Page 15 - Flathead Beacon // 12.17.14

FLATHEADBEACON.COM NEWS DECEMBER 17, 2014 | 15 Battle Brewing Over Alcohol Regulations
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Alcohol distributors split from new industry coalition, shaking up potential efforts to reform licensing system
By DILLON TABISH of the Beacon
Besides the regular quarreling be- tween Republican and Democratic law- makers, a high-profile conflict between the various interests in the alcohol in- dustry appears likely to erupt at the up- coming state legislative session in Hel-
enaL. ast week one of the main industry players — the Montana Beer and Wine Distributors — announced their sepa- ration from a statewide coalition that included members of the Montana Tav- ern Association and Montana Brewers Association. The group has been trying to patch up relations and find common ground after a big blowup in the 2013 session.
The distributors’ split occurred on the eve of the January session due to disagreements over a specific bill that is being promoted by the coalition seeking to change a section of the state’s conten- tious and complex alcohol licensing re- quirements.
The bill, referred to as the “license stacking bill,” would allow brewer- ies to purchase a retail license to sell beer and liquor while also allowing re- tail on-premise locations, like bars, to purchase a brewery license and brew their own beer.
As it stands now, an individual can only own one type of alcohol license in Montana, although some business own- ers have found a way to work around the regulations by establishing sepa- rate businesses under different own- ers, but all working essentially under the same roof.
The list of breweries across the state that have found a legal way to circum- vent the regulations include Tamarack Brewing Company in Lakeside, Great Northern Brewing Company in White- fish, Red Lodge Ales, Lewis and Clark Brewing Company in Helena and Kettle- House Brewing Company in Missoula.
Proponents of the bill say it would streamline business operations for es- tablishments and provide another op- portunity to succeed without being hamstrung by outsized regulations.
Currently, breweries that produce over 100 barrels but less than 10,000 barrels annually can sell up to 48 ounces of beer to a customer on site from 10 a.m. to 8 p.m. If a brewery exceeds 10,000 barrels, it can still provide beer samples but cannot charge. For example, Big Sky Brewing in Missoula operates a free tasting room.
Opponents of the bill say the current
Levi Bender loads a pallet for distribution at Fun Beverage in Kalispell. GREG LINDSTROM | FLATHEAD BEACON
system is already providing important checks and balances and by altering the law, businesses, whether it’s a brewery or bar, could become so-called verti- cal monopolies that could dominate the market with an unfair advantage. Other businesses that wanted to compete with those that owned two licenses would have to also buy a license from the quota system, which would further entrench a controversial issue, according to those opposed.
“The integrity of a balanced market structure that is purposely designed to level the playing field so everybody wins is more important than carving out regulations for special interests who already have licenses,” Brian Clark, the general manager of Fun Beverage, which distributes the majority of alcohol in Northwest Montana, told the crowd at last week’s Kalispell Chamber of Com- merce luncheon.
A few breweries have publically sid- ed with the distributors and raised sup- port for a different type of change.
“I believe raising the barrel limit is a much better solution to allow Mon- tana breweries to grow their production without losing their ability to operate a taproom,” Brian Smith, managing part- ner of Blackfoot River Brewing Co., in Helena, said in a press release announc- ing the distributors’ separation from the coalition.
Smith added, “In the long run, the ideal solution would be to create a Brew- pub license that would remove the retail restrictions on individual breweries, while keeping breweries, taverns and distributors separate.”
Since the last Legislature in 2013, which featured a much-publicized fight between Montana’s tavern and brew- ery associations, the opposing sides have tried to patch things up and com- promise on reform. This occurred in the form of a newly established coali- tion, dubbed the “Alcohol Beverage Co- alition,” that included members of the MTA, MBA and MBWD.
The relationship between breweries and taverns appears to be significantly
mended, but now there’s a new wrinkle involving the distributors.
“I’m extremely disappointed that they walked away from the whole coali- tion,” said Josh Townsley, co-owner of Tamarack Brewing Co. and president of the MBA. “We’re sorry they feel that they would rather be away from the table.”
Townsley said he disagreed with op- ponents who said the potential license stacking bill would find a solution to cre- ate a problem.
“It’s a step. It’s not a perfect option but it’s a positive move working for- ward,” said Townsley.
The proposed bill emerged from a new effort among the various sides of Montana’s robust alcohol industry — distributors, breweries and taverns, as well as the gaming industry — to get along while existing in a new age of alcohol consumption.
In just the past decade, the num- ber of craft breweries in Montana has skyrocketed from a handful to over 40. Craft beer production increased 49 per- cent from 2010 to 2013.
Along with this noticeable change, the distribution has shifted from tradi- tional products — the mainstream line- up of beers from nationwide companies such as Anheuser-Busch — to more lo- cally manufactured craft beers. Accord- ing to Clark, Fun Beverage has seen a 30 percent increase in craft beer distribu- tion in the last decade. Statewide data also shows a shift in where people pur- chase alcohol, with off-premise sales at grocery stores and other retailers in- creasing.
No doubt, the alcohol industry is a lucrative one. The economic impact of beer and wine distribution in Montana totaled $197.3 million in gross sales last year, according to a study by the Univer- sity of Montana Bureau of Business and Economic Research.
In other words, there is a lot at stake and varied interests on all sides.
“It’s going to be a very interesting (legislative) session with regards to al- cohol,” Clark said.
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