In the Doghouse

Sting Finds Fraud In Up To 70% of CA Brewpubs

Keep drinking those kegs, Napa Valley!A recent California Department of Alcoholic Beverage Control (ABC) operation targeting 70 licensed brewpubs found nearly 50 of them to be in violation of the terms of their license, the department announced. Brewpubs, defined as bars and restaurants that brew their own beer for sale, are allowed a full liquor bar so long as they meet a certain quote of beer production and sale. Approximately 150 venues in California qualify as brewpubs.

"This is an outrage, but not a surprise," said Michael Scippa, Public Relations Director of Alcohol Justice. "Give the industry an inch, they'll take a mile, and these brewpub licenses were a mile to begin with."

Brewpubs operate on what is classified as a Type 75 license, distinct from a normal full-bar Type 47 license. Under Type 75, the venue can maintain a full bar so long as it brews at least 200 barrels of beer on-site each year while operating a full restaurant. The exemption was originally carved out to provide an economic boost for craft breweries, but many licensees saw it as a cheap end-run around the more limited Type 47. As the Napa Valley Register notes, Type 75 licensees historically did not even have to sell the beer. They could donate it, give it away, or pour it down the drain, while retaining the income from the full liquor bar.

The California legislature modified the production requirement this year, raising the minimum production to 200 barrels per year, and requiring documented sales. However, many of the venues ABC investigated were not even able to meet the pre-2018 requirements. Even restaurants intending to follow the new requirements may fall short in 2019. The Register calculates that, for all purported brewpubs in Napa to meet their sale minimums, every single beer-drinking tourist would have to buy two pints from a brewpub specifically--on top of everything they drink from establishments with other types of of licenses in the area.

According to ABC Deputy Director Eric Hirata, disciplinary actions against violators ranged from a suspension of their hard liquor privileges to a full revocation of their license. Some venues simply surrendered their Type 75 license outright, rather than try and comply with the brewing requirements. But ultimately, public involvement in the monitoring process is essential to preventing ongoing abuse.

"The community can assist in keeping Type 75 licensees in compliance by telephoning complaint to their local ABC district office," Deput Director Hirata advised via email.

Not all community members are convinced that brewpubs can or should be simply kept in line. "The Type 75 was always an open invitation for fraud," said Mr. Scippa. "Rather than enforce or reform it, we need to get rid of it."

A list of local ABC offices is available here.