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HB616 & How I Came To Forgive Big Sky Brewing | Jeff Whiteside

HB616 & How I Came To Forgive Big Sky Brewing

by Jeff on April 3, 2013

in Activism, Economics, Interests, Manipulation, Politics

Big Sky Brewing LogoFor those that know me, they know I’m passionate about beer; probably more so than any other topic.  You may also know I’ve recently been embattled in the politics surrounding House Bill 616, a proposed Montana bill that significantly alters the the abilities and limitations placed upon our brewers within our state.  I’ve talked to a half a dozen brewers personally, I’ve sent letters to every brewery in the state, I’ve actively engaged in furthering a grassroots mobilization strategy and I’ve engaged the committee responsible for it’s future determination on at least three occasions.

Once they get around to it, Montana’s politics move FAST.  It was only two weeks ago today that I was actually able to lay my eyes on the actual text of the bill.  It went to first hearing and House committee vote last week.  As I write this, for all intents and purposes, the bill is now dead.    And I suppose you could say, we the people, have been responsible for determining that bill to be dead on arrival.  A representative on the committee said they received more communication about HB616 than any other legislation before them this year.  My hat is off to all those that actively spread the word and encouraged action.

If you’ve actually read the bill, though, you also probably have conflicted thoughts on the legislation.  On one hand, it did offer a new (and better) way to for breweries to compete and could directly result in benefits to both the selection and variety in providers of craft brews available on the market.  On the other hand, there were a few (seemingly intentional) language choices that had sweeping impacts upon the industry and threatened to force an entirely new game on current breweries and potentially curtail the future growth of the industry completely.

It was for the latter reasons that I opted to combine my interests in beer and politics to work against this bill.

With about seven days notice upon publication of the bill, people quickly took to their sides with this legislation.  For the most part, the people sided on behalf of the breweries.  We love our craft brew and we’re willing to take a second out of our day to write a committee to tell them that!  The problem was, as it turns out, there wasn’t a universal stance for the breweries.

When it was discovered that Big Sky Brewing testified FOR and promoted the passage of HB616, things got heated.  We took this as an assault against Montana’s beer culture, and from what the average observer could possibly know, it could be considered just that.  Almost immediately after their testimony, hundreds of us from across Montana swarmed Big Sky’s Facebook and declared everything from a personal boycott, to extreme discontent all the way the act of pouring out and pissing on their beer.  I was one of those people, but I in no way support pissing on beer.

If you look at my logo at the top of this page, the first descriptor I use for myself is “truth seeker.”  There’s always two sides to every story, as they say.  Big Sky was gracious enough to offer interested homebrewers, like myself, to come down to their facility and hear their side of the story.  I jumped at the opportunity and spent three hours with my fellow Missoulian homebrewers hashing out our issues over the matter.  I couldn’t have been in better company, most of us were impervious to having rainbows and puppy dogs blown up our butts and we came prepared with hard questions.

There is no doubt that Big Sky Brewing showed us homebrewers an honorable welcome.  Big Sky insured the owner and almost every single one of the key players within the company was present for the after hours meeting.  They prepared a presentation that essentially went through their own analysis, which also provided relatively detailed industry statistics within the State so we could clearly see which (and how) breweries across the state would be affected by the law.  It was far more than I could have expected for being simply a lowly customer, homebrewer and craft beer enthusiast.

Most of us, however, wanted to drill straight to the point.  Question after question, we addressed the primary points of contention based on our understanding of the legislation.  For almost an hour and a half of discussion, we aired our concerns and questions.  Big Sky Brewing was prepared, with the data and knowledge, to answer these questions.  Where we struggled to find agreement (or at least understanding), however, was on the specific mechanisms that killed the growth of the industry.  This was our primary concern as homebrewers, since it’s some of us that might someday want to ascend in their craft to own a brewery.

Specifically within the bill there is a two year compliance period, where if a brewery exceeds the limits found in the bill (300BBL), they must obtain a license for up to $100K within that two year period.  The problem was that, according to our understanding, we understood this two year grace period to start on the bill’s enactment, therefore not permitting new breweries the same opportunity to become more profitable before purchasing a license.  This would effectively mean a NEW small brewery would have to start limiting their production if they approached this limit, purchase a $100K license immediately (when it’s not entirely profitable to do so) or immediately insure that only 40% of their production is sold from their tasting room and the rest, distributed by either bottles or kegs to taverns.

My summation of the “ah ha” moment of this discussion, where all of us pretty much turned, was when we were told that there was a cost for Big Sky’s support of HB616.  Up to this point, this has not been publicly stated or acknowledged by Big Sky, and to my knowledge, anyone else.  But, there was back room deal (by Big Sky) to insure this two year grace period would be extended to three, and also would apply to all breweries in the future as well.  Future brewery killer mechanism?  Deactivated.

The unfortunate thing in all this is that none of this was public knowledge.  Most of the breweries, the MBA and we the people had to make a fast decision on this bill.  There was no time for negotiating amendments or the results of an impact analysis to occur in the court of public opinion.  There was not time for education or clarification of specific intent.  But, there was time for one last thingFor Big Sky to singlehandedly deactivate the “brewery killer” mechanism as a negotiation for their support of the bill.

While some of us walked away from the meeting with an “agree to disagree” point of view on some of the negatives, like the 300BBL limits versus a higher one, these are civil disagreements that aren’t treasonous.  Based on Big Sky’s data, a 300BBL brewery should just crest a profit level of about $100K.  I think that’s a bit high, personally…but it’s close enough, anyway.  Regardless, it’s probably unreasonable to expect a new brewery to invest that $100K into a license immediately, when there could very well be more important investments that need to be made at that stage of the business.  However, if new breweries (at any time) were afforded three years to become compliant from the time they hit the limit, they could grow their business, save money and figure out the best strategy for them.  If they opt to purchase a license, they stand to extend their profits, can satisfy their customers their customers until 2AM if desired and don’t have to observe the current 48 ounce limits.  Seems like a decent deal to me and the math works out.

There is also the outstanding issue where, if a cabaret license is NOT available in a given city, once the two year offer on “guaranteed” cabaret licenses for existing breweries has expired.  There isn’t a good answer for that, but essentially, the letter of the law in HB616 would force a new brewery to limit production or pursue distribution in this case.  Regardless, these are matters well outside the realm of Big Sky’s control since the entirety of the MTA would undoubtedly oppose such a loophole in Montana’s prevailing liquor license quota system.

In the end, I’m glad we were able to kill this bill.  It changed the game significantly for the majority of Montana’s breweries and they weren’t given the time to truly assess the situation.  Big Sky’s story is nearly unprovable at this point, since it’s likely we’ll never see any of the amendments that were a result of their negotiation.  Yet, why wouldn’t I take their word?  It took them almost two hours two tell us what we really wanted to hear.  That they were looking out for their fellow brewers and the few of us who might someday want to own a brewery.  That’s not rainbows and puppy dogs, that’s some hard digging.

If there is an enemy to be had here, it could be considered the MTA.  They played a forceful hand by bringing this bill VERY late in the session with virtually no time to navigate, and it didn’t have to be.  Had accurate information been known more than five days in advance of the bill’s committee vote, who knows what the outcome may have been?  There could have been a coalition of breweries that might have supported a diffused and more reasonable approach within the same construct with a few minor amendments.  The MTA failed to realize that with a few key adjustments, they may have just been able to garner themselves another compromise that “evens the playing field” as it were, but is still sensitive to the growth of the industry.

Sadly, I don’t think we’ll see it.  The mood on this bill is that it’s dead, although it’s officially voted on tomorrow.  The bill was tabled by the sponsor of the legislation on 4/3/2013, so it is effectively no more.

Big Sky indicated to us that this whole fiasco has pissed the MTA off and future negotiations are pretty much off the table.  I don’t quite understand this “taking my toys and going home” approach just yet, but as long as it means they leave us alone, I’d be OK with that.

At this rate, I don’t have high hopes for HJ18, a bill that commissions a study of our liquor licensing laws from the many different interests and relationships involved, and will generate recommendations on how to best handle the situation.  It’ll only work if you have a modicum of faith that if Montanan’s sit together in a room, we will find our common ground.

I rescind my personal boycott of Big Sky Brewing company and will encourage others to do so.  Respectfully.

 

 

 

 

 

 

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{ 3 comments… read them below or add one }

LaNette April 3, 2013 at 12:46 pm

Jeff, I am wondering if you asked Big Sky one question. Was this their bill? Did they work with MTA to draft this bill? The reason why I ask is because they had all these stats and all this information that no one else had time to compile because the language of the bill came out so late. How were they able to do get all this information so quickly?

Also, a back room deal sounds great and it sounds nice of them, but again why wasn’t Big Sky talking with the other brewers about their ability to make a back room deal with MTA? For me this still goes back to the necessity for collaboration. Big Sky has a lot of political clout and it’d be nice if they used it to work with the local breweries.

Jeff April 3, 2013 at 1:08 pm

LaNette – In fact, I myself asked that very question. The response I got from Big Sky was that they had the same amount of time to review the bill as we did, approximately five days. Big Sky employs quite a few people and could easily be considered the most agile and capable of our breweries, so I don’t think it’s absurd to believe they could have done the analysis quickly and reasonably accurately. Clearly, however, there was a communication line between the MTA and BSB, but I’m not reading too much into it at this point, based on their word.

I also pointed out the shortcoming of communication with their fellow brewers. I raised the point, given these miscalculations, that a conference call should have been called amongst all the breweries and the MBA, prior to the committee’s vote, to discuss this openly. In an hour and a half, they were able to change our minds…I think there could have been a much different outcome if everyone was truly on the same page and spoke with a unified voice.

LaNette April 3, 2013 at 1:24 pm

Thanks Jeff. I agree I’d like to see BSB work more closely with the MBA and breweries. I’ll try not to focus on the communication line between MTA and BSB. I hope BSB has heard from consumers how important all breweries are to our state and start working with everyone to better the system.

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