Wednesday, May 11, 2011

HB 660 Is Dead, HB 602 Hits a Hurdle

I'm really sorry to be the bearer of bad news, but brace yourself: House Bill 660 is dead. And HB 602 is in trouble.

HB 660 is the bill in the Texas Legislature that would have allowed Texas brewpubs to sell their beer off-premises. Right now, they can only sell at the pub — a frustrating situation, since out-of-state brewpubs can bottle their product, send it to a distributor, and get it on store shelves in Texas, while Texas brewpubs cannot. As Scott Metzger of Freetail Brewing, one of the leaders of the HB 660 movement, told me: "
If I wanted to increase the reach of my beer in Texas, the best thing for me to do is move out of Texas."

The bill is stuck in committee due to completely idiotic opposition from the Wholesale Beer Distributors of Texas (WBDT), which so fears any change to Texas' "three-tier" system — which mandates legal separation between producers, distributors, and retailers — that they're willing to kill a bill that would bring them more business. (A more sensible distributor group, the Beer Alliance of Texas, supported the bill.)

At this point, being stuck in committee is a death sentence — the official deadline for House bills to get out of committee was Monday. That's because the legislative session ends May 31, and there wouldn't be time between now and then to move the bill through the House, then through the Senate committee, and then through the Senate, and then through conference committee. (The Texas Lege only meets for 140 days every two years.) The only hope left now is to attach the bill as an amendment to another bill, and a spokesman for HB 660 author Rep. Mike Villarreal told me that he doesn't anticipate that happening.

Now, for the bad but not-yet-tragic news: HB 602 is in a bad place. That's the bill that would allow Texas microbreweries to kinda-sorta "sell" their product on-premises. As I've explained before, the bill wouldn't really allow retail sales, but would allow up to a 12-pack of beer to be given away to visitors at the end of a paid-admission brewery tour, thus technically preserving the three-tier separation and procuring WBDT support. But also
to get WBDT support, the bill was amended in House committee to limit this privilege to brewers who produce no more than 75,000 barrels a year. That change, unfortunately, has brought opposition from another big power in the beer world: Anheuser-Busch, which feels the law discriminates against them. The bill has been left pending in Senate committee while the involved parties haggle things out.

I'll have a more detailed report on the HB 602 situation tomorrow in the News section of The Austin Chronicle.

(UPDATE: The Chronicle report is here.)

(photo copyright Lee Nichols)


sparkadelic said...

These baby steps are a waste of time. We need to find a sponsor for a bill to repeal the whole 3-tiered system once and for all. It's completely anti-capitalist, and with all the "free marketers" in the lege, pushing it as a free market issue and hammering again and again and again that the current system punished both business and consumers would force the opposition to show their true protectionist colors. Make the legislators choose between supporting their constituents or the lobbyists writing their checks, and make them do it in public.

The Mayor said...

Don't forget it was at the insistence of AB-INbev's lobby that the bbl limitation be put in. It wasn't originally in the bill. They are playing dirty

Mike said...

Actually the three tier system was intended to keep organized crime out of the alcohol business after the end of prohibition. Just about every state has some sort of law to try to keep the Mafia out of the booze business.

In Colorado, a person, or company, may only own one liquor store.

Whether these steps are effective is open for debate. Whether they are needed is open for debate. However, given the success of alcohol businesses in Texas, I have trouble calling them anti-capitalist. Every society has a right to put curbs on its citizens to enforce its values. And encouraging the growth of small businesses is not a bad thing.


Chris Bradford said...

What's the definition of "brewpub"? So I'm clear: brewpubs can serve their beer on tap but not bottled?

Lee said...

Brewpub: A restaurant or bar that brews their own beer. They can serve their beer in bottles as well as on tap, but they cannot sell it anyplace except the brewpub (i.e., they cannot put it on the shelves of your local corner store or grocery store).

Charles Kuffner said...

Hi, Lee. I'm not finding that update on HB602 in the AusChron that you mentioned. Is it not there yet, or am I missing it? Thanks.

Lee said...

Hi Kuff, it's here:

I'll also add it to the text of the post.

Charles Kuffner said...

Got it. Thanks!

Travis said...

Im not completely clear on what the "three-tier system" is? could someone give an explanation?

Lee said...

Travis: To elaborate on my description in the article: In Texas, legal separation is required between producers, distributors, and retailers (those are the three tiers). So a brewer cannot own a distribution company (although a brewer can self-distribute, as long as that brewer is not a brewpub), a distributor cannot own retail stores or a brewery, etc.