Tagged: microbrewery

Where Are All the Microbreweries?

So, you want to start your own New Orleans microbrewery huh? Seems like a cool idea. Shockingly (to me), we don’t have many good, local beers being made in New Orleans or Louisiana in spite of a sizable vibrant, young entrepreneurial population that enjoys knocking back a couple (or few). Surely it’s not lack of innovation or desire. Maybe, just maybe, there’s a roadblock? Well, lets see.

Good tasting recipe, check. Building to brew in, check. Equipment to brew with, check. Awesome design for labels, check. Sounds like you’re on your way. Oh wait, you may want to check here first. That’s where you can read Revised Statute 26 of the state of Louisiana. And there’s more. That’s the requirements of the city of New Orleans. Allow me to save you the drudgery of sifting through the assorted fees, laws, fees, restrictions, fees, limitations, fees, etc. Ladies and gentlemen, I give to you, a step by step guide on how to legally (I’ll leave the business plan to you) start a microbrewery in New Orleans, Louisiana, U.S. and A.

First, you must be at least 18 yrs old, been a LA resident for previous 2 years, be a US and LA citizen, never been convicted of a felony (or your spouse), not owe delinquent sales taxes, submit to fingerprinting (for a fee) and a FBI background check (for a fee), and mail your state and city permit applications within 24 hours of each other.

Next, you must decide if you will be manufacturing beers over 6% alcohol content or producing more than 12,500 barrels (48,438 pints) a year. If so, stop right here. You cannot be a microbrewery or sell on site directly to customers, you must be classified solely as a manufacturer and sell directly through wholesale distributors. Below, I outline the necessary steps for manufacturers and microbreweries.

Manufacturer

  1. Pay the state $1000/year for manufacturing an alcoholic beverage over 6% alcohol content or in excess of 12,500 barrels.
  2. You may only sell your beer to a licensed wholesaler.
  3. Each year you must pay a “gallonage tax” of $10/barrel with no barrel holding more than 31 gallons (248 pints). However, for beers <6% alc. content you may receive a 2% discount on taxes due if you pay them “accurately and timely.”
  4. You must acquire a bond in the amount of $10,000 for each type of permit you hold to guarantee payment of taxes and penalties.
  5. You’re probably going to need an attorney to help you comply with all reporting requirements and to help you understand your contractual obligations in selling to wholesalers.
  6. Since you’ll be operating in New Orleans you must get a local permit and you’ll pay a non-refundable $500 application processing fee, $135 for being a beer business, and a $50 (minimum) occupational license fee.
  7. If your business happens to be in the Vieux Carre Zoning District you must pay a $50 processing fee and a $125 permit issuance fee.

So, it’s pretty straightforward what’s required for being a manufacturer. After investing in creating a product that makes people happy you lose a significant amount of control over where it can be sold. Certainly not ideal.

Microbrewery

  1. Acquire Retailers, Class A permit for $120 that allows you to sell on site but not at wholesale.
  2. Acquire Microbrewer permit for $1000 that allows you to brew and sell no more than 12,500 barrels a year of not more than 6% alcohol content beer.
  3. Since you can sell at retail you must pay a “fee” of $100 for every $100,000 in gross sales.
  4. Each year you must pay a “gallonage tax” of $10/barrel manufactured with no barrel holding more than 31 gallons (248 pints). However, you may receive a 2% discount on taxes due if you pay them “accurately and timely.”
  5. You’re probably going to need an attorney to help you comply with all reporting requirements and to help you stay within the law as a retailer.
  6. You must acquire a bond in the amount of $10,000 for each type (2) of permit you hold to guarantee payment of taxes and penalties.
  7. Since you’ll be operating in New Orleans you must get a local permit to manufacture and you’ll pay a non-refundable $500 application processing fee, $135 for being a beer business, and a $50 (minimum) occupational license fee.
  8. If your business happens to be in the Vieux Carre Zoning District you must pay a $50 processing fee and a $125 permit issuance fee.

In other words, for the desire to have a local business that allows you to interact more personally with your customers and allow them to better sample your product before buying it in stores or at a bar you must limit the upside of your business and variety of your products.

No wonder we don’t see more microbreweries in Louisiana, much less New Orleans. Yes, I’m sure there are other factors as well, such as the inability (I think, but I’m no farmer) to grow hops locally, but do we really need all these restrictions and fees? At a minimum the 12,500 barrel production limit should be increased significantly. Why is 6% alcohol content the dividing line? And why can wine producers sell directly to their customers when beer manufacturers can’t? Also, I think ultimately we need to seriously reconsider the 3 tier distribution system. After researching this article, I’m amazed how cheap drinks are in this city once you take into account the 3 parties who get paid by it’s sale.

Why do we need a middle-man? Especially when a situation can arise where you, as a manufacturer, choose to change wholesalers but by law must wait 24 MONTHS until your new wholesaler can sell to the bars/retailers your previous wholesaler sold to! Why shouldn’t you be able to sell your beer directly to a bar or liquor store who wants to carry your product? Crazy, right? Seems to me that alcohol distributors had a heavy hand in getting this 3 tier system placed into law just to force suppliers to use them. One thing is for certain though, these laws need serious reform. Here’s looking at you, 2012 legislative session.