An astute brewing law enquirer emailed me today. His question was simple – what the hell is up with these Louisiana brewing laws? Can we produce beer higher than 6%?
I don’t blame him for asking. Unfortunately, Louisiana brewery law is about as antiquated as it gets. With only a handful of breweries to help the ATC interpret the laws, it is somewhat of a crapshoot.
But there is a good short answer that I tossed back to the reader that I thought I would share with you all. Hopefully it improves your understanding of what you can do as a brewery in Louisiana.
There are two types of brewery licenses in the State of Louisiana:
Microbrewery license holders can only sell their beer at retail (through a pub) and can only produce 6% and below. Think Crescent City Brewhouse.
Beer Manufacturers are different, and they can produce beers of 6% and above. They can also sell at wholesale through a distributor, but they can only obtain a retail license to sell 10% of their production in their own taproom. Think Abita or Parish Brewing.
To date, virtually no one has taken advantage of the ATC’s allowance of a limited retail license to sell 10% of production. I’m really not sure why. I understand that 10% might not be a lot, but it is certainly worth it to drive customers into your brewery and allow you to take advantage of the significant retail margin. Hopefully, we will see more of these soon. And better yet, we hope to see the law improve to allow more sales.
Many moons ago, I had a premature party over the passage of a law that I thought might have an impact on opening up taprooms to brewers in Louisiana. It turned out that the law was directed only at distillers (strange, right? distillers need a tasting room more than brewers?). But it never was a “live or die” issue for brewers – because the law has long provided a way to add a tasting room on premise.
La R.S. 26:273(C) has long provided an exception to the strict three tier regulations enforced in Louisiana. Under that law, brewers could build an on-premise tasting room and sell 10% of their monthly production directly to consumers – both in pints and growlers to go. The odd thing was that no one knew it. When I spoke with an ATC agent last year, I learned that not a single Louisiana brewer had obtained the retail A permit required to have the tasting room.
Perhaps many were confused about the rules. I don’t blame them. So the ATC put together a nice little brief on their website, outlining the rules. Oddly enough, I just now saw it despite being published over 10 months ago. Whoops. Better late than never. Because I think this does a better job of explaining the law to you – than my previous post did:
July 3, 2012
Malt Beverage Manufacturers and Limited Use Retail Permit
Pursuant to R.S. 26:273C holders of a valid Louisiana Malt Beverage Manufacturer Permit, located entirely within the state of Louisiana, may obtain a Class A retail permit if the holder of the Malt Beverage Manufacturer Permit applies for and meets all qualifications for a Class A retail permit as set out in R.S. 26:271 and 271.2. Class A retail permits issued pursuant to the provisions of this subsection are subject to the following limitations:
The manufacturer shall only make retail sales of products brewed by the manufacturer at the brewing facility holding the retail permit.
The manufacturer is only authorized to make retail sales at the licensed premises where the malt beverages are brewed.
Retail sales to visitors of the brewing facility shall only be for personal consumption by said visitors. However, the retail sales may be made to visitors of the facility for consumption on the licensed premises and to visitors in appropriately sealed containers for consumption off the licensed premises.
The total amount of retail sales by the manufacturer for any given month shall not exceed ten percent of the total amount of all beverages produced on the licensed premises for that month.
The manufacturer shall obtain all local retail permits required by the municipal or parish governing authority.
The manufacturer shall remit all applicable state and local taxes resulting from retail sales made at the licensed premises.
A manufacturer holding a retail permit pursuant to this subsection shall comply with the terms of the Louisiana Responsible Vendor Program.
A legal entity holding a malt beverage manufacturer permit shall not be authorized to obtain more than one Class A retail permit.
***NOTE: I have had two comments now from confused readers regarding my use of the term of “Pilot.” I use the term pilot to refer to a brewery’s test system – the brewing equipment used to prepare small batches of beer. My use does not include the TTB’s use in the “pilot brewery license,” which is a license reserved for educational, scientific and research purposes. That license will not allow you to sell your beer. But using a “pilot-type” brewing system, you can obtain a normal Brewers Notice. That is my intent with this article. Hope that clears it up!
The past few months have been extremely exciting. My office has been inundated with calls from brewers ready to go commercial. I am very happy to announce that Reiser Legal’s flat rate licensing packages have been uber successful – and as a result we have more beer being churned out. I only wish I could help more of you in other states (sorry guys and gals).
A trend is seriously starting to take shape – brewers are getting the TTB out of the way early on by licensing a pilot system. Whether it’s a 10 gallon system, or its a 10 bbl commercial pilot, many are finally taking advantage of the fact that a Brewers Notice can be attained much earlier than you might have thought.
I have always taken the stance that the best thing a brewery can do is get licensing accomplished as soon as possible. Waiting until you have you found investors, ordered equipment, installed equipment, ordered materials, etc. – can cost you quite a bit of money in standstill operations. Remember, the TTB and state licensing processes can take several months to accomplish.
In the past few years, the TTB has become accustomed to the “nanobrewery.” Regularly, the TTB licenses commercial brewing operations of no more than 10 gallons of production per batch. In some instances, I have seen anything from modified stovetop assemblies to standing burner setups get their TTB licenses and begin to churn out legally-salable beer.
The important things to remember are that the TTB will only license a bonafide commercial operation – which means finding zoned space capable of meeting local codes. Sometimes, it might be an industrial garage and sometimes it will be a small shed in your residential backyard. But, as long as you can meet the minimum standards, your dream of opening a microbrewery might be closer than you thought.
Knowing these things, many brewers are getting started earlier than they had hoped. By obtaining a suitable space and a reliable pilot brewing system, brewers are able to submit their application to the TTB and state licensing agencies. Once approved, they can grow organically and obtain change of locations, change of owners and other approvals required by the TTB.
Want an example? The photo above is my wife’s brand spanking new pilot system. This system will be used to submit an application to get her brewing. With the licensing processes out of the way, she can begin producing and selling beer while raising the money to start a full scale production facility.
Don’t delay the application process. Get brewing and grow organically.
A few days ago, I published a post about the passage of SB 64. At the time, I believed that the law would provide breweries with the opportunity to open taprooms and sell beer at retail to consumers. Turns out, I was most likely wrong.
Thanks to some super sleuthing from Parish Brewing owner, Andrew Hadley, I found out today that the intention behind the law was to help out a new distiller and that because the law was placed in the first chapter of beverage regulations (which applies to alcohol of high content) the ATC is treating the law merely as a permission for liquor producers. Wow.
So, as much as it pains me to let brewers know that this law is not for them – I must concede. Louisiana law still does provide brewers with the opportunity to open a taproom and sell their beer at retail. Unfortunately, those sales must be kept to 10% of monthly production (See La RS 26:273(C)). Here is what Andrew said:
I spoke with the lead counsel for Louisiana ATC today and confirmed that this change to 85.1 only applies to beverages of high alcohol content (liquors and wine) since it is in the chapter dealing with these kinds of beverages. Low alcohol beverages like beer are governed in the following chapter. Quoting from a follow-up email from the lead counsel of the ATC: “SB 64 only applies to liquor wholesalers as R.S. 26:85.1 is for high content only. Louisiana alcoholic beverage law is divided into several chapters; Chapter 1 (which contains 85.1) only applies to high content alcoholic beverages and Chapter 2 (which contains 273C) only applies to low content alcoholic beverages.”
This is not my opinion, this is the exact response from the ATC’s lead attorney. It is very clear about this law not applying to breweries at all.
I know that everyone wants this law to apply to breweries but the legislative intent was to impact only liquor manufacturers. As a lawyer, you know that legislative intent is paramount here.
As a brewery we want a better law than this anyway. If anything, I would rather be able to sell 10% of my production than be limited to only one case per person per month.
My first thought is that I am saddened that Louisiana breweries continue to be forgotten. Why distillers and not brewers!? In my opinion, lawmakers should make a uniform decision to help a blossoming industry in Louisiana. This is a bummer, but I will guarantee that the clean passage of this law, mixed with the emotional response of the industry will help push a similar law through very soon – perhaps in the next session.
We all want taprooms. Make it happen, lawmakers. Thanks again to Andrew Godley and his help interpreting the new law.