Which Breweries Can Open Brew Pubs?Added by Hawley Troxell in Articles & Publications, Wine, Brew, Spirits Law on February 10, 2015
Q: Why can some breweries have brew pubs but not others?
Before answering the question, let’s be clear about what a brew pub is, at least in Idaho. In our state, brew pubs are where a brewery sells its own beer to you, the consumer, in a place where you can sit down and drink it.
There are two kinds of brew pubs. The first, and most common, is often called a “tasting room” or taproom. A taproom is a place at a brewery where you can buy and drink a beer made onsite. Many, if not most, Idaho breweries have onsite taprooms. Woodland Empire, Selkirk Abbey, and Sawtooth are all examples. The second kind of brew pub is located offsite from the brewery. A good example of this second, less common, establishment is Crooked Fence’s Barrelhouse brew pub in Garden City. Although the Barrelhouse sells Crooked Fence beers, all of those beers come from a separate brewing facility. Except for where each is located, the two kinds of brew pubs are otherwise identical. Brewers can generally serve food, wine, and products from other breweries in their onsite and offsite brew pubs.
Brew pubs in Idaho share another similarity: they are kept scarce by state law. Until 1987, it was essentially illegal for a brewery to serve paying customers a glass of the brewery’s own beer. That year, lawmakers decided to allow breweries to own up to two brew pubs—one onsite and one offsite. However, to qualify for the privilege of opening brew pubs in Idaho, the brewery must be licensed in Idaho and must produce fewer than 30,000 barrels of beer per year. This is why only some breweries can operate brew pubs here.
The annual 30,000 barrelage limit is presumably meant to help microbreweries enter the market by keeping large breweries from buying up bars, squeezing out smaller competitors, and pushing distributors around by forcing them to carry only that brewery’s brands. Of course, there is one obvious problem with the 30,000 cap: a startup brewery could eventually be punished for its own success.
So far, none of Idaho’s indigenous breweries have bumped up against the barrel ceiling, but Idaho’s largest breweries could do so soon. Within the next year or two, Payette intends to start production in a facility with as much as 100,000 barrels per year in capacity. Laughing Dog is also said to be considering an expanded brewery with a capacity exceeding 30,000 barrels per year. Unless the legislature does something, these breweries and others will eventually have to choose between meeting demand for their packaged beer and keeping their brew pubs open. Let’s hope that day never comes.
*This Q&A article was originally featured in the February 2015 issue of Idaho Brew Magazine.
For more information, please contact a member of our Wine, Brew, and Spirits Group, or call 208.344.6000.
More Tax Law Blog Posts
- 12/21/18—A Few Year End Retirement Plan Action Items and Issues for Consideration
- 08/07/18—The Supreme Court Eliminates the Physical Presence Requirement for Sales Taxation: The Effect On Idaho Law
- 04/07/18—Probate in Idaho
- 02/14/18—The New Qualified Business Deduction: A Key Feature of the Tax Law Changes in 2018
- 12/04/17—Year-End Tax Planning Has Never Before Been More Important
- 02/21/19—West Ada Foundation Friends of the Foundation Gala
- 02/28/19—Idaho Humane Society Sip n Purr
- 03/01/19—College of Idaho Gala