After years of fighting for the right to sell to-go beer, manufacturing breweries in Texas now have allies on both sides of aisle.
Texas Democrats and Republicans both included language in their respective party platforms supporting the legalization of off-premise sales privileges for the state’s production breweries as well as changes to the three-tier system of alcohol distribution.
The inclusion of language in the party platforms — which set forth guiding principles for the state’s two main political parties — is a small step toward changing a contentious state law that prevents the state’s breweries with manufacturing permits from selling beer directly to consumers for off-premise consumption.
Texas beer producers with manufacturing licenses are not currently allowed to sell to-go beer to visitors, despite the fact that the state’s brewpubs, as well as wineries and distilleries with similar manufacturing permits, are allowed to sell their products for off-premise consumption.
The debate has raged since 2015, when Dallas-based Deep Ellum Brewing filed a lawsuit against the Texas Alcoholic Beverage Commission (TABC) arguing that the current law put manufacturing breweries at a disadvantage. However, in March 2018, a federal judge ruled that the TABC’s decision to not allow production breweries to sell alcoholic beverages for off-site consumption was “rational” for preserving the three-tier system, promoting responsible consumption and ensuring fair competition.
Nevertheless, during its state convention held June 14-16 in San Antonio, the state GOP included a plank in its platform calling for the eradication of the three-tier system and allowing production breweries to sell their offerings for off-premise consumption.
“We urge the Texas Legislature to adopt legislation eliminating the mandatory three-tier system of alcohol production, distribution, and retail,” the Republican plank read. “Texans should have the freedom to purchase alcohol directly from manufacturers, just as any other retail product.”
And during its convention last weekend (June 21-23) in Fort Worth, Texas, Democrats added language to their party platform calling for the modernization of the state’s three-tier system as well as the expanded sales privileges.
“Democrats support modernizing the TABC’s 3 tier system because Texas’s craft breweries create jobs, encourage tourism, grow the economy, revitalize communities and add incremental tax revenues,” the plank read. “Democrats support legislation allowing craft breweries to enjoy the same rights as their competitors in every state that allow them to sell and market their products directly from their breweries to consumers for take-home consumption, and ensure fairness in distribution across the state.”
In a press release, Texas Craft Brewers Guild executive director Charles Vallhonrat called the issue “bipartisan” and argued that both Democrats and Republicans shared “clear, unequivocal support for beer-to-go sales directly from manufacturing craft breweries.”
“This is a right exercised by breweries in 49 other states, and one we strongly hope to see extended to Texans in the 2019 Legislative Session,” he said.
Speaking to Brewbound, Vallhonrat said the inclusion of the language in both platforms proves that the off-premise sales issue is on the radar of both parties. However, he said the guild is not advocating for the dismantling of the current three-tier system, but rather reevaluation and reform to “match current business norms.”
For his part, Rick Donley, president of the Beer Alliance of Texas, which represents the state’s wholesalers, told Brewbound that he wasn’t sure the adoption of the party planks would “change the landscape one iota.”
Donley challenged the guild’s claim that Texas is the only state in the nation to bar brewery to-go sales, saying “95 percent” of the state’s more than 250 beer companies qualify for brewpub licenses by selling fewer than 10,000 barrels of beer annually.
Vallhonrat credited CraftPAC, the guild’s political action committee formed in January, with helping get the language included in the party platforms. He said members of the guild and CraftPAC attended both conventions to lobby lawmakers and reach “the core of the party faithful.”
“CraftPAC has made the conversation about alcoholic beverage law reform stay very visible and ever present in legislators’ minds,” he said. “But also I think there’s a bad taste from the last session and how H.B. 3287 worked its way through the process, how it created a lot of blowback from the brewers, and I think there’s recognition that that wasn’t the greatest good-faith effort to get legislation passed.”
In H.B. 3287, Texas lawmakers changed the way the state’s barrel cap is calculated, adding production across multiple brewing operations rather than from individual facilities. Now, breweries making more than 225,000 combined barrels annually will be required to buy back their own products from a wholesaler in order to continue selling beer for on-premise consumption in their taprooms.
When the Legislature reconvenes in January 2019, Vallhonrat said the guild would look to offer bills that modernize the state’s alcohol laws. However, he admitted that the guild still has “a lot of work to do.”
“I definitely think we’re going to be in an improved position,” he said. “I think it’s too early to say if we have numbers. CraftPAC has certainly allowed us to have more conversations than we’ve had in the past.”
Vallhonrat added that the guild is “100 percent” willing to discuss ways to modernize Texas’ beer laws with the state’s wholesalers.
“They need to come to the table,” he said. “We’re already working it. We’d love to have them there.”
Meanwhile, Donley said the wholesalers “will make our case to the Legislature.”
“The more the Texas Legislature has given them, the more that they want,” he said. “They’re never going to be satisfied.”
Texas brewers and distributors will have a chance to come together later this summer, when Brewbound travels to Austin, Texas, to host its next round of Brew Talks on August 7, in conjunction with the National Beer Wholesalers Association Next Generation conference. Representatives from both tiers will discuss the current state of legislative affairs in Texas, including the issue of to-go sales and taproom exemptions.
Learn more about Brew Talks NBWA Next Generation and register here.