The COVID-19 pandemic has changed the business landscape in profound ways. The seismic shift to remote work has one-time 9-to-5 office workers wondering if they ever want to return to their former routine as the health emergency wanes. Many are making that decision by starting businesses of their own. The microbrewery or craft beer industry is one that has seen dynamic growth in the pandemic era as many long-time cubicle dwellers are determining that now is the right time to cut ties to the corporate world and do something new and exciting.
New growth on tap
Even after the setbacks of COVID-19, the United States reached a record number of craft breweries in 2021. According to the Brewers Association, there are now more than 9,000 operating beer producers in the U.S.
Announced in the Brewers Association’s “Year in Beer” report, that number includes 710 new breweries that opened across all 50 states and the District of Columbia, offsetting the 176 that closed their doors. In 2021, the craft beer industry provided 400,000 total jobs, with 140,000 being those directly working at breweries.
The glass is half full
Those who have taken the plunge into craft brewing are finding that it can be a rigorous task to get up and brewing. Besides purchasing expensive equipment, supplies, and finding an ideal location to brew, owners must navigate a gauntlet of legal mandates in this heavily regulated industry.
While state laws and requirements vary in their specifics, they often overlap. For example, brewers will always need to choose a name or form an entity. They might also be required to get a brewer’s bond, which is a type of alcohol bond, when applying for their brewer’s license.
Oversight at the federal level
In addition to state licensing, all brewers are required to apply for a Brewer’s Notice with the Alcohol and Tobacco Tax and Trade Bureau (TTB) which is part of the U.S. Department of the Treasury. When applying at the TTB, brewers will be asked to submit information related to the packaging, labeling and environmental impact of the brewing operation. This application process ensures that those who operate a TTB-regulated business are duly qualified to do so and will conduct their operations fairly and legally.
The TTB also collects federal excise tax on the sale of alcohol and is also the main federal authority when it comes to the requirements for the manufacturing and sale of alcohol. Applying for a license from the TTB is often the longest and most arduous part of the process – taking up to a year in the worst-case scenario.
New microbreweries will also be asked to obtain a brewer’s bond or brewer’s collateral bond when applying for a Brewer’s Notice. The exact amount of the bond will vary in accordance with the specifics and parameters of the brewery. Its amount depends on the expected excise tax liability of the operation – i.e. how much beer will be sold and how much in taxes will be paid.
Regulating beer as food
With the introduction of the Food Safety Modernization Act (FSMA) in 2011, there have been increased regulations recognizing beer as food. In addition to current TTB regulations, alcoholic beverages are now regulated as food products, and fall under U.S. Food and Drug Administration (FDA) jurisdiction. The act is designed to proactively manage food safety hazards involved with the manufacture and transport of products, including alcoholic beverages. While craft or microbreweries must follow many of FSMA rules, including regular inspections, there are also a number of exemptions granted under the act.
Useful examples of microbrewery legislation from the eCode360® Library
From licensing and fees, to hours of operation, to production limits and product storage, local communities play an important role developing and enacting microbrewery legislation that can help craft breweries operate safely and successfully. Here are just a few examples:
Is your municipality looking to impose microbrewery legislation? Let us know.
General Code is ready to help you update your municipal code so the latest regulations are always available to the public. Contact us to get the process going. We are happy to help!
- Craft breweries: The Challenges of doing business in a crowded market
- The Trends And Challenges The Craft Beer Industry Is Facing
- Brewery Licensing: 7 important laws and regulations
- The Food Safety Modernization Act and Its Effects on Breweries
- Ten Key Legal Steps You Need to Take to Start Your Own Brewery