Lagerslature: Craft Brewers Push for Change

The passage of House Bill 602 will allow breweries like Live Oak to distribute directly to consumers during brewery tours. Photo by Diego Flores

By Cameron Miculka
For Reporting Texas

Chip McElroy, owner of Live Oak Brewery, is currently looking for a sponsor for his proposed bill. Photo by Diego Flores

The two bills, filed in March by Rep. Mike Villarreal of San Antonio and Rep. Jessica Farrar of Houston, could change the ways brewpubs and breweries are regulated.

Although both target the regulation of beer distribution in Texas, each focuses on different parts of the industry: brewpubs and breweries. Brewpubs are pubs or restaurants that brew beer on premises and sell the beer to smaller niche market. Breweries exclusively produce beer to be distributed and sold to retailers.

Brewpubs, which currently may only sell beer directly to consumers on premises, are prohibited from selling their beer to wholesalers or distributors. House Bill 660 would still limit the maximum production of these breweries to 5,000 barrels per year, but would allow pubs to broaden their markets and make their beers more widely available.

The two bills, filed in March by Rep. Mike Villarreal of San Antonio and Rep. Jessica Farrar of Houston, could change the ways brewpubs and breweries are regulated. A House Bill 602, filed by Jessica Farrar (D-Houston), would allow breweries to distribute their beer directly to consumers, bypassing the three-tier system.

Representative Farrar said that the issue was most recently brought to her attention by the St. Arnold Brewing Company in Houston, Texas. “This bill is meant to loosen some of those restrictive laws surrounding breweries,” she said.  “Brewers want to be allowed to send visitors home with beer following a tour.”

Differences between proposed bill. Graphic by Antonio Morales

Despite two similar bills failing in the previous sessions, Farrar believes the third time may be the charm for at least one. She said that bills usually take several sessions of rewriting to pass due to the structure of the legislature, which, Farrar said, “is set up to ‘kill’ bills.”

This draft of the bill, Farrar said, was written with interests of all concerned parties in mind, including wholesalers who have been previously opposed to the bill. “The intention was never to [disturb the three-tier system],” she said. “If anything, it will create more business for distributors.”

Several phone calls placed to the Wholesale Beer Distributors of Texas for this story were not returned.

Farrar also said that the efforts of brewers across the state to raise awareness have been tremendously effective in garnering support for the legislation. “Brewers are the ones with the most vested interest in passing this legislation, she said. “Beer enthusiasts around Texas have also been a driving force behind this bill. They have been great at getting the word out to others in the community through blogs and public events. ”

However, some brewers would like to see the new system overhauled completely.

Chip McElroy, the president of Live Oak Brewery in Austin, Texas, compared the current three-tier process to standards regulating wineries, which allow wine to be sold directly to consumers.

“Wineries are allowed to sell wine at their place of production whereas breweries are prohibited from that,” McElroy said. “That’s a discrimination issue.”

Although Farrar’s bill would still be prohibit breweries from selling beer directly to consumers, Farrar’s bill would allow breweries to give each customer up to 48 12-ounce bottles of beer. The bill also allows breweries to charge a ticket price for tours to make up for the cost of the beer.

McElroy said that he doesn’t believe Farrar’s bill goes far enough to help small craft breweries. “[The bill] doesn’t do anything to help the smallest of the small breweries,” he said.

McElroy is instead currently looking for a representative in the House to file a bill that would allow small craft breweries to sell their beer on premises. However, he has not yet found a sponsor.