Changes Affecting Small Brewers in Texas Legislative Session 82(R)

Texas Fails At Meaningful Change

The eighty-second session of the Texas legislature wrapped up a little while ago.  During the 140-day session every craft brewer in the state simultaneously cheered, prayed and held their breath for the successful passing of a number of favorable bills.  House bills 602, 660 and 2436 all died of pressure from the distributors lobby.

HB 602 ran an end-around the three-tier separation by proposing to allow microbreweries (such as the New Republic) to charge admission to a tour and send the consumer home with a few cases of beer.  This bill passed the house without dissent.  Then Anheuser-Busch InBev took noticed and whined  about being excluded from the bill’s benefits.  They wanted the same privilege despite the fact none of the AB/InBev brewers are allowed to give tours.  With the bill showing unanimous favor in the house hope twinkled bright for this bill then burned out.

HB 660 got brewpubs into the distribution game.  Passage of this bill would have permitted a brewpub to distribute their products to other retailers.  Similar privilege is a driving force behind the flourishing beer culture in other states, and had it passed we likely would have changed our license to a brewpub so we could sell directly to the consumers – those that really matter.  However, this was not to be as the distributors lobby sang their tired song about passage leading to alcohol sales to minors in dry counties.  Complete bullshit.

HB 2436 dispensed with the the frivolous tour requirement and proposed to allow us to sell directly to the consumer.  You may come to our brewery and buy our beer; Full Stop.  A privilege about every other business in Texas takes for granted.  Showing such favor to microbreweries destined this shining Texas star to a death in committee.

So, What Changed?

Thirty bills affecting alcohol production and retail passed.  Noteworthy that not a single one changes the way alcohol is distributed.  Most of them do not change the way The New Republic Brewery does business.  Those that do give us an additional tax or reporting burden.  The TABC summarizes everything, but I’ll hit the lowlights for small craft breweries.

These both take effect on September 1st of this year.

HB 11 requires us to file a monthly report to the comptroller.  This report must include our net sales of each brand to each retailer by outlet.  We must disclose the number of units sold, the container size and pack of each unit and the net selling price.  There are provisions to keep this information private, except under certain circumstances.  Aside from being a hassle to our bookkeeper, this is a potential leak of sensitive business information.

HB 2582 increases the excise tax we pay from $4.50 to $6.00 per barrel.  It brings the small microbreweries up to the same taxation rate as larger alcohol manufacturers.  We laid plans to compensate for this increase and therefore will not raise our prices to cover the burden.

The legislative session began hopeful for real improvements to the Alcoholic Beverage Code.  Improvements that would have allowed us to interact directly with the people that buy our beer and boost the business during a slow economic recovery.  It ended with no substantive changes.  The usual culprits worked against you this year: foreign-owned macro-breweries and the antiquated, protectionist distributors lobby.