Has Pennsylvania’s New Liquor Legislation Made Brew Pub Licenses Obsolete?

From the desk of BOP General Counsel: Theodore J. Zeller III, Esq. of Norris McLaughlin Marcus.

Until recently, Pennsylvania breweries have been able to open up a world of possibilities by obtaining a GP-license to operate a brew pub at their brewery premises. The new legislation, however, has changed the situation. This raises the question, has the GP-license become obsolete? This is a question that current and future breweries will have to answer when filing applications, validations, and renewals for their licenses. In the meantime, we would like to outline some of the advantages and disadvantages of operating strictly under a G-license versus adding a GP-license.

Initially, we should note the relevant change (you can view the major changes here in our recent blog post) affecting breweries under H.B. 1169, signed into law as Act 166 of 2016 (“Act 166”), which was signed by Governor Wolf on November 15, 2016, and will go into effect on January 14, 2017. Act 166 now allows breweries with simply a G-license to sell Pennsylvania beer brewed by other manufacturers, Pennsylvania limited wines, and Pennsylvania limited distillery products. Previously, only brew pubs holding a GP-license had the ability to sell Pennsylvania limited wines and limited distillery products. Additionally, under Act 39, which became law in August, licensees are now charged a $700 surcharge fee when renewing each of their licenses.

Now that we have covered the new changes in the law, here is a breakdown of the positives and negatives of having a G-license versus adding a GP-license.

The Benefits of Only a G-License:

Breweries with a G-License must only have 10 seats and offer snack foods in order to sell its beer for on-premises consumption.
Expo Permits: Breweries can obtain expo permits to sell their beer at festivals by the glass, growler, bottle, and package not to exceed 192 ounces. The permit is $30 per day, and cannot be used for more than 30 consecutive days and 100 days per year.
Farmer’s Market Permits: Breweries can obtain a farmer’s market permit to sell its beer at farmer’s markets, which meet certain criteria, throughout Pennsylvania by growler, bottle and package not to exceed 192 ounces. The permit is $250 per year, and can be used at multiple farmers’ markets at one time.
Breweries can self-distribute their beer to other licensees.

The Negatives of Only a G-license:

Decreased hours: Breweries’ tasting rooms are permitted to be open only until midnight.
Cannot obtain an off-premises catering permit. Although, does this matter when you can obtain 100 expo permits per year, which are not limited in hours and allow off-premises sales as well?

The Benefits of Obtaining a GP-license:

Increased hours: Brew pubs have the ability to be open until 2 a.m., unlike their G-license counterparts who must close by midnight.
Catering Permits: Brew pubs can apply for and receive off-premises catering permits that allow them to serve limited wines and beer (and, probably, Pennsylvania licensed spirits), for on-premises consumption, at an event on an unlicensed premises for 5 hours per day, up to 52 days per year.

The Negatives of Obtaining a GP-license:

Seating Requirement: To obtain a GP-license, the brewery must have tables, chairs, and food for 30 people.
Extra $700 surcharge fee for having an extra license.
Additional renewal and validation fees for having an extra license.
No self-distribution: GP-license holders must sell their beer through wholesalers, just like out-of-state brewers are required to do.

As you can see by the breakdowns above, there are many positives and negatives to the debate of whether to add a GP-license to your G-license, or not. Keep in mind that with every GP-license, you will also have the privileges that come with a G-license. We should note, however, that if a brewery were to abandon its GP-license, it would have to file for a license extension of its licensed brewery premises to cover the former GP-licensed area. Ultimately, it will be up to the breweries to decide what to do under Act 166 when it becomes law on January 17, 2017.

For additional information regarding this matter, please contact Matthew Andersen, Esquire, at mandersen@nmmlaw.com or our offices at (610) 391-1800. For information regarding federal and Pennsylvania liquor law matters or general manufacturing and distribution advice, please contact Liquor Law Department Chair Theodore J. Zeller III, Esquire, at tzeller@nmmlaw.com or at our offices at 610-391-1800.