Arizona microbreweries seek legislation to hold onto restaurants, raise production limit

IndustriesAssociated Press

Some of Arizona's most successful microbreweries are brewing for a legislative battle to hang onto their business.

Four Peaks and San Tan brewing companies are in danger of losing their restaurants that aren't attached to brewing operations once they surpass a production cap, the Arizona Capitol Times reported (http://bit.ly/1uWVNxT ).

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Both companies have been close to going above the state-mandated limit of 40,000 barrels per year. Once they pass that, the microbreweries would be considered beer producers and would not be able to run their stand-alone eateries. Four Peaks has four bar and restaurant locations but two of them do not actually brew beer.

"Are they willing to close two restaurants and put 200 people out of work?" Four Peaks co-founder Andy Ingram said.

The company, which began in 1996 out of a Tempe warehouse, relies on the restaurants as well as beer for its success, according to Ingram. San Tan Brewing only has one bar and restaurant but is close to the production limit.

Microbrewers plan to propose a bill in next year's legislative session that they say would be a compromise. The current 40,000 barrel limit would stay intact but microbreweries turned producers would be able to have seven microbrewery operations. Some beer distribution companies are behind the idea but not those who distribute wine and spirits.

The Arizona Wine and Spirits Wholesale Association said it will draft a bill limiting the number of microbrewery licenses for a producer. In addition, any microbrewer that crosses the 40,000 barrel threshold couldn't maintain non-brewery restaurants.

Don Isaacson, an association spokesman, said these growing microbreweries cannot have the benefits of being both a restaurant and a brewing business.

"What they want to do is take some of the special rights that are there for microbreweries with them to the producer level. When they cross the line, they have to shed the other rights," Isaacson said.

Republican Rep. T.J. Shope, of Coolidge, introduced legislation in the last session that would have upped the production cap to 200,000 barrels a year. But the bill got held up by the House Rules Committee. Shope said the battle brewing ahead will be high-stakes and contentious.

"You've got the big brewers and distributors on one side and Four Peaks and San Tan on the other. And each of them is very powerful and very loud and neither wants to back down," Shope said.