Craft Brew Bills Raise Questions

Should craft breweries be allowed to sell on their premises and be able to distribute in Texas? It's one question that is being raised in Austin with lawmakers that has posed a question about the Alcohol Code as well. According to the Texas Tribune, the Senate Business and Commerce committee is dealing with the subject this week.

The Senate Business and Commerce Committee on Tuesday acted as legislative referee over bills that would allow craft breweries to sell on their premises and self-distribute in Texas, but critics said the legislation would hurt the state's system of alcohol production and distribution.

“It’s two different visions of where the beer industry in Texas needs to go,” said Rick Donley, president of the Texas Beer Alliance.

State Sen. Kevin Eltife, R-Tyler, filed a package of bills in February that would make significant reforms to the Texas Alcoholic Beverage code and the state's three-tiered system that regulates the production, distribution and retail sales of beer separately, dating to the end of Prohibition.

Eltife said the legislation also puts Texas brewers “on a level playing field with other states” in their treatment under the law. The change is strongly supported by the Texas Beer Alliance, which lobbies for major-brand beer distributors and some craft brews. Donley said the legislation supports the growth of craft breweries and addresses lawsuits surrounding the Commerce Clause.

Senate Bill 515 would raise the annual barrels a brewpub could produce from 5,000 to 10,000, grants a limited right to self-distribute to retailers and allows retail sales through distributors. SB 516 and SB 517 raise the annual production limit used to determine which small ale brewers and beer manufacturers can participate in self-distribution. SB 518 allows small brewpubs to sell their beer to customers on their premises and sets tasting room hours of operation.

“It creates a nice steppingstone for when a brewery starts out small and grows larger into a production brewer,” said Scott Metzger, owner of Freetail Brewing in San Antonio and legislative chairman of the Craft Brewers Guild. “It becomes a pathway.”

Currently, brewpubs, which can only sell to directly to consumers, cannot make the transition to become production breweries, which sells to wholesalers, Metzger said.

The Texas Beer Alliance did not always champion these changes, but craft breweries have recently become the industry’s gold mine. “It is the only segment in the industry to show growth in the last four years,” Donley said.

But Eltife’s bills are being challenged by Senate Bill 639, filed by state Sen. John Carona, R-Dallas, and supported by the Wholesale Beer Distributors, which presents a host of complex changes to the code, centered on severability, reach-back pricing and distribution — problems that Carona's staff argues go unaddressed in Eltife's bills.

What are your thoughts on this issue? For fun, what are your favorite craft beers in Texas? There are many good ones to choose from.