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Helpful Information for Out-Of-State Breweries Coming to the Craft Brewers Conference

by / Friday, 25 March 2016 / Published in Blog

philadelphia-city-view1We’ve been pretty excited since first learning that the Brewers Association’s Craft Brewers Conference was going to be held in Philadelphia this year.  From May 3 through the 6th, Philadelphia and the surrounding area will play host to established industry professionals, rising stars, and craft beer fans.

Although Philadelphia is known as the City of Brotherly Love and will certainly be a great host, Pennsylvania’s liquor laws are generally not viewed as welcoming.  Many out-of-state brewers will not only be attending the CBC, but will be bringing their beer with them, either specifically for the conference or for many of the events happening at Philly-area bars, pubs, and restaurants during that week.  These breweries will want to keep the following in mind when making arrangements for the CBC.

  1. Any out-of-state brewer bringing beer into Pennsylvania can only do so through the use of an “importing distributor” – it cannot “self-distribute” like PA brewers. (Is this a violation of Granholm?  Maybe.  Has anyone challenged it?  Nope.)  An importing distributor is a specific type of distributor, and the license allows it to bring in beer produced outside of PA.  If an out-of-state brewery already has a distribution agreement with an importing distributor that covers Philadelphia, it will have to use that distributor.  If the brewery does not have an existing relationship, it will need to enter into a distribution agreement with one.  Distribution agreements are not to be considered lightly, however.  Like many other states, in Pennsylvania, once a distribution agreement is entered into, it can be very difficult to get out of.  Generally speaking, they can only be terminated for “good cause,” which will likely require a court to determine if that has occurred.  There is some very thin ice in this area and not a lot of guidance, but suffice it to say that a brewery will want to limit the distribution agreement as much as possible in terms of duration and geographic location.  If not careful, the brewery could unintentionally be giving distribution rights to someone, which could cause problems if they ever intend on entering that market later.
  2. An out-of-state brewery will also need to ensure that it registers its particular beer brands in Pennsylvania.  The actual paperwork is fairly easy and can be found here:  http://www.lcb.state.pa.us/cons/groups/licensing/documents/form/000392.pdf  The fee to register, however, is not an easy pill to swallow – $75 per brand  Please note that Pennsylvania does require the brewery to attach the COLA issued by the TTB to the brand registration application.  Pennsylvania does have a dedicated office for reviewing and approving brand registration, so if you have any questions about what is required, they are very helpful.  They are also generally very quick at processing and approving the applications (usually less than a day).  Pennsylvania is in the process of moving all alcohol-related forms and applications online and brand registrations were one of the first to be put in place.  The on-line brand registration site can be accessed here:  https://plcbplus.pa.gov/pub/Login.aspx
  3. In addition to the fee for brand registration, an out-of-state brewery will also need to make sure that the appropriate taxes are paid on the beer.  PA’s beer excise tax is one of the lowest in the nation at $.08 per gallon.  Unlike pretty much every other tax, this rate hasn’t changes since 1947 so we try not to complain and rock the boat on this one.  Forms related to the tax and reporting can be found here:  http://www.revenue.pa.gov/FormsandPublications/FormsforBusinesses/Pages/Malt-Beverage-and-Liquor-Tax.aspx#.VvU8FXpA6b8

Those are the main points to consider for out-of-state breweries.  If you have any questions, please feel free to contact me.  Hope to see you there!

Cheers,
Ken McDermott

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