Montana tavern owners battling with beer brewers

HELENA— Tavern owners faced off against craft brewers at the Capitol Tuesday, arguing the upstart competition has been allowed to unfairly flourish with too few restrictions.

Both sides packed a state House Business and Labor Committee hearing looking at two bills.

One brought by the tavern owners, House Bill 616, would put new licensing requirements on the brewing industry. The tavern owners argue some breweries have grown into full-scale retail establishments not envisioned by the original law that allows tasting rooms.

Another bill to study the issue, House Joint Resolution 18, was backed by brewers who said more conversation is needed to fairly reconcile differences.

Rep. Roger Hagan, R-Great Falls, said stricter restrictions are needed on the brewers. He said brewers are taking advantage of laws, revised in the late 1990s, that allowed the breweries to retail beer sell up to 48 ounces of beer a day to customers before 8 p.m.

He said that law was intended to let wholesale breweries offer a little taste to retail customers. The lawmaker argued some breweries now sell almost all their product to customers and resemble bars.

Tavern owners testified that they enjoy selling local-made beers to customers. They argued that unfair retail competition from the breweries, however, is limiting the availability of such beers for the retail bars.

Hagan's bill would require many retail breweries to buy a new state license for $100,000. Wholesale operations would not need the license.

The bill received support from one large brewery, Big Sky Brewing Company in Missoula, which said it is too large and exceeds production limits to open a tasting room under the current law. The brewery supported the way the new bill would allow it to open a tasting room with the new special license, or perhaps even buy an all-beverage license that would allow expansion perhaps into food or other businesses.

But the rest of the brewers in the state opposed the law. They argued it would stifle growth in the industry.

The brewers are instead suggesting a two-year study with the aim of producing new rules that everyone can support. They said Hagan's bill is being wrongly sold as a way to help the industry expand with new licensing rights.

Farmers who sell grain to the breweries and customers who enjoy the beer also opposed the bill.

"It was crafted by the Tavern Owners Association, and it is meant to benefit the Tavern Owners and it will crush many of the small-town mom-and-pop breweries in Montana," said Helena attorney David Hull, who said he enjoys the breweries.

Hull argued tavern owners get a lot of extra rights with their liquor license, including the ability to sell all beverages and profit from gaming.

The breweries argued they don't want the rights to those businesses and enjoy the current model that limits hours and consumption. Many of the very small brewers said they have built modest retail business plans that would be jeopardized under the proposed bill.

"It is flawed in many ways and it would put us out of business," said Rob Jarvis of Philipsburg Brewing.

The committee did not take immediate action on either bill.