Texas Beer Bill Somehow Gets Worse, Clears House

Austin Ray

THE GIST
Texas lawmakers have added a controversial new wrinkle to an already controversial legislative effort by voting to impose new on-site sales restrictions on breweries of a certain size. As it passed the House on Saturday, HB 3287 would require breweries that produce 175,000 barrels or more per year to sell their beer to a distributor and buy it back before legally being able to sell it directly to the public. The bill was originally intended to prohibit breweries owned by larger beer companies from operating taprooms, thereby clarifying existing rules that had been muddied by the influx of outside investment.

WHY IT MATTERS
As we reported last month, the original bill offered a simple change:

“Under the status quo, brewers that produce no more than 225,000 barrels annually at a single location are permitted to sell beer directly to consumers at taprooms. As proposed, however, that 225,000-BBLs cap would instead apply to ‘all premises owned directly or indirectly’ by the license holder, as well as any affiliate or subsidiary businesses.”

This, we reported then, would force companies like Karbach (owned by AB InBev), Revolver (MillerCoors), and Oskar Blues (which has financial ties to a number of breweries) to shut down successful taprooms.

As updated, however, the current bill takes one step forward and two steps back.

Forward: it would now allow for those companies to continue operating taprooms. Back: it would require they, as well as any independent company that crests 175,000 barrels in annual production, sell that beer to a wholesaler and buy it back.

Per the Houston Chronicle, State Rep. Craig Goldman, a Republican of Fort Worth, believes “this bill hurts no one,” going on to accuse the Texas Craft Brewers Guild, which opposes the legislation, of spreading misinformation about its harmful effects. As you can imagine, the Guild is calling bullshit pretty hard, decrying the newest version of the legislation as a “damaging, anti-competitive taproom bill which aims to put a new ceiling on success for craft breweries in Texas.”

“In other word[s],” writes Charles Vallhonrat, the guild’s executive director, “distributors would collect a fee for any beer sold in a brewery’s own taproom, even though that beer never leaves the brewery.”

In turn, the latest version of the bill has sort of flipped the dynamic of support. Initially, it had been reported elsewhere that some craft breweries were indeed in favor of the legislation, as it would tamp down larger, international companies from operating taprooms while leaving alone independent businesses of a certain size. Such a scenario would have created new allies of brewers and wholesalers, typically at odds over these types of law changes. Now, though, craft brewers are aligned with the likes of AB InBev—another strange ally—as the legislative reach extends beyond ownership and focuses primarily on simple production numbers.

The bill is now headed for hearing in an unspecified Senate committee before the body can vote. A schedule of action was not readily available, but the Guild is sharpening its knives.

“Now we prepare for the Senate battle,” Vallhonrat tells the Chronicle.

—Dave Eisenberg

READ MORE
House tightens reins on Texas breweries [Houston Chronicle]