A bill making its way through the Montana Legislature that would allow breweries to increase their production limit from 10,000 barrels to 60,000 barrels and still sell beer to customers on the premises was significantly gutted in a committee Tuesday.
The Senate Business, Labor and Economic Affairs Committee voted to make the limit 12,000 barrels, which would only be a 2,000 barrel increase from the current production cap.
The Montana Brewers Association has argued that the current production cap stifles economic growth and hampers job creation because breweries that hit the 10,000 barrel cap must either stop selling beer in the tasting room or stop canning more beer.
Facey believes pressure from the Montana Tavern Association on lawmakers was the reason the production limit was drastically reduced.
“The reason for the 12,000 barrel limit is to force the breweries to the negotiating table,” he said. “But going to 12,000 barrels doesn’t help anybody because you need to pay (business equipment loans) off.”
The bill would have largely impacted three breweries in the Missoula area. The owners of Big Sky Brewery, which produces much more than 10,000 barrels and must give away beer for free in its tasting room, testified that they’ve given away $4 million worth of beer in the past decade, which they say has cost the state $250,000 in lost excise and income taxes. KettleHouse Brewing Company, which is going to be producing more than 10,000 barrels at its new Bonner location, doesn’t yet have plans for a tasting room at the new location. And Bayern Brewing in Missoula, which is pushing right up against the 10,000 barrel limit, can’t produce more beer while still selling in its popular tasting room.
KettleHouse Brewing posted Tuesday on its Facebook page that the amendments “could effectively force the brewery to shut down its Northside Taproom.”
“They neutered a perfectly good bill,” said KettleHouse owner Tim O’Leary. “It was easy and simple and wouldn’t have hurt really anybody because this 10,000 barrel production cap applies to breweries that are established and are actually helping bar owners provide Montana-made beer to serve in their bars. That helps them compete against startup taprooms. So now if you are at 9,999 you’ll say ‘to hell with it, I’m not going to expand and send beer to Billings or White Sulphur Springs, I’m going to save it for my taproom.’”
Brewers and some lawmakers cried foul, saying the Montana Tavern Association leaned on lawmakers to drop the limit and pointing out that the chairman of the Senate Business and Labor Committee is a bar owner. Several of the state’s larger businesses, including Big Sky Brewery, KettleHouse Brewing Co., and Bayern Brewing in Missoula, all are over or near the current limit and said the change would hurt their operations.
Bars and breweries have long butted heads, with bar owners upset that breweries can sell their product from taprooms without having to buy expensive liquor licenses that bars must have to operate.
Thomas’ amendment also would limit breweries to three locations and sell no more than 2,000 barrels annually for consumption on-site. Thomas said that works out to about 400 people drinking about three beers a night.
Breweries are good for the state’s economy, Thomas said, and employ people in small towns and are a popular Montana product both in-state and as an export.
“I’ve seen data that shows when you open your brewery you make money the more beer you sell, but you get to a point where the pub doesn’t make any more money from the tasting room because you are limited by the number of customers you can have and the quantity of beer they can drink and the hours you can be open,” Facey said. “Breweries are limited by hours, then they plateau out. The only way to make more money is by selling it in stores and bars. So reducing this production limit is just truly hurting the number of jobs in the manufacturing industry. So by taking that cap down, it’s not providing any relief to the tavern owners.”
But Sen. Ed Buttrey, who chairs the committee that lowered the proposed barrel cap, said breweries are not artificially stifled by the state and are free to brew as much as they want, given they shut down their taprooms after passing a certain level.
“You’ve all been sold a bill of goods,” Buttrey said. “This is not about increasing production, this is about being able to still act as a bar.”
Buttrey said brewers came to an agreement years ago with the tavern association that they would use their taprooms to help generate revenue as they started their businesses, and as production grew they would close down on-site sales.
Tim O’Leary, who owns KettleHouse in Missoula, said the amendment would let the brewery keep its location on Missoula’s Northside open. He also said his brewery would not have a problem staying under the 2,000-barrel-a-year cap for on-site consumption. That cap does not affect growler sales or anything else sold to be consumed off-site.