Archive for Friday, January 22, 2016

Small breweries in Kansas seek bill allowing more production

January 22, 2016

TOPEKA — Committees in both the House and Senate held hearings Thursday on bills that would let small breweries in Kansas double their production, raising the limit to 60,000 barrels per year.

Philip Bradley, who lobbies for the Craft Brewers Guild of Kansas, said Manhattan-based Tallgrass Brewery is seeking the bill, although it would benefit an entire industry that has seen rapid growth in recent years.

"There are currently 33 microbrewery licenses in Kansas," Bradley said, noting that some brands, including Lawrence-based Free State Brewing Co., hold multiple licenses. "We are growing and we are meeting the needs and demands of the Kansas consumer."

Thirteen of those microbreweries have opened in just the last five years, he said.

The microbrewers asked for a similar bill in 2014, but lawmakers would agree at that time only to raise the cap to the current limit of 30,000 barrels per year. Bradley said he was told by committee chairmen then to come back if they needed the cap raised beyond that.

"Well, we're back," he told the House Federal and State Affairs Committee.

This year, he said, the push is mainly for Tallgrass Brewery, which has invested nearly $7 million in its new plant in Manhattan and now exports beer to 14 other states.

Jeff Gill, the CEO and owner of Tallgrass, was unable to attend the hearings because of heavy snow Thursday in Manhattan. But he submitted written testimony saying his company needs the higher limit "to remain strong and competitive with breweries in other states and continue our pattern of revenue growth and job creation in Kansas."

Under Kansas law, microbreweries are taxed at a lower rate than full-scale manufacturers. They also are allowed to operate brew pubs where they can serve their own products in the same building where they're made.

Bradley said the industry believes there does need to be a limit on microbreweries in order to maintain a distinction between them and large manufacturers like Anheuser-Busch or Miller Brewing Co.

Near the end of the hearing, though, confusion arose over what the current limits really mean.

Bradley said he has always understood the limit to apply to each "brand," such as Free State or Tallgrass.

But Debbi Beavers, interim director of the Kansas Department of Alcoholic Beverage Control, told the panel that it applies to each license, so Tallgrass technically could produce up to 60,000 barrels a year if it obtained another license, and built another facility.

Bradley, however, said that would require another massive investment in another new plant and new brewing equipment. And he said Tallgrass' current plant is designed to be capable of producing four times the current limit.

Chuck Magerl, owner of Free State Brewing Co. in Lawrence, said he had no position on the bill because his company can work with the current 30,000-barrel limit.

"As things stand now, that's adequate for us," he said. "There are other things at the Legislature that we may be monitoring more closely."

Two separate bills are being run simultaneously through House and Senate committees. The chairs of those committees did not indicate when they plan to take action on the bills.

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