Part 2: Breweries
This article is the second in a three-part series of articles regarding the licensing of alcoholic beverages in Montana. Our first article dealt with wineries; this article will focus on breweries. Currently, there are seven microbreweries in downtown Billings and roughly three dozen throughout the state. Our firm is proud to represent 406 Brewing Company of Bozeman, Red Lodge Ales of Red Lodge, and Uberbrew of Billings. Montana has long had a thriving microbrewery business; the first brewery located in Montana Territory was opened in 1863 and closed in 1974 (after a brief hiatus during the Prohibition). In 1926, Montana was the first state to repeal Prohibition enforcement. Prohibition officially ended in 1933. Interestingly, the total number of breweries in the United States in 1873 was around 4000, whereas the total number of breweries located in the United States today is just under 3000, representing a consolidation in the industry.
According to the Brewers Association State Craft Beer Sales & Production Statistics for 2013, Montana ranks third nationally in terms of the number of breweries per capita. The total economic impact of Montana's brewery industry is estimated to be over $200 million. By contrast, Montana's tourism industry is estimated to have generated nearly $2 billion in sales in 2014, resulting in an additional $276 million in state and local taxes. Although tourists visit our state because of its natural wonders and unparalleled outdoor activities, Montana's eclectic and award-winning breweries help ensure that tourists will enjoy their stay.
The laws governing the licensing of breweries in Montana are numerous but relatively straightforward. Mont Code Ann. § 16-3-106, passed in 1933 (the same year in which Prohibition ended), prohibits the opening of alcoholic beverages during transit. Mont Code Ann. § 16-3-201 allows the manufacture of beer for personal or family use. Under Mont Code Ann. § 16-3-212, a licensed brewer or importer may sell beer to any licensed wholesaler.
Small breweries--defined as those with annual nationwide production of less than 10k barrels--are allowed to sell beer on-site during the hours of 10:00 a.m. to 8:00 p.m. Mont Code Ann. § 16-3-213. Under the sample room exception, breweries that manufacture less than 60k barrels of beer per year may provide samples of their own beer on premises and without charge, upon payment of a license fee.
The Montana Code also sets forth certain mandatory contract provisions for agreements between a brewer or importer and the licensed wholesaler; these agreements must be filed with the state Department of Revenue. Mont Code Ann. § 16-3-222, -226. Under Mont Code Ann. § 16-3-230, all beer that is to be distributed in the state must be shipped to a licensed wholesaler. Mont Code Ann. § 16-3-244 places advertising restrictions on beer retailers.
Title 16, Chapter 3, Part 3 of the Montana Code sets forth various restrictions on the retail sale of beer. For example, Mont Code Ann. § 16-3-302 and -303 govern the consumption of beer on premises and the sale of beer for consumption off premises. Mont Code Ann. § 16-3-306 addresses the proximity of retail beer establishments to churches and schools, and Mont Code Ann. § 16-3-316 governs the provision of alcoholic beverages at fundraising events.
Title 16, Chapter 4, Part 1 of the Montana Code provides the specific licensing requirements for brewers. Mont Code Ann. § 16-4-103 addresses licensing requirements for wholesalers, and Mont Code Ann. § 16-4-104 addresses licensing requirements for retailers. Licenses may be transferred only with the permission of the Department of Revenue. Mont Code Ann. § 16-4-106. Special provisions are made for golf courses and catering operations. Mont Code Ann. § 16-4-109, -111.
The brewery industry garnered the attention of the Montana legislature this year. House Bill No. 326 would allow a person to own licenses for both a brewery and a bar. House Bill No. 336 would have raised the production cap from 10k to 60k for breweries allowed to operate a taproom (the small brewery exception discussed above). As of the writing of this article, both bills have been tabled.
