This year’s legislative session was about to get started and as the day dawned, it looked like 64oz growlers would finally pass in a bill filed by some craft-beer-friendly legislators. Craft breweries were told by distributors that were unfriendly last year that this year would be different. The dawn seemed brighter and eyes watched the legislature eagerly. Then the news broke that a lawsuit had been filed by FISA, the lobby for independent liquor stores in Florida, including ABC Fine Wine and Spirits, that aimed to clarify rules and change laws that had previously helped craft breweries.
To help explain this suit, Ross Appel of Komlossy Law wrote a blog post and explained a few things for us.
The Florida Independent Spirits Association (FISA), a trade group representing alcohol retailers, filed a Petition with the Florida Division of Administrative Hearings attacking the tourism exception that allows Florida breweries to have taprooms on site. The Petition challenges the manner in which the tourism exception to the three tier system is approved and the perceived lack of oversight actually provided by the Division of Alcoholic Beverages and Tobacco (ABT). To provide a bit of context, FISA and ABC Fine Wine & Spirits share a lobbyist.
It took one business day for the Florida Beer Wholesalers Association and the Beer Industry of Florida to file motions seeking to intervene. They support FISA’s position. FISA will not object the intervention by either trade group. It’s not a surprising twist. This was almost certainly orchestrated well in advance. It’s pretty unlikely that these parties wrote their motions over the weekend and filed them at about the same time on the next business day after having also had the opportunity to reach and confer with counsel for FISA. So if this looks like something you have come to expect from the Florida Beer Wholesalers Group, for example, it is likely they were pulling those strings from the very start to make this happen.
This is, essentially, a roundabout way of attacking craft beer taprooms. The Petition challenges the perceived failure of the ABT to require that applicants actually prove their structures promote the brewery and Florida’s tourist industry. FISA argues that the application used by a manufacturer to apply for a vendor license does not require the applicant to demonstrate that the property promotes the brewery and Florida’s tourist industry and is thus invalid. The FBWA argues that “[e]vidence will show that many of the applications approved pursuant to section 561.221(2) include no ‘other structures’ whatsoever, much less any that promote the brewery or the state’s tourism industry. This is evident from the sketches of the premises that applicants are required to submit with their applications for CMB licenses. The Division has adopted a policy of ignoring these sketches, at least for purposes of determining whether the applicants’ premises include ‘other structures which promote the brewery and the tourist industry of the state.’
Additionally, evidence will show that the Division has a policy of making no inquiry or inspection to determine whether any such “other structures” – assuming they exist – promote the brewery and the tourist industry of the state. By affirmatively establishing a policy to not consider whether “other structures which promote the brewery and the tourist industry of the state” are part of CMB applications, the Division has created an unadopted rule.”
They are not likely bluffing there about evidence. There have probably been quite a few public records requests for brewery applications. It’s relatively unlikely that there is an affirmative policy to ignore whether breweries/taprooms promote the tourist industry. It should also be noted that Florida Statute 561.221(2) does not require breweries to prove or demonstrate, as the Petition suggests, that the brewery and its structures promote Florida’s tourism industry. That relevant portion of the statute is below:
“The division is authorized to issue vendor’s licenses to a manufacturer of malt beverages, even if such manufacturer is also licensed as a distributor, for the sale of alcoholic beverages on property consisting of a single complex, which property shall include a brewery and such other structures which promote the brewery and the tourist industry of the state. However, such property may be divided by no more than one public street or highway.”
There is some legitimate focus placed on the “other structures” here by FISA and the intervenors. It seems that they want to argue that there should be separate structures for tourism, like a roller coaster. A taproom, though, is another structure. Without the taproom, it is far less likely that tourists will come to visit breweries and stop by breweries when visiting family members in Florida. The taproom also quite obviously supports the brewery. It is somewhat silly to suggest that if you do not have rides for children, then you should not be selling beer for consumption on premise. This is the ultimate result of that argument – and it’s not a logical one. For these groups, which often throw around baseless claims about the three tier system being necessary to promote the general public health, that argument with that inevitable result doesn’t work.
Besides the tourism exception, the Petition also challenges the manner in which vendors can become manufacturers. The claim is basically that the law is neither being applied properly nor consistently. Florida law states that entities which are first licensed as vendors should only be able to manufacture beer pursuant to the “brewpub” exception that limits production to 10,000 kegs annually and does not allow for sales for off-premise consumption. However, the claim is that the ABT is improperly issuing “full” manufacturing licenses to existing vendors rather than limiting them to the brewpub license.
Ultimately, in terms of what is being argued, the Petition is not unreasonable. There are certain inconsistencies in the way Florida’s statutes are applied and this targets some of that. One can also argue that the ABT should have policies in place to further the statutory language requiring manufacturers with taprooms to have structures besides the brewery supporting the brewery and Florida’s tourism industry. That doesn’t mean the ABT should have to require breweries to affirmatively prove or demonstrate that their taprooms/other structures support the tourism industry. The ABT could, for example, have their own research demonstrating that craft breweries support Florida’s tourism industry.
Many breweries that are already properly operating taprooms are worried about a potential retroactive impact here. Breweries-in-planning are generally even more worried. If something were to happen here prohibiting breweries from having taprooms, one may assume that previously-licensed breweries would be grandfathered in and would be allowed to continue selling beer on premise. However, anything is possible at this point. The end goal is likely more than simply the clarification that FISA’s lobbyist claims they are looking for. FBWA was behind an attack on taprooms a year ago. This is nothing new. It is simply a new tactic aimed at forcing change. Florida’s Beverage Law could use an overhaul and this might further that objective. Granted, the overhaul sought by these groups would be far out of line with what craft breweries believe is appropriate and likely vastly different from the manner in which the beer industry currently operates in Florida.
The public support of the craft beer industry was great during last year’s legislative session. While supporters of the industry and of small and local business should not be contacting any judges assigned to the proceedings, they can and should continue to contact their legislators to let them know in a reasonable manner that they support the industry and the reasons for doing so. It is likely that part of the plan by those parties that orchestrated this is to make a major legislative push to rewrite the Beverage Law. Support of the industry can help ensure that the voice of the craft beer industry and those who support it will be heard if it comes time to implement new laws/rules for the alcoholic beverage industry.