Arizona beer bill back on tap

KINGMAN - Black Bridge Brewery owner Tim Schritter never understood why the proposed craft brewery legislation ever became a constitutional issue and he wonders why opponents of the bill are now in favor of it.

Nonetheless, he's happy that Senate Bill 1030 was unanimously passed Monday by the Senate Rules with amendments that were agreed upon by the Arizona Craft Brewers Guild, the Beer and Wine Distributors of Arizona and the Arizona Wine and Spirit Wholesale Association.

SB 1030, sponsored by Rep. Kelli Ward, R-Lake Havasu City, now moves to a vote on the Senate Floor, which is expected this week.

"As a whole, it's good for Arizona breweries to encourage them to grow because they don't have to worry about limitations," Schritter said Tuesday.

Stakeholders agreed to a cumulative cap increase that allows microbreweries to produce up to 200,000 barrels a year regardless of the number of microbrewery licenses held.

That doesn't affect Schritter. He made 182 barrels last year.

It's the provision for guest taps and collaboration rights that's critical to Schritter's business model. It remains the same from SB 1030, matching what farm wineries have.

"I still have the ability to legally have other brews on tap from other Arizona breweries," Schritter said. "I can go to Flagstaff and brew my beer with other breweries and when it's done, I can bring kegs back here. That's one of the main things for my business."

Schritter said that saves him from having to purchase additional liquor licenses for $10,000 to $20,000.

Passage of SB 1030 will be a historic victory for craft brewing in Arizona, saving jobs and paving the way for growth in the industry, said Rob Fullmer, executive director of the Arizona Craft Brewers Guild.

"SB 1030 ensures that our brewers have a business environment that is competitive with Colorado and California. It provides all brewers with a clear and consistent path to grow and transition from a start-up to a large producer," he said.

It's a balanced bill that both the craft brewers and now all the distributors support, Ward said.

"It creates a clear path for growth for both in-state and out-of-state breweries," she said. "It's right for jobs, it's right for our economy, and it's right for Arizona."

Arizona Senate Rules Committee delayed action on the bill in February when its attorney challenged its constitutionality. The attorney said the bill likely runs afoul of the Constitution's commerce clause because it grants exceptions to in-state microbreweries that aren't given to out-of-state breweries.

Amendments to the bill reflect a collaborative effort among craft brewers and distributors of beer, wine, and spirits to do what's best for the industry and Arizona's economy while strengthening the three-tier system, said Steve Barclay, executive director of Beer and Wine Distributors of Arizona.

Other major amendments to the bill include:

• Second level of microbrewery status: When a microbrewery hits the 40,000 barrel production level, it can keep growing (subject to cumulative cap) but relinquishes all self-distribution rights (except for its on-site retail), and it also cannot open any more remote/off-site retail locations.

• Limit on number of remote/off-site retail locations: An overall limit of seven licenses, as in SB 1030.

• Preserves current establishments: Ensures the industry moves forward without compromising establishments currently in existence to allow for a clean transition under the new guidelines.