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A Brewery Pub License’s Impact on Self-Distribution

by / Friday, 14 February 2014 / Published in Blog

DSCF2125One of the big issues facing Pennsylvania breweries when they are creating their business plans or just starting out is how to promote their beer and get it into other places.   By virtue of its brewery license, a PA brewery can self-distribute its beer by selling to other licensed entities, including restaurants and distributors.  A brewery can also enter into distributor agreements, whereby it agrees to give that distributor exclusive rights to sell the beer in a specific geographic area.

Within the past few weeks, I’ve had conversations with several PA brewers about their decisions to either self-distribute or go through a traditional distributor.  This is a very complex decision with pros and cons on both sides.  There is a lot of information to consider, which sometimes leads to confusion.  For example, in speaking with these brewers, some believed that if a PA brewery obtained a brewery pub license, it could no longer self-distribute.  The confusion likely stems from the fact that for most purposes, a brewery pub license is considered a retail license.  40 Pa. Code 3.92 (The holder of a brewery pub license shall have all the rights and be subject to the same conditions and qualifications as those imposed on holders of a malt and brewed beverage retail dispenser license.) Combine that statement with the following – a “holder of a brewery license who receives a …malt or brewed beverages retail license to operate a brewery pub shall not sell directly to any person licensed by this act” except through the traditional distribution arrangements (47 P.S. 4-446(a)(4)) – and you can see how that can be interpreted to mean breweries with brewery pub licenses can’t sell to other liquor licensees.

While the brewery pub license is often treated as a retail license, it is still its own, separate license.  Recognizing this, the Liquor Control Board has specifically stated that “If the brewery operates a brewery pub pursuant to a [brewery pub] license, rather than a restaurant, hotel or retail dispenser license, the brewery is limited to selling the malt or brewed beverages it manufactures, but may continue to self-distribute.”  Advisory Opinion 13-499.  Accordingly, the Liquor Control Board has held that a Pennsylvania brewery can still self-distribute after it receives its brewery pub license; however, if the brewery obtains a restaurant or eating place license, as some in the state have, it can no longer self-distribute.

This is just another example of how the liquor law isn’t always what it seems when you first read it and how Advisory Opinions can be helpful in piecing the law together.  Below are links to a few Advisory Opinions discussing this topic:

Advisory Opinion 2010-408

Advisory Opinion 2012-153

Advisory Opinion 2013-499

Cheers,

Ken

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