Hey Texans: Are you enjoying that 6% Lager “Ale” or that 4% Pale “Beer”? Confused why the brewery can’t tell you where to score a six-pack Jester King Pale Ale ? What? Huh?
Well, according to one of your state’s best and brightest breweries, Texas law prohibits the use of commonly-used descriptive beer terms. That brewery has decided file a lawsuit, in federal court, challenging those regulations.
Austin-based Jester King Craft Brewery has filed a lawsuit in US District Court for the Western District of Texas. The lawsuit was filed to challenge six particular portions of Texas beer regulations enforced by the Texas Alcoholic Beverage Commission. If we ever thought we had it tough here in Washington, check out these allegations about the Texas code:
1. Prohibit breweries and distributors from telling customers where their products
can be bought;
2. Mandate the use of inaccurate statutory definitions of “beer,” “ale” and “malt
liquor” to describe malt beverages;
3. Prohibit advertising the alcoholic content of brewery products and using words in
advertising and labeling that suggest alcoholic strength;
4. Prohibit breweries from selling their products at the point of production while
allowing wineries and brewpubs to do so;
5. Prohibit brewpubs from selling their products to distributors and retailers while
allowing wineries and microbreweries to do so; and
6. Treat foreign breweries as the first American source of supply of malt beverages
while treating importers as the first American source of supply of wine and
My initial reaction is that much of what is found in the Texas code is probably located in many other state codes. The restrictive language is part of a slowly-decaying uniform three-tier regulation package that was pushed decades ago. Many states have slowly altered former portions of that code, updating it to make sense for their brewers. This is especially true in states with proactive brewer groups, who demand change. Washington, Oregon and California have responded favorably to pressure from their brewing industry members.
Here, Jester King is up against a difficult task. Booze is heavily regulated and states have strong interests in regulating how it is produced, marketed and sold. The interesting argument here is whether the state’s means of regulating booze actually serves that interest.
- Does improperly labeling a product recognized otherwise by the mass consumer base actually help better inform the consumer? Surely not.
- Does preventing the direct sale of beer from one type of beer producer while allowing it from another almost identical producer serve a governmental purpose? Probably not.
- Does prohibiting brewers from providing public information about the location and availability of alcoholic beverage help to sustain a government’s interest? Maybe, depending on whether that purpose of reducing consumption or preventing brewers from looking like distributors.
I think that Texas, and several other states, will have trouble upholding some of the labeling regulations. But those laws directly resulting from the three-tier model regulations may prevail. The courts have already clearly permitted three-tier regulations. Regardless, its a clear sign that Texas needs to take the time to better understand an industry that has grown incredibly over the past decade.
Jester King has wisely approached its action with an open mind about the challenges it faces. The brewery informed its consumers about the case in an open letter, correctly reflecting that the state only needs to show a rational basis for the challenged regulations. But, I think that their hearts and brains are in the right frame of mind – the challenge is a worthwhile one.
Our claim under the Equal Protection Clause of the 14th Amendment, maintains that breweries, like wineries, should be able to sell their products directly to the public. Right now in Texas, we cannot sell our beer at our brewery. We can only sell beer through a retailer or distributor. When people visit Jester King and ask to buy our beer, we have to tell them, “Sorry, that’s illegal.” Brewpubs are faced with an equal and opposite restriction. They can sell beer on-site, but cannot sell beer through a retailer or distributor. Texas wineries on the other hand are allowed to sell on-site and through retailers and distributors. We are suing because the State has no rational interest in maintaining special restrictions aimed at limiting the sale of beer.
Finally, the lawsuit challenges the State’s requirement that every foreign brewery wishing to sell beer in Texas obtain its own separate license. Foreign wineries and distilleries are not burdened by this requirement. They may simply sell their products in Texas through an importer that has one license for all the wine and spirits it brings into our state. The result is that small, artisan beer makers often have their beer kept out of Texas by unduly burdensome fees.