Montana Bill To Allow License Stacking Ready for Introduction

One of the most heard statements in the taverns versus breweries turf war comes from a variety of tavern owners:  “If breweries want to act like bars, they should buy a retail licenses like we had to do.”

As explained here, that’s not legal under Montana law.  Montana subscribes to the three tier system (manufacturer, distributor, and retailer) and none of the tiers is allowed to also own a license from another tier.

That said, a minority of Montana breweries operate under a “closely affiliated” license model, where the brewery is separated from an adjacent restaurant/bar (sometimes only by panes of glass) and the license for the brewery and bar are held by members of the same family (literally and figuratively, depending upon the case).  This model works well in theory, particularly where licenses are inexpensive, but I’m told the accounting, legal fees and other costs are a gigantic pain in the ass.

One legislator, Representative Ellie Hill of Missoula, has drafted a bill that would allow license “stacking” to enable breweries to also own a retail licenses. Breweries would be allowed to own a beer/wine license or an all-beverage license, thus eliminating the 48 oz/person/day and 10 am to 8 pm restrictions.

The draft bill is LC 0653 and its status is “ready for delivery.”  That means Representative Hill could introduce the bill at any time (though that time is running short for the 2013 Legislative Session). 

I’m guessing this bill does not get introduced.  I’m told the Montana Brewers Association is not very keen on it, though that’s not confirmed.  I’m certain the Montana Beer and Wine Distributors Association would vehemently oppose it, since it messes with the principles of the three tier system.  And frankly, while it may sound good in the abstract, it is not a good solution.

Why? Let me count the ways.

  • First and foremost, it gives brewery opponents more fodder for shutting down tap rooms.  Now that breweries could directly own licenses, one could argue the “small brewery exception” for onsite tap room sales needs to be eliminated or significantly restricted. It’s why the Montana Tavern Association’s second attempt at a tap-room killing bill is rumored to include license stacking.
  • Ultimately, it reduces choice.  As long as Montana’s quota system is in place, there is a finite number of licenses.  Each time a brewery purchases a license – either because it becomes legal to “stack” licenses, or chooses to go the “closely affiliated” license route – there is one fewer license to be used at a non-brewery bar or restaurant.  Thus, there is also one fewer place to sell Montana craft beer.
  • It perpetuates a licensing system that creates value for a few license holders while decreasing competition and increasing turf battles in an industry that should be working together to foster growth. Since the bill does not increase the number of licenses, it creates more competition for existing licenses, thus driving up the value and potentially pitting breweries against other breweries who elect to maintain tap rooms.  

In the end, license stacking may help eliminate some of the pain in the ass of the closely affiliated license model, but ultimately does little to improve Montana’s licensing system.

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