over current brewery laws, but this is an interesting discovery to say the least.

    • Ray D
      Posted May 3, 2011 at 2:58 pm | Permalink

      I’m certainly no lawyer, but it seems that in any legal definition, the most subjective and vague qualifier is the most powerful to those looking to get around the restrictions it attempts to impose. Here, section “E” seems to be that. “Excessive vacancies in existing buildings” definitely seems useful. It’s not what we wanted or deserved, but it’s a start. I guess it’s my hope that this compromise will get enough of these oft-canned plans in motion to let people see how much value they can add to a community.

    • melinda
      Posted May 3, 2011 at 3:17 pm | Permalink

      I’d like to meet him too. Who is it?

  8. Stott Noble
    Posted May 3, 2011 at 2:39 pm | Permalink

    Is there a list of brewpub-qualifying counties?

    I have to say that while not getting everything we wanted, this is way ahead of where we were on both brewpubs and commercial breweries having a favorable environment in which to grow. Might require a bit more creativity but brewers are creative by nature. When the alternative is the status quo I think this is very good news. Now, will it become law?

    • Posted May 3, 2011 at 4:14 pm | Permalink

      Madison, Jefferson, Montgomery, Mobile, Russell and Lee

    • Casey
      Posted May 3, 2011 at 4:24 pm | Permalink

      I completely agree. Removing the 80-seat restaurant restriction is fantastic. That was a killer, IMO.

  9. Posted May 3, 2011 at 2:59 pm | Permalink

    I just think it’s funny that they want to push brewpubs into “slums” and areas that are “conducive to ill health, transmission of disease, infant mortality, juvenile delinquency, or crime, and are detrimental to the public health, safety, morals, or welfare.”

    They aren’t concerned about the zoning headaches they’re trying to create for us, but imagine if a bill were introduced that limited distributor locations to historic buildings, historic districts and slums.

    • Rich Edmondson
      Posted May 3, 2011 at 3:56 pm | Permalink

      Not only that, but these areas are the very same areas that concerned the State House the most with regard to homebrewing legalization, because we don’t want the poor souls who live in public housing to have easy access to beer, wine, mead, or cider. What is mead, anyway?

    • Ned Ryerson
      Posted May 3, 2011 at 8:27 pm | Permalink

      With all due respect couldn’t those words be used to describe all of Alabama if seen through the right kind of eyes…by the right city council. It seems to me that this now puts the power to decide whether or not to have a brew pub in the hands of the city council instead of Montgomery. How is this not an absolutely wonderful thing. Now you just have to convince the city council instead of the seemingly immovable object that is Montgomery. Am I missing something?

      • Posted May 4, 2011 at 7:48 am | Permalink

        Got it – Groundhog Day. Or is that your real name?

  10. Nicholas Franklin
    Posted May 3, 2011 at 3:15 pm | Permalink

    While any step is a step forward, I feel this “compromise” in light of the boycott initiative is a miserable failure.

    The boycott should go on. This is not acceptable.

  11. Horace Willis
    Posted May 3, 2011 at 4:10 pm | Permalink

    Frankly after reading this and the comments and doing some research I say we pull one of the tricks of the distributors. “Sorry this won’t do for us after all. The boycott will recommence immediately.” If nothing else the county restriction appears to limit it to JUST Jefferson county. So anyone outside of B’ham area such as say Huntsville will be left totally out in the cold. Given the number of craft breweries we have in Huntsville (Mind you I do not live in Huntsville but instead in Decatur) this is simply unacceptable to me. Either FTH goes back to the table or we need to form another group that WILL stand up and do what is right. This bill is in it’s essence really no better than what we have now. We need more and we should work towards that.

  12. Ned Ryerson
    Posted May 3, 2011 at 5:15 pm | Permalink

    Dan,

    I know some of these people are close to you but please don’t let them get to you. If this bill passes it will be the most sweeping change in brewery law in Alabama history. Hands down. If you are honestly thinking of ‘a way we can boycott all beer distributors in Alabama’ the this movement and all of the hard work of all of its volunteers will be all for naught.

    If this bill passes it will totally change the landscape of tourism and economics in Alabama…the day after it passes. If this bill passes it will set an example of collaborative effort to effect real tangible change. It will set the stage and tone for all the discussions that will follow about brewery law in Alabama. It will also show that we (FTH) are not just staunch idealists who will take our ball and go home if we don’t get everything we ask for. Please see this change for as historic as it is and stand behind our work.

  13. Aaron
    Posted May 3, 2011 at 10:55 pm | Permalink

    I’m just curious as to why anyone is interested in keeping the 1918 law?

  14. Chase
    Posted May 3, 2011 at 11:29 pm | Permalink

    I’m also curious as to why it was important to keep the 1918 part. It seems like we’ve made too many compromises in their favor.

    • Posted May 4, 2011 at 8:57 am | Permalink

      I keep seeing prior to 1918, but it’s really prior to 1919. Every year counts!

  15. Joey Schmidt
    Posted May 4, 2011 at 2:26 am | Permalink

    This law can barely be considered a baby step, the county restriction atleast has to go. Whats gonna happen when the push for the bottle bill comes?

    Damn the Distributors and the Religious Nazi’s. Between them and Legislators ignorant of alcohol and the craft community what are we gonna do?

    I guess we get a pitance this year? Don’t get me wrong I appreciate the work but to much was given, to to much.

  16. Interested
    Posted May 4, 2011 at 10:37 am | Permalink

    Does it make sense to build a business case for opening a brewpub in a largely populated area?

    If so, the site location and county restrictions would eliminate the Hwy 280 corridor, or perhaps the Hwy 119/Hwy31 areas which are in Shelby county. Just examples of non-historic, non- distressed and county restricted places.

    Those parts of the compromise need more work.

  17. Jack
    Posted May 4, 2011 at 12:07 pm | Permalink

    I see this as as step in the right direction. Not everything that we wanted but given the political realities of the status of the distributors I don’t believe it to be an unreasonable compromise. The building work around seems like a huge step in the right direction. My thanks to Dan for getting something done this session rather than failing in pursuit of the unattainable.

  18. Todd Hicks
    Posted May 5, 2011 at 1:44 pm | Permalink

    I like the idea of introducing a bill that requires wholesalers to locate in an economically distressed area. I am also in favor of an idea I presented as a joke to the ABG: “How about a new bill that stipulates that draft and packaged beer can only be distributed and sold in any wet county or wet municipality that currently has an active and continually engaged operating Brewpub or Alcohol Manufacturer Licensee. Let’s see what that does!”

  19. CraftBeerFan
    Posted May 11, 2011 at 3:49 pm | Permalink

    Occasional craft beer drinker and seasoned political observer. Right now, you folks are a victim of your own success. Flat sales are a major problem for all the major beer companies across the Western world. The only real area of growth is in craft beer. For a long time, stuff like Free the Hops was simply an irritant that AB and co did not take seriously. Now, you are a legitimate threat. Be happy that you were able to make progress this time, but next time you guys need to be prepared to rock and roll.

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