Mailing Date: April 26, 2011
Gary M. Toczko, President
Nimble Hill Vineyard and Winery
RE: Collocation of Brewery at Limited Winery
Dear Mr. Toczko:
ISSUE: This office is in receipt of your March 31, 2011, e-mail wherein you state that you are the owner of Nimble Hill, a limited winery and vineyard in Mehoopany, Pennsylvania. You plan to plant hops this spring and you note that you are a very pro-agriculture business. You have five (5) questions as follows:
1. Can you open a licensed brewery or, alternatively, can your wife, who is not an owner of Nimble Hill, open it?
2. Can you sell Nimble Hill wine at the brewery?
3. Can the production facility house both the winery and the brewery by some type of separation?
4. Are you able to have tastings and/or sales at the brewery?
5. Can you self-distribute your brewery product?
Board records indicate that Nimble Hill Vineyard and Winery holds Limited Winery License No. LK-216 (LID 56478) for premises located at Rural Route 1, Post Office Box 175 in Mehoopany, Pennsylvania.
OPINION: As a threshold matter, please be advised that, since both a limited winery and a brewery are considered manufacturer’s licenses, it would be permissible for the same entity to hold both licenses. While there is no specific prohibition, please note that it is the Board’s Bureau of Licensing, and ultimately the three (3)-member Board, and not this office, which determines whether to approve the issuance of a license and to determine if the application conforms to the Liquor Code and the Board’s Regulations. Thus, the response to your first question is that you or your wife may apply for a brewery license, and the fact of the existence of Nimble Hill Winery at the same location is not, in itself, a barrier to that plan.
A brewery license (“G”) allows the holder to produce and manufacture malt or brewed beverages and transport, sell, and deliver such beverages in case quantities or in a single container of not less than sixty-four (64) ounces, which may be sold separately anywhere within the Commonwealth. [47 P.S. § 4-440]. A brewery pub license (“GP”) allows the holder of a brewery license to operate a restaurant or brewery pub within or immediately adjacent to the brewery premises. [47 P.S. § 4-446]. It allows sales for on-premises consumption of the beer produced and owned by the brewery, and sales for off-premises consumption of its products not to exceed one hundred ninety-two (192) fluid ounces in a single sale.
Holders of brewery pub licenses are also permitted to sell, for on-premises consumption, wines made by a limited winery that is licensed by the Board. [47 P.S. § 4-446(2)]. In addition, the holder of a brewery license may apply for an eating place malt beverage license, which would allow it to sell not only its own beer for on-premises consumption, but also the beer of other manufacturers. [47 P.S. § 4-446(4)]. Similarly, the holder of a brewery license may apply for a hotel liquor license or a restaurant liquor license for use only at its brewery premises, which would allow it to sell not only its own beer and others’ beer at its premises, but also liquor and wine for on-premises consumption. [Id.].
Thus, in response to your second question, if you were to obtain a GP license, then you could sell both your malt or brewed beverages and Pennsylvania-licensed wines, including but not limited to Nimble Hill wines, for on-premises consumption at the brewery location. Nimble Hill Winery, of course, could continue to sell its own wines for on- or off-premises consumption.
In regard to your third question, nothing in the Liquor Code prohibits a winery and a brewery from operating out of the same building. However, the building in question must meet the requirements imposed by both licenses to legally operate. You should direct specific questions concerning physical requirements as they pertain to your application to the Bureau of Licensing. You will need special permission to run both operations on the same physical premises.
In response to your fourth question, tastings may be conducted at the brewery or elsewhere so long as they are in conformity with the Board’s Regulations. Specifically, tastings may be conducted by manufacturers’ representatives, distributors, importing distributors or retail licensees, on licensed or unlicensed premises, provided the following conditions are met: (1) the products used are legally procured, properly registered, and taxes paid; (2) there is no purchase requirement associated with the tasting; (3) there is no cooperative advertising associated with the tasting event; (4) wine and spirits manufacturers or their agents are registered pursuant to Board Regulations; and (5) no more the one (1) standard-sized alcoholic beverage of each product shall be provided to each tasting participant. A standard-sized alcoholic beverage is twelve (12) ounces of a malt or brewed beverage, such as beer, four (4) ounces of wine (including fortified wine) or one and one-half (1½) ounces of distilled spirits. [40 Pa. Code §§ 13.201, 13.211(a); Board Advisory Notice No. 10 (6th Revision)].
The issue of sales at the brewery has been addressed in the response to the first and second questions.
Finally, as to the fifth question regarding self-distribution, and assuming for purposes of this response that you plan to obtain a G or GP license, please note the following general information. As noted above, a brewery (“G”) license enables the holder to “produce and manufacture malt or brewed beverages, and to transport, sell and deliver malt or brewed beverages from the place of manufacture only in original containers, in quantities of not less than a case or original containers containing one hundred twenty-eight ounces or more which may be sold separately anywhere within the Commonwealth.” [47 P.S. § 4-431(a)]. In-state licensed manufacturers of malt or brewed beverages may choose to function as their own primary distributor or name a distributor or importing distributor as the primary or original supplier of their product. [47 P.S. § 4-431(b)]. Therefore, as the holder of a G license, Nimble Hill’s brewery entity would be permitted to distribute its own malt or brewed beverages and territorial agreements would not be necessary.
Please be advised that there are limited circumstances in which the holder of a G license is not able to self-distribute the malt or brewed beverages that it produces. Section 446(4) provides the “holder of a brewery license who receives a hotel liquor license, a restaurant liquor license or a malt or brewed beverages retail license to operate a brewery pub shall not sell directly to any person licensed by this act, except if any malt or brewed beverage is to be distributed in this Commonwealth it shall be only through specific importing distributors who shall have first been given distributing rights for such products in designated geographical areas through the distribution system required for out-of-State manufacturers under section 431(b)….” [47 P.S. § 4-446(4)]. However, since your brewery would plan to operate a brewery pub pursuant to a GP license rather than a restaurant, hotel or retail dispenser license, this provision is not applicable and a territorial agreement is not required.
Lastly, please be advised that any malt or brewed beverages sold within the Commonwealth of Pennsylvania must be registered with the Board. Section 445 of the Liquor Code provides:
No brand or brands of malt or brewed beverages shall be offered, sold or delivered to any trade buyer within this Commonwealth unless the manufacturer thereof shall first submit an application in the form and manner prescribed by the board for the registration of the said brand or brands of malt beverages, together with an annual filing fee not to exceed twenty-five dollars ($25) for each brand registration requested. In the event an out-of-State or foreign manufacturer of malt or brewed beverages has granted franchise rights to any person for the sale and distribution of its brand products but which person is not licensed to sell and distribute the same in this Commonwealth, said such person shall nevertheless be required to register the involved brand before offering the same for sale in Pennsylvania. It is further conditioned that the person holding such franchise rights shall, together with its application for brand registration, file with the board copies of all agreements between it and the Pennsylvania importing distributor appointed by such person to sell and distribute the brands of malt or brewed beverages as provided by sections 431 and 492. Such agreement shall contain the manufacturer's consent and approval to the appointment of the Pennsylvania importing distributor and the rights conferred thereunder.
[47 P.S. § 4-445].
Please note that a GP licensee is required to register any malt or brewed beverage that it produces for public sale regardless of whether such malt or brewed beverages are produced solely for on-premises consumption. Finally, you are also advised to seek private counsel experienced in Pennsylvania liquor law before engaging in this complex commercial enterprise. Please do not hesitate to contact this office should you have additional questions.
THIS OPINION APPLIES ONLY TO THE FACTUAL SITUATION DESCRIBED HEREIN AND DOES NOT INSULATE THE LICENSEE OR OTHERS FROM CONSEQUENCES OF CONDUCT OCCURRING PRIOR TO ITS ISSUANCE. THE PROPRIETY OF THE PROPOSED CONDUCT HAS BEEN ADDRESSED ONLY UNDER THE LIQUOR CODE AND REGULATIONS. THE LAWS AND POLICIES ON WHICH THIS OPINION IS BASED ARE SUBJECT TO CHANGE BY THE LEGISLATURE OR THE PENNSYLVANIA LIQUOR CONTROL BOARD.
Very truly yours,
FAITH S. DIEHL
cc: Pennsylvania State Police,
Bureau of Liquor Control Enforcement
Jerry W. Waters, Director of Office of Regulatory Affairs
Jane Melchior, Director, Bureau of Licensing
Tisha Albert, Assistant Director, Bureau of Licensing
PLCB Advisory Opinion No. 11-142