Ohio passes craft brewing-friendly legislation, AB InBev upset

Ohio is one of the more fertile craft brewing grounds in the country, and the state legislature has taken notice, passing a bill to lower the licensing fee for brewers producing under 31 million gallons per year in the state from $3,906 to an even $1,000. It also allows them to sell product to retail permit holders, while eliminating that authority for larger brewers and prohibiting them from also owning a distributor. That last point has caused a stir (see after the bill summary).

The bill, SB 48, created a new permit, the A-1c liquor permit, defined as a “small brewer” brewing under the aforementioned 31 million gallon mark. Here are the high points of what these A-1cers will be able to do:

The bill creates the A-1c liquor permit to allow beer manufacturers that produce up to 31 million gallons of beer per calendar year to manufacture and sell beer for home use, sell beer manufactured on the premises at retail for on premises consumption, and sell beer products to retail and wholesale permit holders. The fee for the permit is $1,000 for each plant during the year covered by the permit.

The bill clarifies that A-1c permit holders are eligible to receive an existing tax credit, which currently applies to A-1 permit holders who produce no more than 31 million gallons of beer per year. The bill also requires A-1c permit holders to comply with record keeping and advance tax payment requirements, allows the issuance of A-1-A permits to A-1c permit holders and makes other conforming changes.

As for the A-1 permit for the bigger brewers, the bill removes the authority for A-1 liquor permit holders to sell beer products to retail permit holders. Under the bill, current A-1 liquor permit holders who would otherwise be eligible to obtain an A-1c liquor permit are permitted to continue operating under their existing permit until it expires. However, on the effective date of the bill, any current A-1 liquor permit holder will be prohibited from selling beer products to retail permit holders unless the A-1 liquor permit holder would qualify for an A-1c liquor permit (i.e. produce no more than 31 million gallons per calendar year).

Under current law, an A-1 liquor permit can be obtained by any beer manufacturer, regardless of production volume, to manufacture beer and sell beer products in bottles or containers for home use, sell beer manufactured on the premises at retail for on premises consumption, and sell beer products to retail and wholesale permit holders. The fee for the A-1 liquor permit is $3,906 for each plant during the year covered by the permit.

Another interesting wrinkle in the bill is brewers would be allowed to open a tasting room within a half-mile of their production facilities.

Controversy

The bill seemed to appear rather quickly, even taking craft brewers off guard. As we were prepping this story, Anheuser-Busch InBev was apparently prepping its own response. According to The Columbus Dispatch, AB InBev reps are meeting with Ohio Gov. John Kasich before he officially signs the bill to tell their side of the story. From The Columbus Dispatch:

At issue is a prohibition in Senate Bill 48 against brewers also owning a beer distributor, a ban favored by the Ohio Wholesale Wine and Beer Association, which has contributed more than $600,000 to legislative and statewide campaigns in the most recent two-year election cycle.

…

Although the controversial measure arrived in Gov. John Kasich’s office yesterday afternoon, he will meet with Anheuser-Busch’s representatives — including the Belgian company’s North American president, Luiz Edmond — today before deciding whether to sign or veto the measure.

AB InBev employs more than 700 people in Ohio. We will stay up on the story as it develops, but head to The Columbus Dispatch for more on the AB InBev meeting.