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.