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SB 604 has Passed! What this Means for Virginia Beer

on Mon, 03/05/2012 - 1:06pm

Minutes ago, Senate Bill 604 passed the Senate floor, and is on its way to Governor Bob McDonnell’s desk for signing. We've talked a bit about SB 604 recently via Facebook and Twitter, but if you haven't spoken with us directly, a 140 character tweet probably doesn't suffice to explain what the bill is all about, or what we think it means for us specifically, and for Virginia’s beer culture at large.

SB 604, introduced by Senator Jeffrey L. McWaters and Senator William M. Stanley Jr., gives brewery license holders permission to sell their beer for on-premise consumption where it is made. At present, Virginia breweries that do not have a full service restaurant (brewpubs) have been limited to offering free samples, and selling beer to go. The bill was amended once by a House sub-committee to specify that breweries can only sell brands they own (this law is currently in place for Virginia commercial breweries, so I believe the amendment just provided clarity to lawmakers), and ultimately passed the House floor on March 1, 2012 with 99 yeas and 0 nays, and the amended bill passed the Senate floor on March 5, 2012 with 38 yeas and 1 nay. The bill will go into effect on July 1, 2012. Read the full language of the bill here:

As brief background on the main group lobbying for the bill, the Virginia Craft Brewer’s Guild re-formed in 2011 as an affiliate organization with the long-standing Virginia Manufacturer's Association. Among the potential legislative priorities of the group was the ability to sell beer on-premise at non-brewpub (sans restaurant) breweries. When Senator McWaters submitted the bill for the 2012 legislative session, several members of the Virginia Craft Brewer’s Guild, including Devil’s Backbone, Starr Hill, Hardywood Park, Bull & Bones, O’Connor Brewing, Legend Brewing, and St. George Brewing, as well as some start-up breweries and local beer lovers, rallied together to lobby in support of this bill. Among the lobbying efforts included numerous visits to the General Assembly, scheduled visits to many delegates and senators, attendance and speaking at several sub-committee meetings, and a hospitality event for the General Assembly at Hardywood Park.

The ability to sell beer for on-premise consumption has worked extremely well as a way to enhance beer culture in other states, like neighboring North Carolina. As evidence, Ashville has been named “Beer City USA” three years straight, and has become a major tourist destination for an ever growing population of craft beer lovers. Further, North Carolina was selected as the location for Sierra Nevada’s east coast satellite brewery, and is a front-runner in New Belgium’s search for an east coast site. With more breweries from the western part of the country looking to expand to the east coast, more favorable beer laws will certainly make Virginia more competitive in attracting $20M - $100M+ expansion projects that will create a great deal of new jobs in a rapidly growing industry.

On the local level, SB 604 will also make it easier for much smaller breweries to launch and start growing. Given a lack of automation and significant labor inefficiencies, smaller breweries tend to create a great deal more jobs per unit of output than larger breweries. As a point of comparison, Hardywood hand-fills 60 bottles per hour with a team of five people. The mega-brewers fill 75,000 bottles an hour with the same or fewer people. In simple terms, small breweries like us have the potential to create 1,250 times as many jobs per unit of output.

For years, thanks to their successful lobbying efforts, Virginia’s wineries have been able to sell wine by the glass at their facilities. As a result, Virginia’s winery industry is thriving. Wineries in Virginia are generating substantial excise tax revenue, sales tax revenue, and property tax revenue for local municipalities and the Commonwealth of Virginia. Virginia wineries are creating jobs, they’re promoting responsible manufacturing, they’re fostering local agriculture, they’re attracting tourism, and they’re enhancing Virginia’s food and beverage culture to a level matched by few states. With the ability to sell glasses of beer, we hope and believe that Virginia’s breweries will make similar positive economic and cultural contributions.

At Hardywood, we see SB 604 as an opportunity to build our relationship with the community and with other local businesses, to make visits to our brewery more educational and engaging, to create more jobs and to increase our output through our distributor and retail partners more on par with demand. We may increase our visiting hours, but we still plan to close by 8PM at the latest. Our hope is to encourage greater traffic to local restaurants by encouraging more people to come out in Richmond in the early evening. We would like to offer occasional live music, and to become available as a host of private events. We would also like to release more pilot/test beers to the market for feedback on a regular basis. Certainly, with the additional opportunities SB 604 will create this July, there will be more work opportunities with Hardywood.

All in, we feel the passing of SB 604 will help pave the way for a very bright future for Virginia's craft breweries, and will enable Virginia’s beer scene to become truly world class. We extend our deepest gratitude to all who reached out in support of this bill.

Special thanks go to Mike Killelea, brewer at Legend and chairman of the Virginia Craft Brewers Guild, Brett Vassey, president and CEO of the Virginia Manufacturer’s Association, Alice and Olivia from the VMA, Jeff Smith IV and Jeff Smith III of the Smith Group, Inc., Curtis Coleburn with the Virginia ABC, Antonio Elias with Delegate Betsy Carr’s office, Jasen Eige from Governor McDonnell’s office, Steve Crandall with Devil’s Backbone, Mark Thompson with Starr Hill, and last but not least, my colleagues at Hardywood Park, Patrick Murtaugh and Brian Nelson.