[Title]

Committee: Regulatory Reform

Complete to 9-9-13

A SUMMARY OF HOUSE BILLS 4709 - 4711 AS INTRODUCED 5-9-13

Taken together, the bills would amend the Liquor Control Code to (1) increase the number of barrels of beer a microbrewer could produce in a year, (2) allow brewpubs to have an interest in up to five other brewpubs, and (3) allow brewers to sell the beer they make for on-premises consumption at multiple licensed brewery premises.

House Bill 4709

The bill would amend the definition of "microbrewer" to increase the amount of beer that a business could be brew and still be considered a microbrewer from 30,000 to 60,000 barrels per year. (MCL 436.1109)

House Bill 4710

The bill would allow a brewpub to have an interest in up to five other brewpubs as long as the combined production of all the locations in which the brewpub has an interest does not exceed 18,000 barrels of beer in a calendar year. Under current law, brewpubs are limited to an interest in up to two other brewpubs if the combined production does not exceed 5,000 barrels of beer per calendar year. (MCL 436.4603)

House Bill 4711

The bill would allow a brewer to sell its beer for on-premises consumption at up to two locations that are on any of its licensed brewery premises where the brewer is engaged in the production of beer (defined in the bill to mean the full and complete brewing process, not just a portion of the brewing process). Currently, a brewer can only sell its beer for on-premises consumption at one location. (MCL 436.1411)

FISCAL IMPACT:

House Bills 4709-4711 would have an indeterminate fiscal impact on the Michigan Liquor Control Commission (LCC) and state excise tax collections dependent on how the changes to production restrictions and consumption regulations affect the demand for brewer, microbrewer, and brewpub licenses and the supply of Michigan-produced beer.

As of June 12, 2013, there were two brewer licenses (both belonging to Bell's Brewery, Inc.), 92 microbrewer licenses, and 54 brewpub licenses active in the state.

Brewer and microbrewer licensure fees are $50 per year if less than 15,000 barrels were produced during preceding year or $50 per 1,000 barrels produced annually if more than 15,000 barrels were produced during preceding year, up to maximum of $1,000. The brewpub licensure fee is $100 per year, in addition to applicable liquor license fees. During FY 2011-12, licensure fees from Michigan brewers, micro-brewers, and brewpubs generated revenue in the tens of thousands.

Excise tax on beer manufactured and sold for consumption in Michigan is levied at a rate of $6.30 per barrel and deposited into the General Fund. However, beer consumed on a brewer's premises is not taxed, excluding micro-brewers and brewpubs. Brewers, micro-brewers, and brewpubs that produce not more than 50,000 barrels during the tax year may claim a $2.00 per barrel tax credit for the first 30,000 barrels produced. During FY 2011-12, the LCC collected approximately $1.54 million in excise taxes from Michigan brewers, micro-brewers, and brewpubs.

Legislative Analyst: Jeff Stoutenburg

Fiscal Analyst: Paul Holland

■ This analysis was prepared by nonpartisan House staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.