Arizona Craft Brewers Guild on the state's licensing regulations

There is a ton happening within the Arizona craft brewing industry these days, and the Arizona Craft Brewers Guild contacted Craft Brewing Business to help spread the word of the legislative battles they’ve been fighting. We are more than happy to oblige:

First, some good news, the guild in Arizona helped pass a bill this summer that would expand the state’s legal growler definition beyond glass to include steel, ceramics and other nonporous materials. This comes just two years after glass growlers were first legalized for filling.

Now, a larger brewing industry discussion is taking place. The guild says some of Arizona’s biggest and best breweries are on the verge of reaching a production ceiling mandated by state law, which is never a situation you want to see.

“Both the Arizona Craft Brewers Guild and the Beer and Wine Distributors of Arizona plan to propose legislation in 2015 to clarify the issue of what happens to a microbrewery when it produces above the current production cap and reaches producer status, and to ensure that the change in status does not result in the closing of a brewery’s restaurants or other retail establishments,” Rob Fullmer, president of the guild, told CBB. “Currently, microbreweries are those breweries who produce less than 40,000 barrels (bbls). Microbreweries are able to open tasting rooms, restaurants, bars and have limited self-distribution. Producers, on the other hand, can brew an unlimited amount of beer, but cannot self-distribute, and cannot open restaurants, bars, or any other type of retail establishment that sells alcohol.

“Without the proposed changes in our current statutes, these breweries will be forced to shutter their restaurants and tasting rooms,” Fullmer continued. “Our proposed solution allows a microbrewery to grow without having to shut down highly successful restaurants that have proved instrumental in establishing and promoting the products of Arizona’s microbreweries.”

So, here is the deal with the current microbrewery statute:

A microbrewery may sell its beer for consumption on or off the premises.
A microbrewery may sell its beer to a wholesaler, to any retailer (up to 3,000 bbls a year), and to any of its own retail establishments at an unlimited amount.
A microbrewery may own an unlimited amount of retail licenses.
Production cap is currently at 40,000 bbls. A microbrewery that exceeds 40,000 bbls shall receive a producer license. Producers may not own retail licenses, with some exceptions.

The guild has proposed changes to this microbrewery statute. The group’s objective is to create two levels of craft breweries in order to promote growth in the industry and maintain the three-tier system. Additional privileges and changes for microbreweries that produce less than 40,000 bbls:

Microbreweries may sell beer produced or manufactured by other microbreweries for on-premise consumption, but cannot exceed 20% of the licensee’s annual sale of beer on the premises. This beer shall be purchased from a wholesaler if that microbrewery has a wholesaler agreement.
Microbreweries may sell wine produced by farm wineries for on-premise consumption only, but cannot exceed 20% of the licensee’s annual sale of alcohol on the premises. The wine shall be purchased from a wholesaler if that farm winery has a wholesaler agreement.
Microbreweries may hold only bar, beer and wine bar, and restaurant licenses. (Currently, a microbrewery may hold any type of on-sale retail license.)
Microbreweries may hold a combined total of seven retail licenses, both adjacent and remote. (Currently, a microbrewery may hold an unlimited amount of retail licenses.)

Once a microbrewery reaches 40,000 bbls and has a producer license, the microbrewery may not self-distribute, unless to own adjacent licenses, may not add any retail licenses, and may not give up or shed any existing licenses when reaching producer status.

Arizona currently has more than 50 breweries with 20 more in planning.

“Arizona’s craft brewing scene is growing rapidly as the rest of the country. Arizona is producing amazing craft beers. One of our members was just voted the best brewery in the world,” Fullmer said. “Our members continue to win big at Great American Beer Festival and produce quality products. Our members are focused on the community and doing things to grow the craft beer industry. This was evident with our Heroes 19 Brew that benefitted the fallen firefighters and the upcoming collabrews that we have planned. I don’t think you can discount Arizona as one of the top craft beer communities in the country with some of the best brews being produced. We have breweries spread out across the state and in many different neighborhoods unlike some areas that have an area filled with a large amount of breweries in one place.”