Support ‘Interfacility Transfer’
LET’S CUT SOME unnecessary RED TAPE AND support COMMON SENSE SOLUTIONs FOR small businesses TO ADAPT AND GROW.
Support SB 1240 & HB 4773
Today, Texas state law prohibits local brewers from moving their own finished products between their own facilities without a government mandated intermediary or a mountain of red tape.
As craft breweries increasingly look to expand to second or third locations, existing regulations stifle efficient inventory management, proving both time-consuming and counterproductive in a state known for its ‘Open for Business’ ethos.
Case Study: Moving a Keg for a West Texas Brewpub
A Tale of Two Locations: A brewery in San Angelo, TX, operates two venues just three blocks apart. Both locations hold Mixed Beverage Licenses and Brewpub Permits, allowing them to sell malt beverages, wine, and spirits. However, they cannot participate in self-distribution of their malt beverages. They must sell their products to a wholesaler and then buy them back at a markup to transfer products between locations. Consequently, moving a single keg between the two venues involves a nearly 300-mile journey and takes a week to travel just three blocks. This process is inefficient and illogical, yet it reflects the reality faced by brewpubs and breweries across the state due to the current regulatory environment that lacks interfacility transfer privileges.
Planting Roots in Texas Communities
As brewers plan for the future, many are opting not to expand into larger facilities but to establish multiple smaller locations that engage actively with their communities. This shift creates a new need for brewers to move finished products between facilities for inventory management and quality control. Texas has long championed the philosophy of reducing burdensome regulations and fostering business efficiency. It’s time to extend these principles to the movement of products within the beer industry. Addressing this issue would not only alleviate logistical headaches for manufacturing and retail operations but also streamline distribution by allowing breweries to consolidate distributor orders at a single facility. Moreover, this privilege would align with existing production capacity limits for breweries and brewpubs, ensuring a balanced approach to growth and regulation.
Highway to a Headache
When brewpubs use their self-distribution caps to move products between commonly owned locations, they have to go through the process of selling the product to themselves. This process requires additional red rape that typically wouldn’t be required of beers only offered in the taproom.
Product Registration
In order to sell product outside of the originating taproom, all alcoholic beverages go through a product registration process at a federal and state level. This process can take up to a month or longer if bureaucratic issues happen such as a federal government shutdown. While we understand the importance of product registration and safety standards, breweries and brewpubs are otherwise not required to get label approval for products sold exclusively in their own taprooms. Below is a flowchart of the Product Registration process.
Rits Report
The Retail Inventory Tracking System Report is a monthly requirement of brewpubs and self-distributing breweries. This complicated and extraneous report is designed to monitor retailers who may be bad actors on inventory based taxes. However, in order to monitor and regulate one group of businesses, we currently punish a different group. As brewpubs are selling their own products to themselves in order to transfer product between commonly owned facilities they have to file these sales on the RITS Report even if they did not sell to any other retailer that month.
Excise Taxes
Excise Taxes in the state of Texas are attributed to the “first sale” of alcohol, which is more accurately the sale of alcohol by the wholesaler to the retailer or for brewpubs and breweries selling beer in their taprooms the sale across the bar directly to the consumer. Allowing for Interfacility transfer would not impact any excise tax amounts, but would offer a brewery who was transferring product a less confusing tax reporting process.
Get in Touch!
Travis Bailey | Government Affairs Associate
travis@texascraftbrewersguild.org