Massachuesetts Could Shut of the Tap

August 4, 2011 4:54 AM

Earlier this week, the Massachusetts Alcoholic Beverages Control Commission released an advisory (PDF) on the status of the farmer-brewer's license when they denied small craft brewer Idle Hands' application. The farmer-brewer's license has long been used by small (under 5,000 barrels/year) brewers as a cheaper alternative to the state's otherwise manufacturer's license. Even larger breweries, like Boston Beer Co., brewer of Samuel Adams, use it as it allows for on-site tastings. With the new advisory requiring that 50% of hops and grains be locally grown in Massachusetts, small brewers are worried about the fate of their businesses - without the ability to sell on premises, offer tastings, or self-distribute, many of the state's microbrews and brew pubs will no longer be able to operate. A meeting with the state treasurer, who oversees the ABCC, is planned.
posted by robocop is bleeding (37 comments total)

I'm just going to through this out there right now and say that I will be far from surprised if it turns out that this move is the result of industry pressure by big beer.
posted by rebent at 4:59 AM on August 4, 2011 [2 favorites]

And if you are going to cut off my local beer, MA, I'm not gonna spell your name rite no more.
posted by robocop is bleeding at 5:00 AM on August 4, 2011 [6 favorites]

Haven't rtfa yet, but I suppose this is being sold as "in the interests of public health" or somesuch hoohah?
posted by likeso at 5:03 AM on August 4, 2011

Let us raise our glasses to Big Government!
posted by ZenMasterThis at 5:14 AM on August 4, 2011 [1 favorite]

Sounds like standard regulatory capture. That said "requiring that 50% of hops and grains be locally grown in Massachusetts"....why is that a bad thing? And why is it only a problem for small brewers? Or is that clause only in the small license?
posted by DU at 5:16 AM on August 4, 2011 [2 favorites]

Let us raise our glasses to Big Government taken over by Big Business!

FTFY
posted by DU at 5:17 AM on August 4, 2011 [4 favorites]

It's only in the small license, which also has the sell on premises and tasting allowances. Problem being, there aren't really any farms in MA growing grains or hops for brewing. One of the articles mentions that the first crop in the last 5 years was only from 7 acres of farmland.

The f-b has long been a work-around as nobody wants to touch alcohol regulations in MA. To change the requirements without actually ensuring there is an infrastructure in place to support the switch (you can't just point at a field and say "Tomorrow, you will be barley!") will doom a lot of small local businesses already operating on thin margins.

Meanwhile, across the border in NH, they just put in a small brewer license (<2,000 barrels) for the nanos.
posted by robocop is bleeding at 5:25 AM on August 4, 2011 [3 favorites]

why is that a bad thing? And why is it only a problem for small brewers? Or is that clause only in the small license?

Did you even read any of the links provided? The issue is explained fairly fully by them.

There are multiple classes of licenses. The Farmer-Brewer license is cheaper, allows on-site tastings, and allows on-site sales. Big names like Anheuser Busch pay more money for a different type of license which does not allow tastings or on-site sales, because AB has enough cash and clout to get preferential treatment and pricing from distributors and retailers (which are the only option if you aren't a Farmer-Brewer).

If small breweries cannot do on-site tastings, and cannot do on-site sales, their only option is to try to compete with the big names directly, both in terms of getting contracts from distributors, and getting shelf space at retailers. That's a fairly big blow to the local craft brewery movement in the state.

This is an incredibly stupid move by the ABCC. It is not going to do a damned thing to encourage agriculture in the state (which is what they claim is the purpose of this change). It is simply going to put a bunch of small businesses out of business, cost a lot of people jobs, and shift a lot of revenue from MA to other nearby states with more reasonable regulation (I'm looking at you, NH!). I cannot imagine what the hell they are thinking -- and in fact, I'm pretty sure they don't know what the hell they're doing.

This being MA, though, I suppose it's not exactly shocking.
posted by tocts at 5:31 AM on August 4, 2011 [1 favorite]

Most states really need significant rework of their beer laws for smaller brewers. For instance, Connecticut makes you register every beer label you intend to sell for $200. Meaningless to big brewers, but enough to stop the sale of stuff that might only sell 50 cases or so.
posted by smackfu at 5:33 AM on August 4, 2011 [1 favorite]

Several small brewers have set up shop recently under the state’s Farmer-Brewery License, with fees starting at $22 and allowing the manufacture of 5,000 barrels of beer or less. The only other option is a “Manufacturer License,” which starts at $4,500.

This is crrrrazy. I work in the alcohol business in North Carolina, a Southern state with a history of strict regulation and all sorts of restrictive ABC laws still on the books, and it only costs a hundred bucks to get licensed as a supplier here. My mind is sort of blown that they've arbitrarily decided on this 50% number despite it not even being in the statute (unless the law has been changed and not updated in the link above).

Given what I've seen over the past few years of the relationship between the alcohol industry and state legislators, I would be shocked if the large brewers aren't behind this, but I'm also shocked there isn't a strong lobbying group made up of local distributors and producers who pushed back before this could be enacted. It sucks that it's necessary, but the smaller guys need to start working together more efficiently to publicize this as destructive toward local small business; that seems to be the main thing here that gives local conservatives pause when it comes to doing whatever the big corporations want them to do.
posted by something something at 5:50 AM on August 4, 2011

Wow, this makes NY law look easy to navigate. I have some friends who started their own brewery and the paperwork alone would discourage the less than dedicated. But they persevered. Locally, we also have at least one nano but it's too soon to tell if they'll prosper.

Tangentially, the hops industry is coming back to NY after almost a hundred years. There are now a number of hop farms starting up, mostly in Central and Western NY.
posted by tommasz at 5:51 AM on August 4, 2011 [1 favorite]

"Section 19C. (a) For the purpose of encouraging the development of domestic farms" (from the license itself).

Clearly, breweries have used this license in a way that does not encourage the development of domestic farms. They all used a loophole in this license to get what they wanted. I love craft breweries way more than the next guy, it seems to me like the ABCC isn't doing anything too crazy. If they can't get the ABBC to back off, they have recourse. They need to find a legislator to sponsor a bill in their next session and/or start collecting signatures to get a referendum on the ballot at the next election (if you can do that in MA).

Meanwhile, they could push back on the 50% number and also on the need to grow both hops AND grains. 10% of either crop would encourage farm development too, and hops are pretty easy to grow and process. Maybe if they back off a bit, some will actually develop small farms, which is what the license was for in the first place.
posted by Patapsco Mike at 5:54 AM on August 4, 2011 [1 favorite]

I love craft breweries way more than the next guy, it seems to me like the ABCC isn't doing anything too crazy.

The iffy thing is why the ABCC decided that they needed to change this now. The law didn't change, but maybe the lobbying did.
posted by smackfu at 5:58 AM on August 4, 2011

I never figured the big breweries had much power in Massachusetts, at least compared to the Distributors. The latter has indicated they don't have much dog in the fight.

It strikes me as less regulatory capture and more overzealous bureaucrats. As to why they changed now, I can't say. My understanding is that these folks were all appointed under the previous treasurer. Maybe they're trying to make trouble -- the political is personal around here.

That said, Boston Beer president Jim Koch lives about a half mile away from State Treasurer Steve Grossman in Newton. Koch is enough of a player in MA politics that if something is bad for his company, things will probably get worked out.
posted by Jugwine at 6:05 AM on August 4, 2011

My questions are: Why change now? Why not grandfather existing licenses (for at least a while)? What does the ABCC (really) hope to gain from the change?

There's a conversation going on at Beer Advocate, too.
posted by soplerfo at 6:06 AM on August 4, 2011

To whom do I direct my angry emails and phone calls?
posted by ghostbikes at 6:07 AM on August 4, 2011 [1 favorite]

Let us raise our glasses to Big Government taken over by Big Business!

The first inevitably leads to the second.
posted by ZenMasterThis at 6:09 AM on August 4, 2011

To whom do I direct my angry emails and phone calls?

The ABCC has contact information on their website. I'm not sure complaining to them will get you anywhere, though. Might have better luck with the Treasurer's Office.
posted by Jugwine at 6:11 AM on August 4, 2011

There is the question of the meaning of "Domestic farms". As I read it no one is really sure if that limits it to Massachusetts farms. Consider this

(f) A farmer-brewer may import malt, cereal grains fermentable, sugars and hops, but may not import malt beverages or alcohol into the commonwealth.

This all seems a tempest in a brew pot.
posted by Gungho at 6:13 AM on August 4, 2011 [1 favorite]

The Minnesota brewery Surly (bless them and their marvelous beers!) ran a grassroots campaign last year to get the state laws changed to include a new class of license, a "brewer taproom" license, so they could serve beer at their brewery. Here's their blog post fro just after the bill was signed: www.surlybrewing.com/brewersblog/?p=56

It should come as no surprise that the entrenched liquor lobby fought hard against it: www.startribune.com/politics/statelocal/122536608.html
posted by wenestvedt at 6:25 AM on August 4, 2011

I'm kind of on the fence here. On the one hand, yeah, this is a terrible and shitty thing to do to local brewers, given that there doesn't appear to be any equivalent of the on-site tasting permissions if the little guys go out and get the proper licenses. On the other hand, everyone who has one of these licenses is abusing a regulation that was meant to encourage local farming. This is the sort of thing we rage at all the time, so I'm hesitant to decry what the state is doing, because they really are trying to encourage something else that is a net good.

In any event, this is likely to play out in weird ways. Boston Beer Company (the guys who make Sam Adams), for example, has their flagship brewery facility in Jamaica Plain, but it's just the R&D facility. All the heavy lifting happens in New York and (IIRC) Pennsylvania, where they lease brewing space from bigger breweries. If they lose their on-site license in MA, well, it won't kill them dead, because most of their production capacity won't be affected. But, critically, BBC is a huge community asset in Boston; they donate a ton of money (5-10% of their production goes to charitable events in the area, and tours are free, but there's a suggested donation of $5 a head, which all goes to their charities that are Boston-based) back to the community, and are basically the anchor behind the commercial redevelopment effort that's happening in a part of Boston that's still recovering from white flight 40 years ago. Ain't no way the state can turn the screws on them without enraging everyone in the city, irrespective of beer preference. For someone in the position of State Treasurer, which is an elected office that no one cares about (until they're enraged at the incumbent, natch), that seems like bad juju.
posted by Mayor West at 6:53 AM on August 4, 2011 [1 favorite]

WON'T SOMEONE PLEASE THINK OF THE MEGACORPORATIONS
posted by seanmpuckett at 6:57 AM on August 4, 2011 [1 favorite]

To whom do I direct my angry emails and phone calls?

Treasurer Steve Grossman is on Twitter (http://twitter.com/#!/MASSTreasury) and his email is [e-mail]. He'll be on NECN's This Week In Business tomorrow, so if you send him something today, maybe cc the station ([e-mail])?
posted by robocop is bleeding at 7:23 AM on August 4, 2011

There is the question of the meaning of "Domestic farms". As I read it no one is really sure if that limits it to Massachusetts farms. Consider this

Yeah, but the issue it seems is balancing that with Section one, where the farmer-brewery that farmer-brewers are licensed to operate is defined

“Farmer-brewery”, any plant or premise where malt beverages are produced from the fermentation of malt with or without cereal grains or fermentable sugars, or of hops, provided that said hops or cereal grains are grown by the farmer-brewer.

It seems reasonably that to be a farmer-brewer, you'd actually have to be a farmer. One of the articles says that the only folks to be denied so far, Idle Hands, were "planning on starting a hops farm," which is to say, they weren't farmers yet.
posted by Jahaza at 7:24 AM on August 4, 2011 [1 favorite]

People, meaning ordinary people, do try to fight back against this crap. People frequently vote in politicians whose battle cry is "Small business is over-regulated! Shrink the government! Get the government off the back of the entrepreneurs!"

When they get into office of course, they only want to repeal or choke regulations when doing so is good for huge multinationals. Aristocrats only help other aristocrats. They might help the local brewers by accident, by unfunding stuff, but no. While governments regular go into budget crises year after year, we never stop funding enforcement of these regulations. We'll cut medicaid. But God forbid we cut the ABCC enforcement budget. Even the budget crunches are looked at as mere excuses to push an agenda. If the ABCC staff is unionized, well, maybe we can look at that.

The simplest answer is to pass a law creating a special license simply based on something like "51% owned by citizens of MA, produced in MA, and under X barrels." But the rub is "how does that help the politicians?"
posted by tyllwin at 7:38 AM on August 4, 2011

We are in the middle of an economic crisis. Shuttering hundreds of successful businesses is a terrible idea. I hope the MA state legislature or the governor does something about this quickly.
posted by humanfont at 8:21 AM on August 4, 2011

Do any of the smaller producers grow their own hops and grains? I'm unfamiliar with MA growing but wouldn't it be a short season? Are their local farmers that could coop with beer producers to fulfill the 50 per cent requirement.
I agree that reg. capture generally sucks. But it does seem like there needs to be another licence to permit the small guys that are not using local grains to have on site tastings etc. I can imagine that the big co's will be pushing hard against that though :(
posted by Librarygeek at 8:26 AM on August 4, 2011

Knowing the treasurer and the governor, I have a pretty high level of confidence that this will be handled in some sort of reasonable fashion now that it has come to light.

I'm unfamiliar with MA growing but wouldn't it be a short season?

That's definitely a factor, and in addition the sheer volume of growing here just wouldn't work in many places. The president of Mercury Brewing/Ipswich Ales estimated he'd need a 1200 acre farm to meet the requirements, and that's for a 14,000bbl/year brewing operation. I don't know that there's a farm of any kind in MA that's 1200+ acres. I can't find one for sale in MA that's over 350 acres.
posted by rollbiz at 9:24 AM on August 4, 2011

And don't forget the maltings!
posted by robocop is bleeding at 9:59 AM on August 4, 2011

nobody wants to touch alcohol regulations in MA

In his book about the establishment of the Dogfish Head brewery, Sam Calagione takes pride in obtaining brewery-friendly legislation in Delaware.
posted by exogenous at 10:16 AM on August 4, 2011

In unrelated news InBev is happy to welcome the former head of MABCC to the executive team. (Not really, but I wouldn't be suprised.)
posted by papercrane at 10:19 AM on August 4, 2011

rollbiz - That's definitely a factor, and in addition the sheer volume of growing here just wouldn't work in many places. The president of Mercury Brewing/Ipswich Ales estimated he'd need a 1200 acre farm to meet the requirements, and that's for a 14,000bbl/year brewing operation. I don't know that there's a farm of any kind in MA that's 1200+ acres. I can't find one for sale in MA that's over 350 acres.

You know those numbers looked suspicious to me so I did some research and this is what I came up with.

According to the law, one barrel is 31 gallons. So lets say we are making 14,000 barrels of beer, thats 434,000 gallons of beer.

We'll grow all of our base grain ourselves, just some plain 2 row barley. AC Metcalfe is an accepted malting grain, it has been reported to yield around 80 bushels per acre, ^[1] but we had a bad year and we're only going to get 45 bushels per acre ^[2] (one bushel of barley is 48 lbs. ^[3]) After malting we'll only have 95% of that, ^[4] so for each acre of farmland we'll get 2052 lbs of malt.

Now, how much barely are we going ot need? 2 row pale ale malt has a typical yield of 32 ppg [5]. Lets be generous and use 2 lbs per gallon of beer for 1.064 OG beer before we add our specialty grains, that's 217,000 lbs of grain. That works out to roughly 105 acres of barley, and that's assuming we're having a bad harvest year.

If Mercury brewing needs 1200+ acres of barely to make that much beer then maybe they should check their production line for leaks.
posted by papercrane at 11:24 AM on August 4, 2011 [1 favorite]

The other complication though is you're not going to get 95% yield. Only about 1/3 of the barley grown in the country is high enough quality to be made into brewing malt.
posted by drewbage1847 at 12:02 PM on August 4, 2011

Only about 1/3 of the barley grown in the country is high enough quality to be made into brewing malt.

I couldn't find any numbers for how much of the harvest would be malted, but as I understand it only 1/3 of the country-wide harvest is malting quality because only 1/3 of the harvest is a malting variety. The other 2/3rds aren't inferior product, it's just not bred for malting.

In any case the 1200 acre number is an order of magnitude out from where it should be.
posted by papercrane at 12:19 PM on August 4, 2011

Adding to papercrane's numbers on barley, here is a quick, conservative look at the land that might be required for the hops for 14,000 barrels of beer (434,000 gallons).

I made a very hoppy IPA homebrew using one pound of commercial hops in ten gallons. So call it 43,400 pounds of hops for the 14,000bbl/year brewing operation.

I don't know if a good climate for growing hops could be found in MA (oddly enough Cascades grow like weeds here in the District of Columbia), so I'll use the poorest yield from this table, about 600 pounds per acre. That's an additional 72 acres for the hops.
posted by exogenous at 12:32 PM on August 4, 2011

Argh. Not only has this story made me agree with cranks posting to newspaper's online editions, but now with Republican state senators.
posted by robocop is bleeding at 11:14 AM on August 5, 2011

State relents on beer rules for smaller brewers

It'd be nice if a proper micro-brewery license came out of all of this. If I was one of these breweries I'd be breathing a short sigh of relief but still be concerned about the future.
posted by soplerfo at 7:59 AM on August 9, 2011