Satellite Brewpubs

State law allows a small manufacturer to have a financial interest in a brewpub license.

A manufacturer that sells, on an annual basis, an amount equal to no more than 60,000 barrels of beer, may have a financial interest in a brewpub, including a brewpub that also has a restaurant retail license, provided the manufacturer may not transfer alcoholic beverages directly from the manufacturer to the brewpub but may purchase alcoholic beverages from an authorized wholesaler or as otherwise provided by law, and may not have a financial interest in any retailer other than a brewpub.

Ala. Code 28-4A-3(d)

Brewpub Partnerships

Federal tied house restrictions ^[1] 27 U.S.C § 205(b) prohibit ^[2] This statute is more complicated and you should consult a qualified attorney to develop a fuller understanding an industry member (generally speaking, a manufacturer or wholesaler), from having an interest or leasing property with a retailer. The only exception ^[3] 27 CFR Part 6 is that “outright ownership of a retail business by an industry member is not an interest which may result in a violation of [the tied house laws].”

In other words, anything less than 100% ownership by a manufacturer in a retail outlet (like a brewpub) constitutes a violation of federal tied house laws.

What about a brewpub owning a manufacturer?

State law only authorizes that, “a manufacturer may have a financial interest in a brewpub.”^[4] Ala Code § 28-4A-3(d) It does not provide for the reverse – where a brewpub licensee has a financial interest in a manufacturer.

However, it does seem like it would be possible to re-structure the business entities so that, for example, a parent company owns both the manufacturer and brewpub, provided all other provisions of law are met. Such a scenario would have to be designed and evaluated case-by-case. ^[5] Confirmed verbally by Bob Martin, Assistant Chief Counsel at ABC, on October 24, 2019

Current Status

ABC leadership have commented that the law only allows a manufacturer to have a financial interest in a single brewpub. The Guild strongly disagrees with this interpretation and is prepared to challenge if and when this situation leads to a formal action against such a business model.