House approves bill to boost craft breweries

The House unanimously approved Richmond Delegate Jennifer McClellan’s bill to let licensed breweries lease their facilities to craft beer makers, a move that may boost the local beer industry.

February 15, 2012; 6:00 AM • by RVANews staff

From Capital News Service, Charles Couch

Neil Burton studied the brewing industry for two and a half years as he prepared to bottle a new beer for Richmond consumers. But Burton still lacks the most important ingredient for breaking into Virginia’s brewing business–a start-up fund of roughly a million dollars.

“It costs a lot of money because the equipment’s so expensive,” Burton said. Plus, there’s the cost of buying or building a brew house–the building where the product is brewed, fermented, and bottled. Those expenses represent major financial limitations on who can make craft beer. But a bill approved by the House and sent to the state Senate may cut the steep cost for those brewing on a budget.

Delegates on Friday unanimously approved House Bill 359, sponsored by Delegate Jennifer McClellan, D-Richmond. It would allow licensed breweries to lease their facilities to other licensed beer makers. “The problem is the way current law defines a brewer,” McClellan said. To become a licensed brewer, one must own the brew house where the alcoholic beverage is produced, McClellan said.

“You have to be the one that owns the physical sort of bricks-and-mortar distillery, which is very capital intensive, and a lot of people just can’t afford to do that,” McClellan said. “But you have existing breweries that have excess capacity, who would love to sort of enter into an agreement with a new craft brewer and brew their beer. But they can’t do it under current law.” As McClellan points out, beer makers aren’t using their equipment at all times.

Burton can attest to that: makers brew a batch, place it in fermentation tanks and then the brew house may sit idle as long as the beer takes to ferment. “If you have the ability to maybe just purchase more fermentation tanks versus having to go and buy a separate brew house, it could make the cost of getting involved in the business easier,” Burton said. He said this would allow brewery owners to increase revenue when they wouldn’t be using their equipment anyway.

“It’s good for Virginia business is the way we see it, because it can increase fairly quickly the number of breweries in our state.” Currently, 36 brewing businesses operate in Virginia, Burton said.

Craft brewers have had success with similar legislation in Pennsylvania, Connecticut, Massachusetts, California, Colorado, Oregon, Washington, Florida, and Minnesota, he said. “Those are a lot of your key brewing states,” Burton said. “As a commonwealth, I think we’ve been doing a really good job with opening new breweries.

“But to have the beer culture that you would see in a place like Colorado, California, Pennsylvania–these types of beer cultures–I think we need some improved regulation and law that can make it a little easier for businesses to get involved in production brewing.”

Besides potential job and business growth, the bill could help attract tourists to the state, Burton said. “When taking these industries into account, it’s also a tourism draw for people who want to come taste these products and visit the actual brewery.”

The craft brewing industry provides 100,000 jobs in the United States.

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