Bill amended to allow craft brewers to increase beer production

  • Craft brewers have compromised on a bill that would allow them to increase production
  • The production cap for microbreweries would go from 40% at 2,000 barrels to 200% at 2,000 barrels
  • The bill would allow brewers to expand without divesting their restaurants and bars

Arizona’s craft breweries have compromised on a bill that will allow them to produce more beer than is currently allowed in the state while retaining their restaurants and bars.

The Arizona Craft Brewers Guild is pushing for a state law change this year that would clarify that the nearly 60 microbreweries could maintain restaurants and bars after exceeding a certain amount of production. Senate Bill 1030 was held up by a committee last month when opponents of the bill raised questions about its legality.

The Guild then compromised on an amendment, which passed its first test on Monday while moving forward unanimously through the Senate committee where it had been held up. The sponsor of the bill is Senator Kelli Ward, R-Lake Havasu City.

The new bill wording will allow microbreweries to produce up to 200,000 barrels of beer per year across multiple sites. The ceiling is 40,000 barrels today. A barrel equals 31 gallons, or two full-size drums.

“It’s exactly what we asked for,” said Rob Fullmer, executive director of the Arizona Craft Brewers Guild.

Breweries need to know there’s a way for them to keep growing if they want to keep investing in Arizona, he said.

Under current law, brewers who make more than 40,000 barrels of beer a year are not allowed to run restaurants. That means the state’s largest breweries, such as Four Peaks Brewing Co., cannot continue to grow without selling or closing their restaurants, or changing the law.

Proponents hope amended SB 1030 will pass a full Senate vote this week.

Under a three-tier system that dates back to the end of Prohibition, a company can only be a producer, distributor or retailer of beer in the state, and cannot do business with more than ‘one of them.

In 1987, Arizona passed special rules to allow small brewers to make and sell beer in their restaurants and bars. This allows them to act as a producer and retailer, without a distributor.

Arizona brewers making less than 40,000 barrels of beer a year are granted special privileges, such as being allowed to “self-distribute” beer at a second location without a distributor. The current law also allows them to distribute 3,000 barrels of beer per year themselves to other retailers.

Under the amended bill, a brewer would have to waive these self-distribution rights once it exceeds 40,000 barrels, except for on-site retail sales. Brewers also could not expand to new retail outlets above 40,000 barrels.

“We know of no opposition,” Fullmer said of the amended bill.

The three companies that originally opposed SB 1030 approve of the changes, Fullmer said. These companies were Alliance Beverage Distributing, Southern Wine and Spirits and Young’s Market. Collectively, the opponents refer to themselves as the Arizona Wine and Spirits Association.

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