The Future is Bright for Craft Breweries in California
By: BPE Law Group, PC
Melanie V. De Marco
July 18, 2023
With over 950 craft breweries, California is the go-to state for local brewers to set up shop and sell some amazing locally brewed beer. Will California stay the leading state for craft beer brewers? Craft beer brewers will be happy to hear that California has recently passed favorable legislation aimed at promoting the growth of the craft beer industry, and helping small businesses grow in an ever-competitive market.
California easily leads the nation with 957 breweries in 2022, with 2nd place, Pennsylvania, with a reported 531 breweries. In a recent study, California craft breweries generated more than $9 billion of economic benefit in 2022. Again, ranking number 1 in the nation. In comparison, in 2021, California craft breweries generated about $8 billion. In terms of production of beer, California craft brewers in 2022, at a per year rate, produced over 3.5 million barrels of craft beer. That is almost 3.8 gallons or almost 7 six packs per adult of drinking age in California. With the expansion of breweries and the market still showing signs of growth, California has finally started to pass legislation to further assist Californian brewers, even if only slightly.
The first of the new statutes passed by the California legislature is AB 2307. This bill now allows brewers to operate eight small facilities, such as tasting rooms, away from the main brewery. In addition, four of these smaller facilities can now have full kitchens set up to provide customers with food. This should be a great step towards meeting the demands of the ever-growing craft beer market in California. Having more satellite locations allows breweries to better reach beer enthusiasts and average consumers throughout the state, increasing a brewer’s ability to cultivate brand loyalty.
In addition, under AB 2301, brewers can now sell their beer directly through nearby self-owned taprooms and restaurants if they are within five miles of the production facility. This is an improvement on the previous law requiring a self-owned taproom or restaurant to be adjacent or contiguous to the manufacturing facility. As a result, brewers that have a nearby restaurant, or multiple restaurants, can now more easily sell their own beer there! Prior to this change, breweries would have to get a remote distributor just to be able to stock and sell their own beers only a few blocks away from the brewery. These are the difficulties faced by many California brewers today when trying to navigate the murky legislative waters.
With that in mind, while many of the publicized issues facing breweries are about licensing, trademarks, and difficulties with distribution, some of the most pressing problems faced by breweries are typically regarding landlord/tenant issues. Remember you can always negotiate your lease. Start discussing your extensions well in advance to avoid a position where you are either forced to accept unsatisfactory terms or are forced to quickly move out. By negotiating your extensions early, you are more likely to get more favorable terms. One of the main benefits of a lease option is that if the business is not doing well, a brewer can simply choose not to exercise the option. However, if business is booming and the brewer wants to exercise the option, they will have the opportunity to do so. This gives brewers flexibility in how they continue their lease and helps avoid being taken advantage of by landlords who see a thriving business with expensive, and immobile, specialty equipment.
After COVID, it has become even more important to renegotiate your brewery’s lease or to negotiate for a lease extension. During COVID, many small businesses, including breweries, had access to emergency funding. This has helped many brewers continue running their businesses through tough times. However, many of these relief assistance programs, both on the state and federal level, will be or have already ended. Thus, craft brewers must ensure that their businesses are not further hindered by troubles with their landlord.
Although beer is the most important aspect of a brewery, brewers should also stay informed and make sure to follow the appropriate, and current, legislation when setting up and operating their breweries. While the California craft beer market continues to grow, so do the difficulties faced by California craft breweries operating in a state with aging beer laws still on the books.
The information presented in this article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your state immediately so that you can determine your best options.
Recent and Popular Articles From Our Blog:
• May 10, 2022 – Using the 1031 to Reinvest
• August 23, 2022 – Understanding Private Road Maintenance
• January 10, 2023 – Website Accessibility Requirements
• February 14, 2023 – Understanding Mediation and Arbitration in RPA
• April 4, 2023 – Understanding Liquidated Damages in a Home Purchase Contract
• June 20, 2023 – Understanding the Lis Pendens
• June 27, 2023 – Do’s and Don’ts Guidelines to a Dental Practice Transition
By: BPE Law Group, PC
Melanie V. De Marco
July 18, 2023
With over 950 craft breweries, California is the go-to state for local brewers to set up shop and sell some amazing locally brewed beer. Will California stay the leading state for craft beer brewers? Craft beer brewers will be happy to hear that California has recently passed favorable legislation aimed at promoting the growth of the craft beer industry, and helping small businesses grow in an ever-competitive market.
California easily leads the nation with 957 breweries in 2022, with 2nd place, Pennsylvania, with a reported 531 breweries. In a recent study, California craft breweries generated more than $9 billion of economic benefit in 2022. Again, ranking number 1 in the nation. In comparison, in 2021, California craft breweries generated about $8 billion. In terms of production of beer, California craft brewers in 2022, at a per year rate, produced over 3.5 million barrels of craft beer. That is almost 3.8 gallons or almost 7 six packs per adult of drinking age in California. With the expansion of breweries and the market still showing signs of growth, California has finally started to pass legislation to further assist Californian brewers, even if only slightly.
The first of the new statutes passed by the California legislature is AB 2307. This bill now allows brewers to operate eight small facilities, such as tasting rooms, away from the main brewery. In addition, four of these smaller facilities can now have full kitchens set up to provide customers with food. This should be a great step towards meeting the demands of the ever-growing craft beer market in California. Having more satellite locations allows breweries to better reach beer enthusiasts and average consumers throughout the state, increasing a brewer’s ability to cultivate brand loyalty.
In addition, under AB 2301, brewers can now sell their beer directly through nearby self-owned taprooms and restaurants if they are within five miles of the production facility. This is an improvement on the previous law requiring a self-owned taproom or restaurant to be adjacent or contiguous to the manufacturing facility. As a result, brewers that have a nearby restaurant, or multiple restaurants, can now more easily sell their own beer there! Prior to this change, breweries would have to get a remote distributor just to be able to stock and sell their own beers only a few blocks away from the brewery. These are the difficulties faced by many California brewers today when trying to navigate the murky legislative waters.
With that in mind, while many of the publicized issues facing breweries are about licensing, trademarks, and difficulties with distribution, some of the most pressing problems faced by breweries are typically regarding landlord/tenant issues. Remember you can always negotiate your lease. Start discussing your extensions well in advance to avoid a position where you are either forced to accept unsatisfactory terms or are forced to quickly move out. By negotiating your extensions early, you are more likely to get more favorable terms. One of the main benefits of a lease option is that if the business is not doing well, a brewer can simply choose not to exercise the option. However, if business is booming and the brewer wants to exercise the option, they will have the opportunity to do so. This gives brewers flexibility in how they continue their lease and helps avoid being taken advantage of by landlords who see a thriving business with expensive, and immobile, specialty equipment.
After COVID, it has become even more important to renegotiate your brewery’s lease or to negotiate for a lease extension. During COVID, many small businesses, including breweries, had access to emergency funding. This has helped many brewers continue running their businesses through tough times. However, many of these relief assistance programs, both on the state and federal level, will be or have already ended. Thus, craft brewers must ensure that their businesses are not further hindered by troubles with their landlord.
Although beer is the most important aspect of a brewery, brewers should also stay informed and make sure to follow the appropriate, and current, legislation when setting up and operating their breweries. While the California craft beer market continues to grow, so do the difficulties faced by California craft breweries operating in a state with aging beer laws still on the books.
The information presented in this article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your state immediately so that you can determine your best options.
Recent and Popular Articles From Our Blog:
• May 10, 2022 – Using the 1031 to Reinvest
• August 23, 2022 – Understanding Private Road Maintenance
• January 10, 2023 – Website Accessibility Requirements
• February 14, 2023 – Understanding Mediation and Arbitration in RPA
• April 4, 2023 – Understanding Liquidated Damages in a Home Purchase Contract
• June 20, 2023 – Understanding the Lis Pendens
• June 27, 2023 – Do’s and Don’ts Guidelines to a Dental Practice Transition