After Decades Without Complaint Beer Retailers And Distributors Challenge Tourism Exception

Jan 16, 2015

Proof Brewing Company's vats at the Railroad Square brewery.
Credit Nick Evans

It seems there’s new trouble brewing for Florida’s small but growing craft beer industry.  The Florida Retail Federation is challenging a long-standing exception to the state’s licensing rules that allows a brewery to sell beer in on-site ‘tasting’ or ‘tap’ rooms.  But this isn’t the only attack the state’s rules have drawn.

Beer is bipartisan.  Really, it’s hard to imagine something more people can agree on.  But, unfortunately in Florida, beer is a political issue.

“Every year the Florida Brewers Guild has solely come to get the 64 ounce growler legalized.  That’s all we’ve ever asked for.”

Byron Burroughs is the co-founder of Proof Brewing Company in Tallahassee, and the thing he’s talking about is a regulation on bottle size.   

In Florida, it’s illegal to fill any container larger than 32 ounces, but here’s the catch: filling containers 128 ounces or larger—a gallon or more—is perfectly legal. 

Like Burroughs says, craft brewers have been working for years to allow the 64 ounce, or half gallon, size bottle in the state, and each year, lobbyists connected with major distributors and retailers have worked to oppose the change. 

But this year was supposed to be different: the Beer Industry of Florida recently released a video indicating it would no longer work against growlers. 

Then came the lawsuit.

Samantha Padgett, general counsel for the Florida Retail Federation, explains the lobbying group, “filed the administrative challenge to ask for clarity on the tourism exception and when it applies.”

The tourism exception addresses an exception in

Alcohol distribution in Florida operates on a three-tier system: manufacturers sell to distributors, who sell to retailers, and no company can operate in more than one tier.  But then Busch Gardens came along.  They lobbied for an exception—the Tourism Exception—and they got it. 

“It allowed them to have a brewery on-site,” Burroughs says, “allowed them to have separation of that brewery to other facilities, as long as they were only separated by one road.”

And if it promotes tourism.  That’s the sticking point: Padgett says the agency providing licenses isn’t requiring brewers to show how they promote tourism.

“No matter who is applying for the exception,” she says, “it should be very clear when the exception applies, and who is eligible.  That is not—it doesn’t seem to be clear that that is taking place.”

This is leaving many in the craft brewing world a bit anxious.  Strictly speaking, the Florida Retail Federation represents businesses in the retail tier, but two major distribution interests—the Florida Beer Wholesalers Association and the Beer Industry of Florida—almost immediately filed motions to intervene, joining the challenge on the side of the retailers. 

These interests are the same ones that have stood against growlers, and to some, it appears they’re now trying to cut off craft brewers’ access to licenses.

“How are we going to sell those growlers if we can’t vend them?” Burroughs says through a chuckle.  “If we legally can’t have a license to sell them?  It’s kind of a moot argument.”

Padgett says the intent of the lawsuit is simply clarification, and her organization is not interested in taking away existing licenses.  But if major changes to the tourism exception are coming, it changes the calculus for new brewers. 

Gabe Grass is in the process of opening a brewery called Grasslands Brewing Company in Tallahassee.  He says without the Tourism Exception in place, his business would be completely different.

“We wouldn’t be able to open our doors the way that we had initially intended.” Grass says. “We’re a saavy bunch.  We could figure that out, but it definitely changes our model.  It changes how we’d have to set everything up.”

In a statement, the Retail Federation points out the Tourism Exception was created for attractions that “bring in tourists and provide tax dollars to the state.” 

But Joey Redner says there’s no question breweries promote tourism.

“Many people are very interested in beer, how it’s made, where it’s made, who makes it; so by the very nature of having a brewery, I think you have structures that promote tourism.”

Redner is the founder and CEO of Cigar City Brewing in Tampa, one of the largest independent breweries in the state.   

Sarasota Republican Representative Greg Steube agrees.

“I think craft breweries, craft distilleries, local Florida wineries, all contribute to our tourism Industry in our state,” Steube says.

Steube is one of handful of lawmakers taking up issues related to beer in the state Legislature, and he’s taking aim at Florida’s licensing regime in a different way.  He’s filed a bill in the coming session that aims to allow craft brewers more flexibility in setting up small retail operations as they start their business.

“So if my bill passed it would make the lawsuit moot,” Steube says.  “Because there would be very clear statutory language that clarifies what the craft brewers can and cannot do.”

Among the changes Stuebe proposes is doing away with licensing for a simple tap-room selling beer brewed on-site in open containers and growlers.  He would also allow a brewer to hold up to two vending licenses.  This would allow them to sell beer brewed on-site, beer from other brewers, and even potentially open up a full bar. 

Joey Redner says having a tap-room is an important first step for a brewery, explaining it allows the business to build capital, and grow into wider distribution.

“The ones that have been able to expand and build production facilities to where they can get into those larger production numbers have been the ones that have had tasting rooms,” Redner says.

Despite the antagonism of retailers and distributors, Steube thinks a growing craft industry helps all three tiers.

“If these craft breweries are successful then everybody else in the three-tier system is successful too.” Steube says.  “If Motorworks Brewing, and Darwin’s Brewing, and Big Top Brewery here locally is successful in growing their product, well that means there’s more product going to the distributor, and more product going to the retailers across the state and the country selling their brand.”

But while Steube is optimistic his bill can get the support it needs when the Legislature reconvenes in March, it should be noted a substantially similar bill died last session.  Meanwhile, hearings in the retail federation’s legal challenge have been set for February 9 and 10.