- Associated Press - Monday, February 9, 2015

PHOENIX (AP) - An Arizona Senate committee on Monday passed a bill designed to modernize laws regulating microbreweries whose expanded production is nearing limits requiring them to stop running their restaurants.

The same committee didn’t act on a competing bill that pitted small brewers and large beer distributors against wine and spirits distribution companies. That bill was opposed by microbrewery owners and employees who packed the Senate commerce committee hearing room.

Sen. Kelli Ward, R-Lake Havasu City, sponsored microbrewery favorite Senate Bill 1030.

It’s intended to allow existing microbreweries that exceed a state production cap to keep up to seven retail restaurants while requiring them to get a producers license. It passed on a on a 6-2 vote.

Camila Alarcon, a lobbyist for the Arizona Craft Brewer’s Guild, said Ward’s bill was a compromise between small brewers that grow past current limits and beer distributors.

“It tells everyone here that owns and operates a brewery that once they reach the production limit of 40,000 barrels they do not have to close any restaurants or brew pubs,” Alarcon said. “But once they graduate and obtain their producers license, they’re producers. As producers they have to distribute all their products through a wholesaler unless the beer is on or adjacent to the brewery. And also like producers, they cannot open any more restaurants or brewpubs.”

The competing proposal is Senate Bill 1437, sponsored by Sen. Steve Smith, R-Maricopa. Smith’s bill is a much more extensive overhaul of the microbrewery rules and supported by the Arizona Wine and Spirits Wholesaler’s Association.

It was designed to keep in place the current three-tier system of alcohol regulation, where producers, distributors and retailers are separated.

The lobbyist for the wine wholesalers, Don Isaacson, said the Legislature has upped the production cap on microbreweries twice in the past to benefit Four Peaks.

“They are a success story indeed. They are producing a million cases of beer a year, or 24 million cans or bottles,” Isaacson said. “At some point it’s hard to argue they are a microbrewery … and entitled to all the same privileges that a true microbrewery is.”

After six of eight members voted to support Ward’s bill, Smith asked that his proposal be withdrawn and pleaded for a compromise.

“Let’s on good faith know from me … that we can somehow broker a fair deal for everybody involved,” Smith said. “I would ask that we resolve ourselves in the coming days, weeks … to bringing the two parties together and understand we do need to fix this.”

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