Louisiana brewery owners say they are concerned about their industry’s future under new state regulations that impose requirements related to food sales and other issues that they warn could force some of them out of business.
The Louisiana Office of Alcohol and Tobacco Control issued an advisory on the new rules Friday that has brewery owners hopping mad. The owner of Parish Brewing in Broussard said he’s considering moving out of state, and the owner of NOLA Brewery in New Orleans predicts three to four closures this year.
The advisory on the new rules had been in the works for about a month to clarify regulations called into question after all breweries received “cease and desist” letters in the fall and some received citations for practices they had thought were permissible.
The letter and citations made owners question if things like hosting yoga events, hiring live music and allowing food trucks to operate at the brewery would be allowed under the new administration.
Once the advisory was issued, however, the progress that industry leaders said they felt while working with ATC evaporated as the advisory included other new regulations in addition to permitting things like yoga and live bands.
NOLA Brewery Founder and CEO Kirk Coco, who is also the president of the Louisiana Craft Brewers Guild, said that even though the ATC and guild reviewed multiple drafts, the ATC only sent the final version to the guild’s executive director late Friday afternoon before publication.
Guild Executive Director Cary Koch said he did approve the final draft and that the Guild and the ATC have worked hard together on the final version.
"The next step moving forward is to take this advisory opinion and live within the guidelines that have been set," Koch said."We were not made whole as we wanted, but that’s where we continue to work with the ATC."
One new regulation that was added in the final draft is that brewery restaurant sales must be “incidental to the beer sales,” and can not exceed 25 percent of what breweries get from beer sales.
This new regulation will shut down the newly opened BBQ restaurant in NOLA Brewery, according to Coco, who is also the founder and CEO of the New Orleans based business. On Saturday evening the ATC proposed changing that to 25 percent of all sales, according to Coco, who added this would be "more than adequate."
Last year, well-known New Orleans pit master Neil McClure closed his Uptown restaurant to open a new location inside NOLA Brewery’s $1.6 million expansion. Under the new restriction, Coco thinks the cap will be met within the first couple days of the month, putting the 20 employees out of work.
Coco says he won’t be the only one out of the state’s 28 breweries feeling the pinch.
“I would guarantee you that there would be at least three or four closures in the next six months and that’s all jobs,” Coco said, estimating that 100 jobs would be affected.
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Microbreweries such as B.J. Brewhouse are not affected by the advisory because they are retailers whereas breweries are identified as manufacturers.
Parish Brewing Company Owner and Brewmaster Andrew Godley said the new restriction is another instance of Louisiana politics making it difficult to do business here. Louisiana breweries pay one of the highest beer excise taxes in the country after it was raised last year, Godley said.
“I am in the process of planning a multimillion dollar expansion and I am considering doing so across the border in Texas or Mississippi if the government is against breweries here,” Godley said.
ATC Commissioner Juana Marine-Lombard was aware of investments like Coco’s when the advisory was issued on the new rules, ATC Chief of Staff Ernest Legier said Friday.
Legier said the 25 percent rule on food was a “huge compromise” in that food service wasn’t specifically allowed under state law governing breweries as he interprets it.
“You also have entities that have invested hundreds of thousands, sometimes a few million dollars in something that is really good for the state and we don’t want to take away their ability to fully utilize that investment,” Legier said, as to the reason for the compromise on food sales.
Coco disagrees with the ATC’s interpretation of state law, saying that breweries should be able to have food because it’s not explicitly prohibited. He noted that breweries have health and hospital food permits, and the previous ATC commissioner allowed it after discussion.
The new rules also address such things as renting breweries for private events and marketing on social media.
In addition, the advisory explicitly allows such events as live entertainment and bingo, trivia and yoga nights as long as it is “incidental to the taproom’s purpose.”
Scott Wood, co-owner of the New Orleans-based Courtyard Brewery, said this permission is a “no brainer” because he understood those things were allowed previously.
“We built breweries to make and sell beer but we also like to have fun,” Wood said. “We want to generate interest in our brands and we want to generate awareness and the way you do that is to hold special events.”
Coco agreed that many of the permissions in the advisory were things that were already understood as allowable, but expressed concern that it imposes more restrictions.
“It’s stuff that we were already allowed to do but she has framed it so now she’s defining it,” Coco said. “Like right now she’s saying that we can do music but only inside the tasting room or taproom and that’s never been in the rule in fact we’ve never done music in our taproom.”
Marine-Lombard said before the advisory was issued that the original cease and desist letters were prompted by numerous complaints, many anonymous, from groups across the state, including competitors, neighbors and law enforcement agencies.
“I was receiving a number of complaints about breweries operating in ways that overstepped the laws of a manufacturer or breweries operating in ways that might not have been compliant with the general law,” Marine-Lombard said in an interview with The Advocate before the advisory’s publication.
Brewery owners say they think the restaurant industry and Louisiana Restaurant Association were behind many of the complaints. Coco said Marine-Lombard admitted to feeling pressure from the group.
“She said that the LRA was pressuring her because we were eating into restaurant business,” Coco said. “That’s a very unfair way to go about changing the law by going to one commissioner and pressuring her to make a ruling instead of going to the legislature and making a law change if they want to change the law.”
Legier said other “industry leaders,” who he declined to identify, were involved in the advisory drafting process and that these regulations affected more than just breweries.
Now that the advisory has been issued, Godley said he is hesitant to be completely open and honest about his thoughts for “fear of retribution from the ATC” and that other brewery owners feel the same way.
“They hold my business and livelihood in their hands,” Godley said. “The livelihood that puts food on the table not only for my family, but the families of my 19 employees. … If we don’t like a decision, our only appeal is to the person who issues the citation or decision, the Commissioner herself. It puts us in a sticky situation.”