How cronyism threatens Louisiana’s craft breweries
Louisiana is well-known for its love of both food and alcohol. The state is a tourist destination for those looking both to enjoy excellent dining and to have a good time. Louisiana’s love affair with food has made its cuisine well-known worldwide. New Orleans’ Mardi Gras festival has few rivals around the world.
Meanwhile, across the country, craft-beer breweries and so-called “gastropubs” have been growing. The craft-beer revolution proceeded at a slower pace in Louisiana, with Abita as one of the few local craft beers to gain national exposure. Much of the reason for this disparity is the hostility the state has shown to brewers, which is in line with its profile generally as a terrible state in which to do business, thanks to its high taxes and crippling regulations. Louisiana has the 12th highest beer excise tax in the country, at 40 cents a gallon. In fact, the tax-hungry state recently raised the fee.
If the tax increase were not enough, the state now is going after craft breweries who also serve food and hold events. Last fall, Louisiana’s craft breweries received “cease and desist” letters and were cited by the Louisiana Office of Alcohol and Tobacco Control for everything from holding yoga classes to serving food. The breweries had been holding those events for years without any complaints, but the ATC suddenly found regulations that limit what breweries could provide on their premises.
The craft brewers got angry and demanded a change in the regulations. In March, the ATC released new rules that, on the surface, would permit many such events. Alas, the devil was in the details.
The ATC ruled that live entertainment was permitted at breweries only so long as it was “not the primary purpose of the facility.” Breweries also could serve food and even charge a cover for some shows. But food sales must be “incidental to the beer sales,” meaning they could not exceed 25 percent of on-premise beer sales. The ATC also banned on-site restaurants from serving alcohol produced off-site. Finally, the ATC ruled that breweries could host fundraisers and events for nonprofits, but they must be a registered 501c(3), c(6) or c(8) and all proceeds from the event must go to the nonprofit.
While the new rules clarify old regulations, they still threaten the existence of craft breweries and gastropubs across the state. NOLA Brewery Co. CEO Kirk Coco told The Advocate that he was concerned about how the regulations would affect his brewery’s recently opened barbecue restaurant, a part of its $1.6 million expansion. Coco also warned of job losses, saying he “would guarantee you that there would be at least three or four closures in the next six months and that’s all jobs.”
Meanwhile, other brewers have threatened to take their operations out of state. One brewer considering leaving Louisiana is Parish Brewing Co. “I am in the process of planning a multimillion dollar expansion and I am considering doing so across the border in Texas or Mississippi if the government is against breweries here,” Parish Brewing owner Andrew Godley told The Advocate.
Craft brewers believe the regulations were issued at the behest of the Louisiana Restaurant Association, which sees breweries as competitors, particularly to sports bars. Instead of going to the Legislature to change the law, entrenched interests merely had to complain to an unaccountable executive-branch agency.
Serving food and holding events is an important part of the craft-brewery business. It helps them build brand recognition and provide jobs for their employees. Louisiana should keep in mind the maxim “do no harm” when they regulate this growing segment of the state economy.
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