Brewpub Bill Gets Boost With Compromise

A bill that would give brewpubs more flexibility to sell their ales has been given a boost by a compromise with an influential beer lobby. 

State Rep. Mike Villarreal, D-San Antonio, laid out House Bill 660 before the House Licensing and Administrative Procedures Committee today. The measure, in its original form, would've allowed brewpubs — restaurants that brew their own beer — to distribute directly to other bars, restaurants, stores and distributors. But after a compromise with the Beer Alliance of Texas, the bill would only allow brewpubs to sell their bottled wares to a beer distributor.  

Villarreal told the committee that brewpubs are already manufacturing beer, and that Texas' regulatory system is stunting their growth. Brewpubs in other states are allowed to sell to distributors, meaning Texas is losing out on what could be a growing business, Villarreal said.

“If it is putting our playing field at a built-in disadvantage to our brewpubs, versus out-of-state brewpubs, then it needs to change,” Villarreal said.  

But opponents of the bill, including the Wholesale Beer Distributors of Texas, say allowing brewpubs to sell to distributors would break down the three-tiered system that regulates the production, distribution and retail sales of beer separately — and has been around since Prohibition. The system is meant to make it easier to regulate and tax beer sales and keep any one company from gaining a monopoly.

They suggest a roundabout alternative: HB 602, which would allow breweries to charge admission for tours and include up to two six-packs of beers to give to tourists at the end of the tour. Keith Strama, who represents the Beer Distributors, told the committee that if HB 602 passes, brewpubs could change their licenses to become manufactures of beer, so that they could sell to distributors, sell during tours and open a restaurant on the premises. 

Rick Donley, president of the Beer Alliance of Texas, told the committee that he is a staunch supporter of the three-tier system, but that after working with Villarreal and the brewpub owners, a compromise was reached. Originally, the bill would have allowed brewpubs to sell a limited amount of their product directly to stores and other restaurants and bars, bypassing the distributors. The amended bill makes the distributors the middle man.

Scott Metzger, a brewpub owner and executive director of Texas Beer Freedom, said he's pleased with the compromise. Being able to sell his beer to a distributor will help him grow his business, Metzger told the committee, but would also help grow the state's economy and its tax revenue. Metzger, who is also an economics professor at the University of Texas at San Antonio, told the committee the bill has the potential to create $680 million a year in economic activity, 6,800 new jobs at brewpubs and $57 million in new tax revenue per year.

Also before the committee today was a bill that would ban caffeinated malt beverages, made famous by brand names like Four Loko, in Texas. Rep. Carol Alvarado, D-Houston, told the committee that the U.S. Food and Drug Administration has deemed the drinks unsafe, and major brands like Four Loko have changed their formula to comply. But she said there are still some small-scale producers of similar beverages that contain the caffeine component.

The Texas Alcoholic Beverage Commission "does not the have the authority to ban them, so we are trying to help TABC, give them the tools they need to take these dangerous and sometimes deadly beverages off our shelves,” Alvarado said.

Alan Gray, a lobbyist for the Licensed Beverage Distributors, testified against the bill because he was afraid the bill's wording was too broad and could be misinterpreted to include other beverages.

While the bill bans malt beverages that contains caffeine, Gray told the committee that other beers and liquors sometimes contain caffeine as part of the brewing process. Gray said he was afraid confusion over the wording in the bill could lead to drinks like Kahlúa being banned.

Alvarado assured the committee that it was not her intent to ban Kahlúa or any other type of drink except for those malt beverages that purposefully add caffeine as a stimulant. The bill was left pending in the committee.