Odd Pub Out? California’s “75” Brewpub

California offers a license designated as “75–on-sale general brewpub.” While it authorizes just what the title suggests, brewing, it does a few other things, too, providing privileges and limitations not afforded to other breweries. Notably, it allows the brewpub to offer distilled spirits, whereas other breweries that have restaurants on premises are authorized only to sell beer and wine by virtue of their type 1 or type 23 license.

The brewpub statute was added to the Alcoholic Beverage Control Act in 1996, under Bus. & Prof. Code § 23396.3. The bill was supported by the California Restaurant Association. It was opposed by California Small Brewers Association (now the California Craft Brewers Association).

Why would a brewers association fight the creation of a new brewpub license? Because the license holder “shall offer for sale on the licensed premises canned, bottled, or draft beer commercially available from licensed wholesalers.” § 23396.3(c). Further, a “a brewpub-restaurant licensee shall purchase all beer, wine, or distilled spirits for sale on the licensed premises from a licensed wholesaler or winegrower, except for beer produced [on-site].” 23396.3(b).

I wonder which tier had the greatest interest in this becoming the brewpub model? With these provisions, the bill also had the backing of distributors.  A 1996 article in SFGate covered the matter. Small brewers were concerned the state was making a move to force them to sell big beer, as expressed by then lobbyist for the association, Bob Judd: “It’s like telling Chez Panisse to sell Taco Bell stuff. Like making Nike sell Florsheims.” California Cafe Restaurants pushed for the bill so it could operate a chain of brewpubs (Alcatraz Brewing Co.), but could not under because it held too many liquor licenses already. Alcatraz Brewing Co. closed recently. Fritz Maytag, then president of the CSBA,  shared his view thusly: “Socially, it just strikes me as a disaster.”

But the fears probably proved largely unfounded–brewers are still free to start up under regular brewery licenses and operate a brewpub as well, so long as they do not have their hearts set on a “full bar.” It has not been the most popular type chosen. An informal survey of CCBA-member brewpubs shows about 15% of them choose the 75 license over the 23, not counting repeat locations for the same brewing company. Breweries with a chain of locations do use them, like the original proponent of the license (Oggi’s Pizza has many locations and has had several 75 licenses, though not all remain active; BJ’s still has active 75 licenses in West Covina and Brea–which requires them to brew at least 100 barrels per year on site). This is likely due to two key factors: (1) constraints the license places on expansion–the 75 brewpub can produce no more than 5,000 barrels of beer annually; (2) the license cost–12 grand for a new 75 license, compared to a mere $100 for a new 23. As of June 30, 2013, there were 109 type 75 licenses issued in California. There were 371 type 23 licenses (up to 60k bbs/year) and 34 type 1 licenses (more than 60k).

The license type also constrains interaction amongst craft brewers. While the brewpub can–indeed, must–have other beer available, it can only bring in commercially available beer through a licensed wholesaler. Thus, it cannot have a “guest tap” from a type 23 brewery that only self-distributes.

This is not the case with type 23 or type 1 brewpubs (standard breweries that also have a “bona fide eating place” on site–such as Stone Brewing Co. or Pizza Port). They can put on tap the beers of brewers who only self-distribute . Take a look at Beachwood BBQ & Brewing’s “hopcam” to ogle what delights await you there, including beers from breweries whose beers are not available through a licensed wholesaler. The same goes for Stone Brewing Co.’s generous guest tap list.

Since many craft brewers do distribute through wholesalers, consumers can find craft beer not brewed by the brewpub on tap at type 75 breweries (TAPS, for example). What they will not find, however, is a direct exchange from brewer to brewer, because the middle tier must intervene. These three-tier regulations were originally put in place to prevent “tied houses,” where a supplier manages through financial interest or inducement to force a retailer to exclusively deal in that supplier’s brands. In the 21st century, some of these rules have hampered craft breweries’ freedom to “untie” their houses and offer a greater variety of locally produced craft beer–especially beer from the smallest members of the brewing community who have yet to access, or who have no plans of accessing, the wholesaler channels of distribution. The type 75 brewpub is an example of just that.

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