It’s official! I’ve joined Reiser Legal as a beer attorney licensed in Washington State. Having gotten to know Reiser Legal’s incredible set of passionate and ambitious brewery owners as a law clerk this past year, it means a lot to now officially partner in pursuing all of your unique visions.
I know that Doug Reiser’s tremendous industry knowledge, relentless work ethic, and straightforward legal approach are responsible for Reiser Legal’s growth. I know that because they’re the very reasons I’ve wanted to work alongside Doug ever since I got to know him years ago, when we started waxing poetic about what beer law—and a beer lawyer—can and should be. They’re the reasons I changed course, moved to Seattle, and am so excited and proud to make this announcement.
I should say, I am a huge fan of this industry, its people, and its culture, and maybe I have been before exactly knowing it. Back twenty years ago, it was my parents who started seeking out family-friendly brewpubs on our vacations, observing that local beer and breweries were a great way to get a feel for an area. To be sure, there weren’t nearly as many options in those days as there are today, but they’re still right about local culture speaking in its beer.
Like all of you, from my first batch of homebrew, I was hooked. As I’ve been traveling that long, winding, sudsy path, I’ve made some good ones and some great ones, and mostly a lot of friends in fellow homebrewers along the way. And I can say that on my end, as my garage became increasingly filled with beer gadgets and fresh grain bills, my head, too, was increasingly filled with all the ways breweries and the law intersected. While I spent my free time thinking, researching, and writing about it, I wound up doing work championing breweries with the Brewers of Indiana Guild, publishing an extensive piece about beer law reform in Indiana, and pouring beers on the side at an Indianapolis brewery in its first year of operation, all before packing my things and heading west to help push forward Reiser Legal’s mission. I see that mission as a simple one: be the most knowledgeable beer law shop out there, stay small and down to earth, never lose touch with the industry and what matters to it, and always make sure we’re doing things at reasonable rates that growing breweries can afford. My personal sub-mission at Reiser Legal will be to draw on my extensive intellectual property training, developing forward-thinking brand-protection tools and strategies, while managing our portfolio of trademarks.
I can’t wait to get to know all of you even better. It means a lot to be a part of your trusted team of counsel, and you can be sure that Doug and I will work hard together to best help build, protect, and defend your brewing business.
So, why’s a Seattle-based craft brewery law firm like Reiser Legal pontificating about Indiana beer laws? Actually, it’s because we represent Washington breweries that we care. And, no matter which brewers’ guild you belong to or which state of bountiful craft brews you call home, I’ll explain why this issue of federal constitutional law is worth your attention.
First, a little background. I’m an Indiana native. That means I grew up in a place where you couldn’t buy booze on a Sunday. Technically, you could buy it on a Sunday, but only if you (1) drove to a different state to get it or (2) were okay going to a bar or restaurant to enjoy some libations there. In other words, until 2010, you could not go into the market, buy brews, and bring them home on a Sunday.
What changed in 2010? In that magical year, the legislature made an exception for just about all craft breweries. (It’s no coincidence that in the years leading up to 2010, Indiana breweries were opening at unbelievably awesome rates.) The 2010 exception gave breweries a unique advantage. Suddenly, the only way to buy carryout beer on a Sunday was to stop by your local craft brewery.
As a consumer, the change in the law rocked. For starters, you no longer had to strategically plan your grocery shopping, planning ahead to stock up on swill before Sunday’s game. The change also affected the good folks of Ohio, as us Hoosiers no longer had to visit their glorious drive-through Sunday beer operations by force, but by choice. However, it wasn’t until, from a legal perspective, I started digging into federal constitutional issues affecting the brewing industry that I realized the problem with Indiana’s freshly-changed regulatory scheme.
Indiana’s scheme means that 100% of carryout beer sold on Sundays is made in the state. Put another way, out-of-state brewers have no access to Indiana’s booming Sunday carryout market. I thought about it, researched it, wrote about it, and put it all together into a Law Review Note called “Brewing Tension: The Constitutionality of Indiana’s Sunday Beer-Carryout Laws.” If you’re ambitious, you can read the note now. But, over the next couple of days, I’ll quickly (and painlessly) take you through why Indiana’s beer laws need deeper change, and why laws like these are bad for the entire industry—and might even affront our Constitution.
Stay with me this week as we talk a bit about beer history, including (1) things you might know, such as the bummer of a time that was Prohibition; or things you might not, such as (2) the crime that abounded during those “dry” years; and (3) the aims of the Twenty-first Amendment, as interpreted by the United States Supreme Court throughout the decades. Along the way, I’ll cover some need-to-know background about the common three-tier distribution system, including how far states can go in regulating booze shipped into and out of the state. We’ll touch on the landmark case of Granholm v. Heald, some decisions in the 7th Circuit interpreting it, and we’ll wind up on why Indiana’s law, as it stands, might not be constitutional. Through it all, I’ll pass along key takeaways for those seeking change in their own states.
See you next time.
Today, we direct you to some emerging stuff on domain names. To be sure, when you’re in the back, cleaning kegs, your online presence is about the last thing on your mind. But, we all know the web is an important face of any brand. Now, you might have heard some hub-bub recently about the new Top Level Domain names coming out. This article from some fellow beer attorneys provides a nice overview. The gist is, Top Level Domains (TLDs) are things like “.com” or “.net” and, drum roll please, the “.beer” domain name is going to come out soon.
Certainly, the new .beer TLD is a fun one. Some blogger will no doubt secure “drink.beer” or “ilove.beer” and we’re happy for whoever manages to nab those up. But, the question the folks behind the article above pose is an interesting one. That is, should you take advantage of a special period of time right now to secure the domain name for your brand? Check out their article, but the short of it is that if you’re already a trademark owner right now (and that doesn’t mean registered with USPTO) you can take some steps ASAP to get your brand’s domain.
Our view is that if you’d be heartbroken you didn’t have that domain name, then you may want to look into it. But, for most breweries, sinking time into this sort of thing isn’t a huge deal. You have your .com, Google’s going to help people get there, and if anyone starts improperly using a website suggesting they’re affiliated with you, there are existing routes to take care of that. Your brand is important to you, and it’s important to your consumers. But, the likelihood is that, unless you’re one of the biggest of the big, no one wants to fork out cash to secure a domain name similar to your brand’s. In fact, our guess is you probably don’t own the .net, .org, etc. already, unless your domain registrar sold it hard enough in a package deal. There are too many other places to spend money when you’re starting up or once you’re well past launch.
For those looking to stake a claim, however, now’s the time to do it—before the gold rush. And, again, if you’d be heartbroken not to have the domain, it seems worth getting out in front of this one right now. Otherwise, just with any domain name, you can wait until it’s available for the public to register, and go ahead and register the one you want and that’s available.
Today’s post concludes our three-parter on contract brewing arrangements in Washington State. As we’ve covered in parts 1 and 2, it’s a legal practice for Washington microbreweries. However, it’s certainly subject to certain restrictions and regulations. Most notably, there’s the LCB-regulated side of the contract that we touch on today.
There Must Be a Written Contract Between the Breweries (and LCB Must Approve It)
LCB mandates that to start contract brewing, breweries must enter into a written arrangement, and we’d expect the breweries to do so anyway. LCB doesn’t clamp down and dictate what exactly this arrangement has to do or say, but there are two notable points. First, LCB has to approve the agreement, and any amendments to it. Second, LCB has provided some general limitations on things like how the product can move from place to place plus guidance on record-keeping for these sorts of arrangements. If you’re thinking about doing this, the specific LCB regulations are a must read. Indeed, some of the regs may at first seem unexpected, such as the requirement that the one producing the beer is responsible for getting federal label approval for it whereas the one seeking the beer’s production is responsible for the state label approval.
Ultimately, contract brewing is a permissible practice in Washington state, and likely an under-utilized business option. With demand for craft beer as high as ever, breweries are constantly looking to expand and grow. Rather than suffer growing pains or make tough decisions as a brewery hits its system’s limits, contract brewing can be a way to keep the product flowing, so long as the arrangement makes sense for the brewery agreeing to allow use of its gear for the run of beer. Further, contract brewing offers an enticing option for Washington start-up breweries who want to get their feet wet before raising serious capital for their own big-time production facility. Indeed, start-ups might consider getting licensed up and ready to go, turning to contract brewing arrangements to build an audience and attract investors before gearing up for primetime.
Last time, we provided an intro to contract brewing in Washington state. Today, we continue our three-part series, covering more must-knows about contract brewing, as a viable business option for licensed microbreweries in the state of Washington. Before getting started, be sure to review Part 1, if you haven’t already.
We’ll cover two important aspects to contract brewing in Washington state, as permitted by statute and regulated by the Washington Liquor Control Board. The two today sort of roll together.
LCB Says Both Microbreweries Must Be a Bona Fide Microbrewery and Produce Malt Beverages
This requirement listed by the LCB in its pseudo-guidance here isn’t exactly clear, and it’s not anything that’s inked into or defined by RCW 66.24.244(7), which is the statutory provision that itself permits contract brewing. It’s also not spelled out in WAC 314-20-095, which outlines further LCB requirements for a compliant contract brewing relationship. At any rate, in our view, it doesn’t take a lot to be a “bona fide” microbrewery—after all, every brewery’s business plan/approach is unique. Further, beer is a malt beverage. This hurdle looks like a low one.
Importantly, Contract-Produced Count Toward Both Microbreweries’ 60,000-Barrel Limit
So, if there’s any catch we foresee in setting out to be a microbrewery that mainly produces for other microbreweries, it’s just that you would have to run the numbers and make sure it can be a profitable thing. That is, the beers produced through a contract brewing arrangement actually count toward both breweries’ 60,000-barrel limit for favorable taxation/licensing purposes. So, if Brewery A gets to sell all those beers at retail and Brewery B only earns money by making them, we’d expect the contract price to involve a number that makes both operations happy. Of course, with the lack of a storefront for Brewery B and the lack of a big brewing operation and staff for Brewery A, this sort of symbiotic relationship could just work out. And, of course, for any brewery thinking about taking on a contract run, it’s worth keeping in mind how it’ll affect your own numbers on your license. Still, the lion’s share of Washington microbreweries produce well under the 60,000-barrel annual limit.
Next time, we’ll wrap up this three-parter on contract brewing in Washington State, covering general concerns relating to the contract requirement itself.