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Updates on Regulation Allowing Breweries to Sell On-Premises

by / Thursday, 08 January 2015 / Published in Blog

lcbBack in October, we broke the news that the Liquor Control Board was proposing to change its regulations to allow Pennsylvania breweries to sell their beer on-site without the need for a brewpub or other retail license. ( http://paalcohollaw.com/?p=508).  Before a new regulation can become effective, however, there is a fairly complex path it must follow, including being vetted by the Pennsylvania Independent Regulatory Review Commission (“IRRC”).  The exact process is too involved for this blog post (and does not lend itself nicely to a Schoolhouse Rock video), but right now the proposed regulation is in the “comments” stage.  The public comments period ended on December 8th, 2014.  During this time anyone could submit comments regarding the proposed regulation; however, the only comments received were those submitted by the Brewers of Pennsylvania (“Brewers”).

While the Brewers certainly appreciated the effort to allow breweries to sell their own beer on-site, they had a few concerns.  The main concern was that the proposed regulation would only allow a brewery to sell the beer it actually produces at that specific site, which conflicts with other laws that state a brewery may sell beer it produces and owns.  For example, section 4-446 of the Liquor Code states breweries may “[s]ell malt or brewed beverages produced and owned by the brewery under such conditions and regulations as the board may enforce, to individuals for consumption on the licensed premises….”  (It should be noted that, technically, the law allowed breweries to sell on premises since this section was enacted in 2011, subject to the PLCB’s regulations.  The PLCB, however, took the position that on-site sales would not be allowed at all unless a brewpub license was obtained.)  The difference between “produces on-site” and “produces and owns” is very important to breweries with multiple locations as it would prohibit one location from selling beer produced at another location, even though it is all owned by the same brewery.

Although no one else commented on the proposed regulation, the Brewer’s comments were persuasive, at least with respect to the IRRC.  After the public comment period closed, the IRRC had its own 30-day window to submit comments to the PLCB.  This window closed yesterday, January 7th.  In its comments to the PLCB, the IRRC agreed with the Brewers, noting that the proposed language was not consistent with other laws impacting Breweries.  While not specifically addressed by the Brewers, the IRRS also requested that the PLCB provide some explanation for the seating and food requirements (proposed regulation would require at least 10 seats and enough food available for each patron).

The comments may push the timeframe for enactment of the regulation a little down the road, but hopefully, the PLCB will be quick to respond. I don’t see any reason for the PLCB to fight over the requested change from “produced on-site” to “produced and owned,” given the language of several other laws. The PLCB may dig its heels in a little bit with respect to the food/seating issue – we’ll have to the explanation. I will be particularly interested in hearing comparisons between the food/seating requirement for breweries, as compared to the requirements for wineries and distilleries or the lack thereof.  Here’s hoping 2015 brings this change and others to the beer industry.

If you would like to view the IRRC’s comments, click here.

Cheers,

Ken

 

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