V-MA Day: Victory in Massachusetts

So, I’m not sure how many people noticed it, but Boston.com ran an alarming article last week (Aug 4, 2011) titled “Rule change alarms small brewers.” The article discussed the farmer-brewer licensing rule in Massachusetts.

Basically, this rule allows smaller, startup breweries to be licensed as a farmer-brewery collaboration, which supports local farming. It originally allowed farms to use their crops (wheat, barley, hops, etc) to brew beer. The rule has been around for a very long time, but only really became useful after 1978, when the US Congress passed an Act allowing brewing beer at home, for personal use, exempt from taxes, as long as you didn’t sell it. That started the craft beer revolution, as many homebrewers began experimenting, and perfecting their brews until they decided to start a legal brewery. Samuel Adams started off this way and is now the largest domestically-owned brewery in the US (Boston Beer Co. is headquartered in Boston, MA. The big macrobrews are either in collaboration with foreign brewing conglomerates, like MillerCoors, which is partnered with Molson in Canada, or Budweiser’s Anheuser-Busch, owned by InBev, a Belgian-based brewing corporation.)

Here are the important things about the farmer-brewer license: firstly, it’s much much cheaper than a regular brewing license. Secondly, it allows breweries to bypass the three-tier distribution method set up following the repeal of Prohibition. Third, it gives breweries the option to offer tastings and samples of their products to the public, along with tours of the facilities. These are all a no-brainer when it comes to small, craft breweries, but vitally important to the industry.

The problem came when MA realized that they hadn’t been enforcing the requirements of the license, part of which states that 50% of a breweries raw material (barley or wheat, and hops) must be sourced from “domestic farmland.” That is a LOT of grain, and would be prohibitively expensive and difficult for small breweries to obtain. As quoted in the article,

“ ‘There’s no brewer in the state that could meet that,’ said Ipswich Ale Brewery’s
Rob Martin, president of the Massachusetts Brewers Guild,
which represents 34 craft brewers in the state.
‘For me to meet that today, I would need 1,200 acres of grain.’ “
Source: Rule change alarms small brewers
by Erin Ailworth, Boston.com

1,200 acres of grain. That’s a f-ton, not to mention the hops. The good hops in the US are mainly grown in the Pacific Northwest, like the Yakima and Willamette valleys in Washington and Oregon, respectively. While hops DO grow in New England (outside of breweries and Irish Lad’s porch), I don’t know how well they fare with the drastic climate shifts from 90+ degree summers to below-zero winters. I would suspect it’s like grape vines; Lady Friend doesn’t particularly like New England wines, because the grapes don’t have the best growing season, unlike the more temperate weather on the West Coast.

Since most of the MA craft breweries (about 25) wouldn’t be able to meet this requirement, they’d lose their farmer-brewer license and have to opt for the more expensive one. As near as I can tell from the application forms, the smallest (under 5,000 barrels) farmer brewery license has a fee of $22, with a surety bond of $3,000. The regular (manufacturer) license has a fee of $4,500, plus a surety bond of $10,000. That’s a hell of a difference. Additionally, they’d have to use the three-tier distribution system, and pay a distributor to deliver their products to point-of-sale outlets (liquor, or in MA “package” stores or “packies”). They’d have to fight for space alongside Miller or Budweiser in warehouses, trucks and store shelves. This also takes away the face-to-face interaction of a small brewer setup personally delivering product to the store owners, and perhaps getting vital feedback on their sales, and even just keeping up a rapport with the store owners who carry their product.

After chatting with Andris Veidis, the brewer/owner of Blue Hills Brewery in Canton, MA, he wasn’t sure if it was the state or the distributors suddenly pushing for enforcement of the law, which hadn’t been a problem for the past 35 years or so. He claims the state is the one encouraging small start-up breweries to utilize the farmer-brewers license, which Blue Hills operates under as well. If it were enforced to the letter, it would mean the end of his business and he says he’d “party for a couple months until they shut us down.”

I also checked in with Bully Boy Distilling, who is operating under a farmer-DISTILLER license, to see how different the regulations were, and if it would affect their business, since they source their wheat from Maine. Owner/distiller Dave Willis replied:

“Honestly, the Farmer-Distiller license, while a nice thing to have,
is not all that important to our business. It’s a much bigger issue for those
that rely on tastings (i.e., a brew-pub). It’s a bigger annual fee, but that’s about it. Also, we use far, far less grain than a brewery, so it’s a lot easier for us to meet the 50% thresh hold. In short, I feel really bad for the Farmer-Brewers out there, but it’s not that big a deal for us.”

Good to know that Boston’s first craft distillery will ride it out. And, it turns out there’s good news for the breweries as well. After meeting behind closed-doors, the Alcoholic Beverages Control Commission and members of the Massachusetts Brewers Guild came to an agreement. The Commission admitted they had been a bit too hasty, without realizing the implications of enforcing the 50% rule, which would close nearly all the small craft breweries in the state, and hinder even the larger ones, affecting around 1,100 jobs.

” ‘The 50 percent threshold will not be implemented,’ Grossman [ABCC Treasurer Steven Grossman] said. ‘We realized that perhaps we went a little beyond what was practical.’

Instead, Grossman said, commission officials will hold several regulatory
hearings across the state focusing on how to develop
common-sense regulations that will promote agriculture
and help create jobs in the state’s growing craft-brewing industry.”

Source: Brewers greet state’s reversal on rule
by Erin Ailworth, Boston.com

Whew. Crisis averted, and a victory for the craft brewers of MA. I chatted with brew-brother Irish Lad about it last week, as I was shaking in anger that the state would even think to destroy the local craft brewing industry. He wasn’t as concerned, believing that an agreement would be reached, rather than shut down 25 or so breweries. I’ve seen MA do crazier things in the past; they like to shoot themselves in the foot when it comes to making common sense decisions dealing with local economies. However, it all seems to be heading in the right direction, for now. As Irish Lad says:

“Yeah, just as predicted! Oh, ye of little faith in the Massachusetts government.
1100 lost jobs is a shit stain no politician wants on their drawers in this economy.
Brew on!”

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