Bill intended to boost Pa. breweries advances

Measure aims to close loopholes that helped out-of-state companies

A measure intended to boost Pennsylvania beer brewers in competition with out-of-staters is advancing in the state House, although there was pushback from some lawmakers who said an amendment played favorites in the brewery industry.

Supporters said the bill sponsored by Bedford County Republican Rep. Jesse Topper would close loopholes in state law. Those loopholes, they said, let out-of-state brewing companies that set up a small brewery in

Pennsylvania take advantage of benefits intended for Pennsylvania-based brewers.

“They are trying to skirt the rules,” said Republican Rep. Carl Metzgar of Somerset County, chairman of the House Liquor Control Committee.

The committee passed the bill in an 18-5 vote in June.

There are more than 400 craft breweries in Pennsylvania. Data from a trade group said they brewed 3.7 million barrels of craft beer in 2018 and employed more than 43,000 people.

By law, Pennsylvania-based brewers can sell their products directly to consumers, bypassing the long-established “threetier” system. That system sends most beer from other sources through wholesalers and then retailers.

Metzgar said a relatively small number of out-of-state brewers have set up small operations in Pennsylvania to take advantage of the law.

“We are trying to make sure people are playing by the same rules,” he said.

On Monday, the bill moved ahead in a procedural step in the House. A spokesman for House Republicans, Jason Gottesman, said its intent was to encourage in-state brewing.

Jay Wiederhold, president of the Pennsylvania Beer Alliance, which represents wholesalers, said his group is in favor of the bill.

But not everyone is on board. Adam Harris, a spokesman for the trade association Brewers

of Pennsylvania, said it did not support the bill as originally written but was working with Metzgar and others on potential revisions.

“We still have one or two other issues to hopefully address before we support the bill,” Harris said.

Democratic Rep. Maureen Madden of Monroe County, who has multiple brewers in her district, opposes the bill. She said it did not make sense.

“It can also hurt the smaller breweries in Pennsylvania that have sister companies in other states,” Madden said.

On Monday, an amendment to the bill passed on a 152-45 vote, with “no” votes coming from both Republicans and Democrats. Opponents said the amendment appeared to play favorites by creating at least one exception for a Pennsylvania brewer with out-of-state connections.

That portion of the amendment read, “A brewery located in a second-class city with retail sales prior to June 1, 2017, may sell malt or brewed beverages produced under a contract brewing agreement with an in-state or out-of-state manufacturer to non-licensees for on-premises or off-premises consumption.”

Republican Rep. Greg Rothman said the effect of the amendment was to “grandfather in” the loophole lawmakers were trying to eliminate.

That, he said, would “discourage breweries from coming to Pennsylvania.”

Another Republican who voted against the amendment, Rep. Mark Gillen of Berks County, said he didn’t like “customized legislation” that appeared to favor certain entities. Nonetheless, he said he favored the larger bill because — “saddled” as the state is with a complex alcohol-sales system — it “has got to have a level playing field.”

Republican Rep. Dawn Keefer of York County said she opposed the amendment because “it is promoting winners and losers” but she, too, would support the overall bill.

She said its message is, “Brew here in PA.”