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Monday, February 16, 2015

Zoning and Regulation of Craft Breweries

Last week, I attended a Chicago Bar Association continuing legal education (CLE) program on local licensing and zoning of craft breweries and brew pubs.  It was a fascinating program, and not just because there were free beer samples.  

Stewart Weiss, Chair of the CBA's Local Government Committee, put together a stellar panel, including a representative from the state liquor commission, a municipal attorney, an attorney who represents brewers, and the owner of a craft brewery.  One of the discussion topics was how the proliferation of craft breweries, microbreweries, and nanobreweries (a new term to me) has created a need to reconsider and modify current state liquor licensing regulations to address these new uses. 

Most state and local licensing schemes are based on what is called a "three tier" licensing scheme (producer, distributor, retailer). The basic structure of the system is that producers can sell their products only to wholesale distributors who then sell to retailers, and only retailers may sell to consumers. The system was set up after Prohibition to keep a tight control over the manufacture and sale of alcohol, and to keep the three "tiers" separated from one another. In its very simple form, a manufacturer cannot distribute or sell at retail, a distributor cannot manufacture or sell at retail, and a retailer cannot distribute or manufacture.  

Craft breweries and brewpubs obviously don't fit neatly into one tier.  A brewpub sells at retail the product it manufacturers on-site.  A rigid three-tier licensing scheme does not accommodate these type of hybrid uses, and as a result, we have seen may states (including Illinois) enact "exceptions" to the three-tier licensing scheme to allow these expanding uses.  Further changes are likely, as these craft brewery uses continue to gain in popularity.

States and local governments interested in bringing in these new uses (popular with residents and out-of-town visitors), will need to review their liquor licensing regulations to see whether the current regulations prohibit these hybrid uses.  Amendments to local zoning codes may also be necessary to determine where a hybrid manufacturing/industrial/retail/restaurant use would be appropriately located.

For more information, the American Planning Association just published an article in its February edition of Planning Magazine titled "Welcome to Beer Country" that discusses how towns are planning for these uses.  You can also check out the presentation slides here.

Post Authored by Julie Tappendorf


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