Tag Archives: beer

California Beer Bills: Round-Up of Proposed Beer Laws for 2014

The following is a list of bills introduced recently in the California Legislature and some summary information about what they would do. The most interesting bill on the docket, in my opinion, is AB 2010 due to the June amendment. A bill originally focused only on beer returns across the 3-tier system now includes language that limits the total number of duplicate licenses a brewery can obtain in order to run “branch offices” like the Stone Store in Pasadena.

Coupon-users, underage students, retailers stuck with off beer, and manufacturers sick and tired of people mutilating their metal kegs may be interested in these bills. April 2014 was unofficially California Craft Brewery Month, though the only fanfare that it received, as far as I can tell, was my updates on Twitter and this here blog post.

The bills are easily searchable on http://leginfo.legislature.ca.gov/ using the keyword, “beer,” or of course, the bill number.

AB 2609–Bill to re-allow homebrewer organizations to host homebrew events that were inadvertently outlawed last year by AB 1425. 

 

AB 2010–Introduced by Assembly Member Gray Feb 20, 2014

An act to amend BPC § 23104.2, and with a very recent amendent (6/12/14) repeal and add a new § 23389. The Senate Committee on Governmental Organization voted aye and now it sits with the Committee on Appropriations with a hearing date on 8/4/14.

This addition provides new language entirely  unrelated to returns for quality issues. It would provide a new structure for issuing duplicate licenses to that breweries can run “branch offices” (e.g., the Stone Store in Pasadena) that sell the brewer’s beer as though it is a brewing premises under the same license as the main brewery. Manufacturers would be limited to 6 duplicate licenses, two of which could be attached to a premises with a bona fide eating place (giving the brewer the ability to serve beer and wine from other producers under specified conditions).

The bill would allow retailers to return beer with “product quality issues” to sellers (and those sellers to manufacturers or importers). This would extend a current exception for beer that is recalled or that presents a health or safety issue to the general rule permitting wholesalers or manufacturers to accept return of beer “only if the beer is returned in exchange for the identical quantity and brand of beer.” Returns are permitted in the case of erroneous deliveries or when packaging is broken/damaging before delivery.

After the amendment, sellers can exchange the beer with product quality issues for the same beer if “quality-controlled product inventory” is available. Otherwise, the sellers may issue a credit or deferred exchange.  With the June 12 amendment, the language now specifies that any returns for quality issues are subject to ABC approval. Further, “aging of the beer” is not a condition qualifying it for a return.

 

Assembly Concurrent Resolution 116–Introduced by Chesbro (Co-author Senator Corbett)

The resolution proclaims April 2014 “California Craft Brewery Month.” Great news! As of late last week (May 23), thanks to a unanimous vote, APRIL 2014 IS officially California Craft Brewery Month. Let’s all go back to April and raise a toast.

The resolution has a number of fun WHEREAS clauses recognizing the importance and impact of the craft brewing movement in California. It also makes clear through historical references that California is where this movement got going back in the late 70s. It’s good to have that on the books, because a certain small New England-y state, probably because it happens to have the biggest craft brewery that has been around quite a while, has recently been calling itself the “epicenter” of the craft brewing movement in various news releases.

AB 1928–Introduced by Bocanegra Feb. 19, 2014

This bill passed and will become law, adding  § 25600.3 to BPC.

This bill would prohibit a licensee authorized to sell alcoholic beverages at retail from accepting, redeeming, possessing, or utilizing any type of coupon that is funded, produced, sponsored, promoted, or furnished by a beer manufacturer or beer and wine wholesaler. The bill would provide a definition of coupon for these purposes. By expanding the definition of a crime by imposing additional duties on a licensee under the act, the bill would impose a state-mandated local program.
 
The definition of coupon is “any method by which a consumer receives an instant discount at the time of the purchase that is funded, produced, sponsored, promoted, or furnished, either directly or indirectly, by a beer manufacturer or beer & wine wholesaler.

The definition of “Coupon” excludes mail-in rebates to obtain discounts from beer manufacturer or beer & wine wholesaler. It also excludes coupons funded by spirits manufacturers, winegrowers, and certain other licensees, so long as no “beer or malt beverages” are advertised in connection with the coupon.

AB 2203–Introduced by Chesbro Feb 20, 2014 (amends § 25202)

It is already illegal to obliterate, mutilate, or mark out a manufacturer’s name on “returnable beer containers … or cartons made of wood or fiber board” without written consent of manufacturer. This bill makes it also illegal to do so to metal kegs. In any case, the prohibition does not apply when the beer manufacturer has discontinued business and is no longer licensed to manufacture.

2203 has an 8/4/14 hearing date in Senate after passing through Assembly and looks like it will pass.

AB 1989–Introduced by Chesbro Feb. 20, 2014 (to amend §§ 25658 and 25662 and add § 25668 to BPC).

The bill would provide an educational exception to the prohibition on underage drinking tasting of beer and wine.

The new section would permit “qualified students” to taste alcoholic beverages, without the student or the qualified academic institution being subject to criminal prosecution, if several criteria are met.

  • Student must taste while enrolled.
  • Institution must have AA or BA in enology or brewing.
  • Tasting occurs as part of course required for enology or brewing program.
  • Beverage remains in control of instructor, at least 21 years of age.
  • Must be part of curriculum requirements.
  • A recent amendment clarified the institution need not be licensed provided it doesn’t charge anything extra for the tasting.
  • A “taste” means “to draw an alcoholic beverage into the mouth, but does not include swallowing or otherwise consuming the alcoholic beverage.”

The bill successfully passed through the legislature and will become law.

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Federalism’s Tension with the National Love of Craft Beer

Federalism allows the individual states to function as “laboratories of democracy.” Innovations in the law of one state can spill over into others; in some cases creating a national consensus. Since alcohol regulation was largely left to the states after Prohibition, each became such a “laboratory” with respect to alcohol laws.

While the general three-tier system has been in place throughout the country, each state has put its own stamp on it. And some of the laboratories have performed more experiments than others, whose lab equipment still bears the dust that settled shortly after the passage of the 21st Amendment . Some of those experiments have benefitted small brewers because the three-tier system generally “protects” distributors and retailers from big bad manufacturers.

In particular, a strict three-tier system prohibits brewers from selling (or in some cases, even offering samples of) beer from the brewing premises directly to the public. Brewers in those states must employ a distributor to get their beer to retailers if they hope to make any money. Many states, such as California, allow breweries (small and large) to self-distribute and to offer tasting (for profit) at the brewery. And lo, the world has not ended. But it has provided start-ups with an instant revenue stream from the ability to sell beer on-site before they’ve even managed to find local accounts or considered a strategy for expansion/distribution.

It has also provided the public with an excellent way to appreciate their local beer: they can look at the brewing equipment and chat with the brewers and proprietors as they enjoy the beer made on site. Then, they can take growlers of it home. Of course, not everyone gets to enjoy local beer this way. Consequently, not everyone gets to enjoy a great variety of local beer: restrictive beer laws mean fewer would-be entrepreneurs will think it is worthwhile to start up.

In tension with these variations across the states is the national culture of beer appreciation growing rapidly in the United States. Drinkers just joining the ranks are well aware of the best beers across the nation, thanks to rating sites, social media, and the general modern ease of knowing about things beyond one’s own state’s borders.

When such a person reads something like this: “If their strategic plan was based on them opening up a microbrewery then changing state law, then that was a poor strategic plan,” he or she may be confused, even angry. He or she may know about the lines to fill growlers at Hill Farmstead or the Alchemist’s Heady Topper kerfluffle. He or she may have seen the picture of the lady with a 2-month-old baby waiting all night for a shot at some Pliny the Younger. Such a person may want a phenomenon of that nature to occur in his or her back yard.

Georgia’s Senator Jack Murphy added, “The three-tier system has been in place for, what, 80 years now? And what it was designed to do and is designed to do is regulate an industry that needs regulating,” Murphy said. Such a person, upon hearing this, is apt to think, “Federalism Sucks!” (Perhaps not in those terms). An opportunity for civic engagement, I suppose. It does seem that more and more politicians recognize the opening of small breweries as an opportunity to tout job creation, particularly in [rural] places that have not seen a lot that. Consequently, a challenger to an old “three-tier” guy may have a lot of success talking about small business growth, new jobs, and the good small brewing businesses have done for local communities.

While it is good that states can establish their own policies, the online and inherently borderless nature of like-minded communities, such as craft beer nuts, puts federalism in tension with the national mood. One national mood of craft beer is: locally made, locally consumed, [very] locally enjoyed. Small breweries (where they can) have teamed with the food truck phenomenon to turn their industrial-zone warehouse sites into cool, brewpub-esque hangouts. And it is a shame that residents of some states can only be spectators [and tourists] to this aspect of beer appreciation.

Sanctum Brewing Some More Life Into The Heart of Pomona

I had a chance to pop in to visit the best thing to happen to Pomona, craft-beer-wise, since the Rookery opened downtown in the old Joey’s BBQ spot. Sanctum Brewing opened its doors a couple weeks ago, initially only Fridays and Saturdays. Now, Thursdays too. Eventually, they are likely to add Wednesdays (since they can).

The space is just east of Towne avenue, at Palm and Commercial just north of the train tracks. Located in the newly renovated Pomona Packing Plant, the history of the buildings includes housing stone fruit and citrus packing operations going back nearly 100 years.

Sanctum’s Jason Stevens and Scott Lucas acquired a pile of old pallets, and put many hours (days, actually) into reconditioning them as decor for their walls and bar. It looks great. As for the beer, the initial test batches include a mild, two blondes (one with apple), a dubbel, a chocolate stout, and an IPA. I would say very successful for test batches–clean flavors, nothing off (that I could detect). I did not get much apple from the blonde, but the plain one was fine and probably better off without it. With a tasting flight, I did not get to appreciate any one of the beers fully, so I’ll leave my comments on them at that.

From a Law.of.Beer perspective, I had enough curiosity to scan Pomona’s council records regarding the opening of Sanctum. The only thing that stands out from a legal perspective is that a zoning amendment was required before the brewery could operate in its location. The particular industrial zone  did not allow for a brewery that served beer on the premises. After a non-contentious amendment, the city approved Sanctum’s CUP and here they are–a great addition to the city. Welcome, Sanctum!

Maine’s Prohibition on Posting Alcohol Content: Unconstitutional Restriction on Commercial Speech

 Maine’s Liquor Licensing and Compliance agency reportedly ordered a brewer to take down information regarding the alcohol content of beers on offer. The problem with the law is that it is restriction on commercial speech that is neither false nor misleading. Manufacturers should be encouraged to share as much truthful information as possible about their products so that consumers can make rational, informed decisions about what they buy. The Constitutional doctrine developed under Central Hudson says that while commercial speech may deserve somewhat less protection than political speech, for example, restrictions on speech containing information about a lawful product that is neither false nor misleading must serve a “substantial interest” of the state, with the regulation directly furthering that interest, restraining the speech only to the extent necessary to further the interest (tailoring).

According to the article, the law has been on the book since 1937, and has probably never been challenged under the doctrine espoused by Central Hudson. In 44 Liquormart v. Rhode Island, the Supreme Court struck down the state’s ban on advertisement of liquor prices because it unconstitutionally abridged commercial speech. In his (non-majority) opinion, Stevens stated, “The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good.” This statement seems to address precisely what is happening in Maine’s prohibition on alcohol content posting. If Maine’s regulation were construed to be a “flat ban” on posting/advertising alcohol content, it would not likely survive First Amendment scrutiny.

Jester King Craft Brewery, Inc. was a plaintiff in a Texas suit against the TABC (835 F. Supp. 2d 227). There, the District Court recognized the First Amendment protection in the context of Texas alcohol content labeling/advertising laws that plaintiffs claimed were “inconsistent, nonsensical, and [not justified by] any substantial government interest.” The court also held that forcing plaintiffs to call ale “beer” if its alcohol content was below a certain level violated the First Amendment because the state failed to show the regulation advanced a substantial state interest.

In Rubin v. Coors Brewing Co, the Supreme Court struck down a regulation on displaying  alcohol content in certain contexts, finding the regulation not “sufficiently tailored to its goal.” Notably, the court acknowledged that there may be a substantial interest in suppressing “strength wars” (the government’s justification for prohibiting information about alcohol content). However, the regulation at issue was too internally inconsistent to achieve that goal, so it failed the First Amendment test. Concurring, Stevens called the regulation an attempt “blindfold the public,” and argued that truthful information about alcohol content deserves full First Amendment protection.

Thus, it would seem the door is not entirely closed on Maine attempting to justify its regulation on posting alcohol content, but the state would face an uphill, and likely losing battle–probably not one it has an interest in fighting. Jonathan Adler of the Volokh Conspiracy posted an article on February 7, 2014 contending that Maine’s law, under Rubin, violates the First Amendment. Good enough for me to remove the question mark from the title of this post and state it affirmatively (even though the Rubin did not foreclose the “strength wars” argument).

Interestingly, there has been a fair amount of chatter amongst the beer-drinking public about “strength wars” amongst craft brewers. Double-triple-imperial beers are ubiquitous. Many, of course, enjoy a high-alcohol beer for the depth and complexity of flavors it can offer. A high-alcohol beer’s “efficiency” often plays a role in popularity as well. Extreme examples of high-alcohol beer recently made by BrewDog and others bring to mind the arms race played out by Tom and Jerry, with each one topping the other’s newest arsenal acquisition with ever-larger cannons and incendiary devices.

Consumers themselves have reacted to this increase by expressing desire for more “sessionable” beers, the popularity of which continue to rise. Most brewers, along with various imperials and doubles, now seem to have some form of lighter “day” IPA, XPA, or hoppy lager. Stone Brewing Co. announced its “Go To” Session IPA on 2/3/14. Brewers self-regulate the serving of stronger beers as well. As beers approach 7-8% and up, they are far more likely to be served in reduced portions–often 6–8 ounces for the strongest beers.

If the market responds in this way to “strength wars,” there is little reason to believe the government should intervene by “blindfolding” the public in hopes doing so will quell a strength war. The whole thing is silly, anyhow, given that someone interested primarily in strength can just go out and buy the cheapest “handle” of vodka, gin, whiskey, rum, brandy, tequila . . . or order the same at a bar.

Ironic, too, the early fear of strength wars in beer. Some 80 years later, the drafters of legislation such as Maine’s might be surprised to know that for the mass market in beer, consumers themselves have kept the alcohol level nice and low, as it turns out that “cold tasting” beer is necessarily low in alcohol.

CA ABC Issues Industry Advisory Regarding Brewery Sales of Others’ Beer

A California brewery (type 1 or 23 license) has wide latitude in sales of its own beer. It can sell the beer on premises, to wholesalers for distribution, and it can self-distribute to other licensees without limit. 

However, in a recently posted industry advisory, the ABC clarified that breweries are expressly prohibited from selling beer that is not “produced and bottled by, or produced and packaged for” them. 

There are exceptions to this seemingly clear-cut rule:

  • Brewers may obtain an off-sale retail beer and license.
  • Brewers may also obtain a beer and wine wholesaler license.
  • Brewers who also have restaurants on or next to the brewing premises can sell others’ beer and wine.

In a recent paper I wrote for a law school seminar class, I argued that small brewers’ who have no interest in operating restaurants should nonetheless have the opportunity that their restaurant-running brethren have to offer guest taps of fellow local brewers to increase consumers’ overall knowledge of the beer styles and choices available to them in the geographic area, to to facilitate their ability to interact and collaborate with one another as that is a valued element of the industry.

 

Origins of National Lager Day, Lack of

When I heard the news today, I first thought: I’ve no lagers at home. I second thought, since when? As declared by whom? One can find it repeated throughout the web today as though it had always been so. Curiously, no mention of the original proponent of declaring this 10th of December the day, or why this day. One might think the National Lager Foundation but alas, there is none.

An Occam’s Razor-type guess is that it comes from someone hoping people will buy more lagers; thus, someone who trades heavily on lagers. AB announced a survey in time for commemorating this holy day. Sam Adams (I think they have a lager…) released survey results too and an infographic and Jim Koch gave his “top 10” reasons to drink a craft lager (not included was “so that we’ll sell more lager”).

I have put as many minutes into historical google and news searches as I am willing and turned up nothing. It is definitely a recent invention, with the earliest mention I found in 2009.

A 2011 post in the Examiner reported the origins of the “holiday” to be unknown. (their written finger quotes). Perhaps it will stay that way. It is now marked on “food holidays” lists in various places and people love a reason to quaff a beer, even if that means celebrating non-lagers under the auspices of celebrating lager day. Those who are fizzy on lagers and ales should take advantage of the many posts taking the opportunity to explain the difference between ale and lager.

In any case,  a day to celebrate lager cannot be a bad thing. I will try a new one (to me) from Schmaltz (or is it Sam Adams/Alchemy and Science now? I’ll have to check the bottle)–Coney Island Albino Python.

What’ll you have?

*Note: The Albino Python is a great hybrid. I do not dislike wits, but I am not always excited about the banana/clove factor. This beer gets the light and smooth body and the citrus peel/spices of a wit, but has a much cleaner flavor overall with muted (yet present) esters/phenols.

Welcome Alosta Brewing; Quick Anecdote on Self-Distribution

This evening I had occasion to visit the 5-days-old Alosta Brewing in Covina, CA. They are Covina’s first microbrewery. (Nearby West Covina features a BJ’s that used to be a prominent brewing location for the company and remains licensed as a brewpub.) The opening process for the fledgling outfit has been long and painstaking, requiring a mid-game switch in locations, much negotiating, and a lot of waiting. After all, though, they are open for business and report a very successful first week so far. At least two local brewers were in the tap room sampling Alosta’s beer when I arrived.

Current offerings include a blonde, a British pale, a strong British pale, and a brown porter. Upcoming are an oatmeal stout and a saison. The brewers/owners include members of the Crown of the Valley Brewing Society, a homebrewing organization in operation since 1988.

While I stood in the tasting room,  a call came in from a nearby pub requesting another keg of the blonde ale. In minutes, a keg was loaded and ready to move. “We can deliver a keg faster than we would be able to get a pizza,” one of the owners exclaimed.

In California, brewers can sell their beer to retail licensees directly without limit. Many states either do not allow this at all, or place caps on the amount of beer that can be self-distributed.

For a brewery just starting up, the ability to be immediately responsive to local retailers seems like an important benefit. As a brewery grows, self-distribution becomes less efficient. But in moments like the one I witnessed, it means the just-opened brewery’s beer can remain on tap through a busy Saturday evening at a popular pub with many great craft tap handles.

Advertising by Autographing

There are restrictions on the freedom of brewers (and other suppliers) to advertise the availability of their products at a particular retailer. For one, they generally cannot initiate the transfer of information–someone must request (such as by clicking “Find Our Beer” on a web page) the information first.

A California ABC industry advisory details one way that a brewer could advertise the availability of its product at a particular retailer proactively. §25502.2 authorizes (until 1/1/16, at least) a supplier to “employ or engage” a person to sign autographs for consumers at an off-sale retail licensee’s premises (a liquor store or bottle shop, for example), and to advertise in connection with the event, including the beer to be featured, and to list the name and address of the retailer in the advertisement. Restrictions include no pictures of the retailer’s premises, and the listing must be “relatively inconspicuous in relation to the advertisement as a whole.”

This privilege may be used twice per year per retailer and must be registered in advance with ABC. While limited, this could be an effective way for small breweries to engage with their local fans (the brewer(s) themselves could sign the autographs) and to announce the availability of their product at a new location (or just to raise awareness about pre-existing availability). If the brewer were to make a special release beer for the event (or make an already popular seasonal beer available first at the event), that may make it even more successful.

Small brewers ought to be able to just send out a Tweet whenever they’re newly stocked at a store or put on tap at a bar, especially those that only self-distribute and are available in limited locations. The market works better when consumers have full information with which to make their choices and there would be no risk of the harms the regulations seek to prevent. For now, though, they are constrained to making use of the limited exceptions such as the “autographing event” one mentioned here. Since it would cost little and foster relationships with local retailers, small brewers should try to make use of it while it is available!

Stone’s “Crime”: Worthy of Pardon

I suppose I should not talk only about the law of beer on the law.of.beer. The beer of beer is worth talking about, too.

The following is Stone’s official description of Crime: “Crime is Lukcy Basartd Ale (a blend of Arrogant Bastard Ale, Double Bastard Ale and OAKED Arrogant Bastard Ale) brewed with freshly harvested peppers and aged in bourbon barrels. Like a criminal act, this capsicum-laced temptation—brewed with jalapeños and black nagas, to name but a few—provides entrée into the seedy underbelly of Stone’s pepper-induced purgatory.”

The first chili beer I tried was Rogue’s Chipotle, many years back. I recall enjoying the subtle, building warmth and light smokiness. Since then, I have had several more. I recently enjoyed sipping a glass of habenero stout by Aztec in Vista, CA (San Diego). The heat level was notably more aggressive than a restrained use of chili as in Rogue’s Chipotle Ale. Yet, with the robust qualities of the stout to accompany it, it worked well.

I have not yet tried the Punishment, which I hear is quite searing. Crime, though, impressively dabbles with extremity while achieving elegance. A strong whiff of chili, wood, and smoke comes off the nose. Stings the nostrils a bit. But the aroma of chili is rich and fresh–as though whole chilies were floating there in the bottle. A drink reveals oak, mild whiskey notes, and poignant heat. Not a subtle, building warmth but immediate sensation. After a moment of surprise, the heat level was actually pleasurable and remained so. It allowed a full appreciation of the true accomplishment of the beer: the nuanced fruit/aromatic flavor of the chinense family of chili peppers (the nagas in this case, related to habaneros). It can be hard to incorporate high-heat chilies in a dish so that the flavor comes through, while keeping the heat level tolerable. Here, it was done with finesse . . . in a beverage.

Unless you really cannot tolerate heat, in my opinion this beer is a must-try.

Language Shows Changing Power Relationships in Beer Distribution

Many states have protections for distributors, including some that require a brewer to renew its distribution agreement with the distributor unless the brewer can show “good cause” for ending the relationship. This of course interferes with a brewer’s freedom to choose how its beer will be handled, marketed, and placed for retail sale. The interference, historically, was justified by the power differential between large manufacturers with national presence and the small, independent, family-owned distributors that operated within particular geographic areas.

The three-tier system is now faced with breweries who are the smallest fish in the pond, with distributors being large and powerful (in many cases), and many retailers, too, being quite muscle-y: BevMo, for example.

Language itself can reveal a lot about how power dynamics have changed. One sentence in particular spurred this post:

@CraftBrewingBusiness sent out this tweet:

Stone Distributing takes Mother Earth Brew Co. under its wing http://www.craftbrewingbusiness.com/?p=11460.

Stone is no giant in wholesaling and craft brewers sign with them because they too are craft brewers and have a reputation for working well with fellow, smaller breweries. But the statement reveals a lot about a small brewer’s decision for the first time to cast a wider net and use distribution channels to sell beer. The language also reveals a lot about perceptions of Stone’s distributing business: it conveys the perception that Stone has a benevolent (if gargoyle-y) wing in the first place.

There are other examples as well (also happening to show that positive perceptions of Stone are long-lived).

When The Bruery signed with Stone in 2008, Patrick Rue posted on his company’s blog:

“This last Tuesday I … signed a distribution agreement! I cannot express in words how excited and happy I am about this.”

Now, taken out of context, if that statement were made in a traditional setting, with powerful manufacturers and small, independent distributors, who would be making that statement? Landing a contract to distribute Coors, Miller, or Bud would mean the world to a small company (I’m sure it still does). Now, such agreements can mean the world to small brewers who want to take the next step in growing their business.

A common usage to report a distribution agreement between a small brewer and a distributor seems to be “signed with.” For example, “Santa Clara Valley Brewing, which has been serving up some of the South Bay Area’s best brews, has just signed with California Craft Distributors™ to bring its golden goodness to the Golden State” (link). This phrasing is commonly found in pro sports, to report an individual player signing with an (obviously larger) organization. California Craft Distributors describes itself as “a  boutique distribution company which focuses on hand selling craft beer statewide in California.” This example further highlights the importance of distributor choice for a small brewer–since the laws add protections for the distributor, using other craft brewers or smaller distributors who will focus their time and energy on understanding and promoting smaller brands is key.

It bears mentioning that in CA, small brewers can self-distribute. Thus, they can get away with on-site sales and self-distributing to the local area for a while before they have to make the decision to use a distributor for the next step of growth. Not all brewers have this privilege, or to the extent that CA small brewers have it. Brewers Association has begun collecting information on the various self-distribution rights (or lack thereof) here.