As you may remember, the Montana Department of Revenue (DOR) created a little uprising among Montana brewers and craft beer fans last year by issuing–and then rescinding as controversy erupted–a proposed administrative rule that would’ve forced brewers to close instead of stop selling beer at precisely 8 pm. (If interested in the details on how that controversy turned out, click here.)
Welcome to the sequel, sort of.
It isn’t a common practice, but for many years, a small number of Montana taverns with all-beverage licenses have been filling growlers, just like brewers do. Neither tavern owners nor their patrons have thought much about the practice because the common perception was that all-beverage licenses allow taverns to sell all kinds of liquor, not just beer, for on premises or off premises consumption. And nobody’s ox was being gored; tavern owners, brewers and beer drinkers all seemed to be okay with the practice.
But not the Revenue Department.
On April 19, the DOR unexpectedly sent out a proposed administrative rule to clarify the law that filling growlers was not legal. The key point was: “An on-premises consumption retail licensee authorized to sell alcoholic beverages for off-premises consumption may sell alcoholic beverages for off-premises consumption only in their original packages or as an individual serving for off-premises consumption.”
This new rule–perhaps, in part, unintentionally–applied to growlers.
The Montana Alcoholic Beverage Code (MRBC) does not allow or disallow filling growlers, and the DOR took the official position that since the law doesn’t specifically allow it, it is disallowed. “The MABC must be construed so as to prohibit any alcoholic beverage transaction not specifically authorized by the MABC,” C.A. Daw, a DOR attorney, wrote in a long letter to the Montana Brewer’s Association (MBA) to explain the agency’s legal position.
Local brewers, alarmed by the unexpected ruling, asked their executive director, Tony Herbert, to meet with DOR officials, which he did. After the meeting, the DOR agreed to withdraw the proposed rule and cancel a public hearing scheduled for June 2 to let the upcoming legislature have a chance to sort it all out.
That’s where the issue is today, but if Montana lawmakers don’t clear up the legal gray area, Herbert expects DOR to re-issue the rule.
Shauna Helfert, administrator of DOR’s Liquor Control Division, told NewWest.Net that her agency had no plans to propose legislation, but if somebody else does, “we’ll provide the facts and be an informational witness.
“I want to help all licensees be in compliance,” she explained. “If this doesn’t get changed by the legislature, then, eventually we’ll try to put it in the rules.”
The Margarita Problem
In a phone conversation with NewWest.Net, Daw cleared up the question of how this became an issue, and ironically, it was nothing to do with taverns filling growlers.
“The main issue that brought this to DOR’s attention was that we heard on fairly good authority that people were going into all-beverage licensees and getting a whole cooler of margaritas and taking it out,” Daw said.
Noting that DOR has responsible for preventing over consumption of alcohol, he added, “If you give somebody a whole cooler of margaritas, well, that could be a problem.
“That was the issue,” Daw said, “and it swept up growlers accidentally. There were no complaints (on the growler situation) as far as I know.”
To that, Helfert agreed–“to my knowledge, there have been no complaints.”
But that is not really the issue, she noted. “Out job is to make sure everybody is compliance. We can’t turn a blind eye to the law.”
Even though the proposed rule has been withdrawn for now, she reminded tavern owners, it is still the DOR position that it’s currently illegal to fill growlers. In other words, it will be illegal until the legislature makes it legal.
So, if it’s already illegal, why do we need a new administrative rule, I asked. “It’s always our policy to clear up what’s not clear,” Helfert answered. Taverns have been asking about this issue, so she thought a rule might be needed to clear up the situation. “We want to make sure licensees understand the rules of the game.”
On the Same Page This Time
In the past, tavern owners and brewers have crossed swords, but in this case, they seem to be in the same corner.
“The brewers are unanimous that they’d like taverns to be able to fill growlers,” Herbert told NewWest.Net, “and we’d like to work with the taverns for common ground on this issue.”
Sam Hoffmann, owner of Red Lodge Ales and MBA president agreed, and he wondered why this practice is even an issue for DOR. “The brewers like it; the taverns like it; and the public certainly likes it.”
“The taverns pay a lot of money for their all-beverage licenses,” Hoffmann pointed out, “and this rule is a restriction on them being able to sell a new product, so we’re hoping to join with tavern owners in supporting a policy that allows them to fill growlers.”
Brewers support tavern owners on this issue because people filling growlers, or even who own a growler, are not likely to fill it with Bud Light. “It’s likely to be filled with Montana-made beer,” Hoffmann speculated, “so it helps all of us.”
To confirm this, I called the MTA in attempt to get an official comment. MTA president Robert Anderson returned my call but only to refer the matter to the organization’s lobbyist Mark Staples, who did not return my call.
Brad Martens of The Rhino in Missoula took my call and had some interesting insight. For years, he has filled growlers. It isn’t a big part of his business, but it has a potential to be more significant. And there’s a principle involved.
Somebody can go into a tavern order a beer or a rum-and-coke, Martens explained, and then get a cell call and have to leave unexpectedly, so the bartender puts it in a go cup and they take it out for off premises consumption. “Why should growlers be any different,” he asked.
At first he wasn’t too concerned about the proposed rule, he said, “but then I thought, well, wait a minute. That’s not right. Why can’t I sell growlers. I should be able to do this.”
Martens pointed out that taverns have to charge more than brewers for growlers, so naturally most of that business goes to taprooms. In some cases, though, it may be after 8 pm when brewers must stop selling beer or somebody could be looking for a favorite microbrew and prefers draught beer to bottles–and be willing to pay a few bucks more for a growler. “That’s what I don’t like,” he said, “them (DOR) telling me I can’t do it.”
In his letter, Daw spells out in great detail the agency’s concerns. Besides the law-doesn’t-specifically-allow-it argument, Daw points out that “refilling liquor bottles,” which he interprets as including growlers, is prohibited. Also, he explained, liquor licenses allow sales in “original packages” only. “Packaging of alcohol is the role of the manufacturer, not the retailer,” Daw wrote, and the brewer, not the tavern owner, is the manufacturer.
Daw interprets the law so that a glass can be filled from the “original package,” keg or liquor bottle, but not a growler.
Hellfert added another perspective. “You can sell by the drink,” she said. “That’s different than by the growler.” Her point being, you can go into a bar get one beer or one margarita in a plastic cup and take it off premises, which is legal, but it wouldn’t be legal to take out a larger container of any alcohol for off premises consumption unless it was the original package.
To be continued, sometime after the legislature adjourns in April 2011.