BOSTON – A group of Massachusetts craft brewers has a scheduled meeting with State Treasurer Steven Grossman in an attempt to stave off a regulatory interpretation that they claim could harm the craft brewing industry in the state.
The Treasurer’s office oversees the Massachusetts Alcohol Beverage Control Commission (ABCC), which issued an advisory this week that it would require applicants for a farmer-brewery license to source half of their agricultural materials from in-state sources.
Massachusetts brewers and suppliers, who have long employed the farmer-brewery license as a way to begin selling their own beer without having to go through more expensive routes to market, say that the new requirement would have the ultimate effect of making the license nearly impossible to achieve.
“This is going beyond enforcement and creating policy,” said Rob Martin, the President of the Massachusetts Brewers Guild and Owner of Mercury Brewing. “People will lose their jobs over this and there will be breweries that will not exist because of this.”
On Monday, the ABCC web site featured a published advisory that the intent behind the requirement was put into place to support and enhance the state’s agricultural community. A treasury office spokesman said the issue had come to light during a hearing for Idle Hands Craft Ales. In turning down that application on July 20, the commission also put the rest of the industry on notice that the new threshold would be applied to all license renewals.
“This is a clarification of the law that is based on information provided during the Idle Hands hearing,” said Press Secretary Althea Harney, who added that the ABCC had become aware “that this perhaps is something that needed to be clarified.”
Under the current law, those looking to open a brewery in Massachusetts can apply for a Farmer-Brewery license, valued at $22 per year for brewers producing 5,000 or less barrels per year. Additional fees apply as barrelage increases, with the cost for a brewery producing between 200,000 and 1,000,000 barrels listed at $110 per year.
Martin, who plans to brew 22,000 barrels through his location in Ipswich, said that the ability to source 50-percent of his raw ingredients from Massachusetts is impossible.
“That number is unattainable by any brewery in the state,” he said. “I would need 750,000 pounds of grain to brew my anticipated 22,000 barrels, and that just couldn’t happen.”
Andrea Stanley, the Co-Founder of the Hadley-based Valley Malt agrees with Martin.
“I think that 50-percent mark is completely unrealistic given the current state of grain growing in Massachusetts,” she said. “This requirement would make it impossible for any brewer to receive or retain the farmer-brewery license.”
Stanley, who operates the only malt-house east of Wisconsin, said 2010 was the first year in nearly five decades that malting barley was even grown in the state and only seven acres was actually harvested.
And while the ABCC claims the new interpretation is being madewith the specific public purpose of “encouraging the development of domestic farms,” brewers disagree.
“By putting that kind of financial constraint on a small brewer, it will take away bottom line dollars that are available to support local farming, since those grains and hops are more expensive than counterparts from outside the state,” said Martin.
Martin believes that the new standard, while not desired, will not force all current farmer-brewers out of business.
“We would be forced to apply for a Manufacturer’s license,” said Martin. “If we wanted to continue to self-distribute we would also need to apply for a Wholesaler’s license.”
According to ABCC applications for those permits, the cost of a Manufacturer’s license is $4,500 and a Wholesaler’s license is $5,000 — a sizeable cost difference from the Farmer-brewery license.
Chris Tkach, the Founder of Idle Hands said that the combined costs of these licenses would be overwhelming and could potentially force him to take his business out of state.
“We are not eliminating any alternatives at this point,” he said. “We need to figure out what the best course of action is not only for the business but for our lifestyle.”
Neighboring New Hampshire recently signed a bill which lowers the Manufacturer’s fee from $1200 to $240 for nano-breweries producing less than 2,000 barrels a year.
Martin, along with fellow brewers and agricultural representatives will meet with the Treasurer on Monday to propose a moratorium on the ABCC advisory and allow current farmer-breweries to proceed in the renewal process as they have in previous years.
The group will also likely propose a new tiered-fee system, where barrelage amounts determine the costs associated with a small-brewers license.
Brewbound.com will continue to provide coverage as this story develops.