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Beer in the District - A Regulatory Analysis

After an unsuccessful attempt to purchase beer at a grocery store in Maryland when I first moved to the District, I thought there needed to be a comprehensive source of beer regulations in DC, Maryland, and Virginia, so folks can know when, where, and how to buy beer when traveling around the region. The first piece focused on regulations in Maryland, while the second focused on Virginia.

As was the case with my Virginia analysis, the beer and brewing regulations in DC aren’t as numerous and varied as they are in Maryland, but the regulations are nevertheless constantly changing.  A primary motivator for these changes is the emergence of the brewing industry in DC - quite simply, regulators take time to respond and keep up with popular opinion.

In this case, I feel like it’s easiest to first discuss the various alcohol-related licenses available in the District.

License Types

The best way to think of the license structure for breweries (and similar businesses) is as interlocking puzzle pieces. Each piece alone can gives some idea of the image, but you can only see the picture fully when you have all the pieces. In this context, a brewery must obtain different licenses or permits based on its operational goals. For example, brewpubs like Bluejacket or the District Chophouse have a different license and permit structure than packaging breweries like DC Brau or 3 Stars.  

Breweries in the District are licensed under the Alcoholic Beverage Regulation Administration (“ABRA”). You may have heard the term ABC (the “Alcohol Beverage Control Board”) floating around now and again - the ABC oversees the administration of ABRA. The mayoral-appointed ABC typically meets weekly to “adjudicate, administer, and enforce alcoholic beverage laws.” While sometimes ABRA can get a bad wrap, Kathy Rizzo, the Executive Director of the DC Brewers’ Guild told me that ABRA has been receptive to the Guild’s suggestions on modernizing alcohol regulation in the District.

ABRA administers licenses for 17 different establishment types including manufacturers, restaurants, festivals, and wholesalers. Breweries are not a distinct type of license under ABRA, but instead, are a subset of a Manufacturer’s license. The Manufacturer’s license itself has three types: Class A, Class B, and Class C. Here at DCBeer, we are primarily concerned with Class B (“B” for beer, clearly). Class A licenses are for the production of spirits, wine, and cider. Class C permits “a bakery to produce baked goods with a maximum of 5 percent of alcohol by volume.” Indeed, that does sound awesome.

A Class B license actually allows a brewery to operate. Specifically, the license allows breweries to sell beer to other licensees, distributors, and consumers. The Class B license requires barrels, cans, kegs, and bottles to be opened off-site, and does not allow a brewery to sell beer for consumption on-site - a brewery needs additional permits for that.

So, if a production brewery like DC Brau only had a Class B license, they could only brew and can beer and then sell it to bars and distributors. As a consumer, you could not go out to Bladensburg Road to go grab a beer or sample after a tour. In order to move beyond the basic allowances of a Class B license, a brewery needs to have additional permits.

Naturally, the permit(s) required depend(s) on what the brewery hopes to accomplish. For example, a brew pub, like the District Chophouse has different needs than a production brewery like 3 Stars. Further, if a production brewery decides to enter the brewpub arena, they must obtain additional permits.  However, a brewpub permit allows for sales to wholesalers.  Examples of additional permits for breweries include a Tasting Permit, On-Site Sales and Consumption Permit, Sidewalk Café or Summer Garden Endorsement.

According to ABRA’s Jessie Cornelius, when conflicts arise or there is a need for new legislation, ABRA works directly with the DC Council on legislation and keeps tabs on practices other jurisdictions to ensure D.C.’s regulations are logical. There is, of course, a lot of nuance to these permits, and there are many different types, but let’s stick with the basics for now.

Tasting Permit

A Tasting Permit allows patrons of a brewery to sample beer. Either a manufacturer or a retailer can obtain a tasting permit, which “[a]llows a manufacturer or retailer to provide customers with a tasting of products on a portion of their licensed premises.” In this context, a brewery with a Class B Manufacturer license can obtain a Tasting Permit but so too can any retailer (e.g., beer stores).

Naturally, there are restrictions. For example, the code requires that a brewery only provide up to 12 ounces of beer as a sample. Moreover, a brewery can only provide samples between the hours of 1:00 pm and 9:00 pm, seven days a week. In 2014, the law, which loosened many restrictive laws in D.C., extended serving hours to seven days a week.

Prior to 2012, breweries could only sell beer to retailers and wholesalers. One of the effects of the creation of the Tasting Permit in 2014 was to allow breweries to sell beer for off-premise consumption, hence why you can now buy 6-packs and other formats at your local brewery now.

On-Site Sales and Consumption Permit

In 2014, the ABC approved an On-Site Sales and Consumption Permit that allows holders of a Class B  license (remember, B for “beer” manufacture) to sell beer directly to patrons; this is entirely distinct from the Tasting Permit. The permit can be obtained by breweries, wineries, and distilleries, but we’re concerned with the brewery portion. The permit’s operative language is that it allows a brewery to “only sell, serve, and permit the consumption of beer brewed by the brewery…” Meaning that a brewery can only sell beer brewed at that location - not from anywhere else.

Moreover, the Sales and Consumption Permit allows sales between the hours of 1:00 pm and 9:00 pm, seven days a week. If a brewery also wishes to provide samples to patrons who may come to the facility for a tour, the brewery must still obtain a Tasting Permit. The primary difference here is cost: a Tasting Permit is $100 annually, whereas the On-Site Sales and Consumption Permit is $1,000 annually.

Brew Pub Permit

The Brew Pub permit allows the holder to have a brewery either on the same premises or “immediately adjacent” to the restaurant portion of the business.  In order to receive a brew pub permit, the restaurant must already have a Class C or D license (which allows sale of wine, beer, and spirits).  However, the permit is directly tied to the fortunes of the restaurant - so, if the restaurant portion of the business is forced to close, the permit is revoked. As with a Class B license, a brewpub permit allows a brewery to sell beer to distributors.

Importing Permit

A discussion of beer regulations in DC wouldn’t be complete without a brief discussion of DC’s gray laws. We’ve touched on the good, the bad, and the ugly of gray laws here on DCBeer in the past. In essence, an importation permit authorizes the holder to import beer into the District. The catch is that the product being imported cannot be obtainable through a distributor in the District. Moreover, the permit is single-use, which means as soon as soon as the beer is brought in under the importation permit, the permit cannot be used again. There are pros and cons that have been discussed ad nauseum, but those are not the subject of this piece. The fact remains, for good or for bad, DC’s gray laws allow a bar or liquor store owner to bring in and sell beer that is not otherwise available in DC.

In 2015, there was an uptick in the amount of Importation Permits granted, according to Jessie Cornelius of ABRA. In 2015, there have been approximately 39,000 permits issued, compared to 34,000 in 2014. It’s difficult to speculate why there were so many more permits issued, though I have to imagine it’s directly tied to DC’s thirst for beers not available in the region.

Aside from all of the permitting that goes into when and where a consumer can buy beer at a brewery or brewpub, there are, of course, a few restrictions on when bars and restaurants can sell, though they are pretty simple. Bars and restaurants are permitted to sell between the hours of 8:00 am and 2:00 am Monday through Thursday. On Friday and Saturday, the hours extend to 3:00 am, and on Sunday, a bar can sell from 10:00 am to 2:00 am.

The District also allows grocery stores, like Whole Foods, to sell beer for off-premise consumption. In order to do so, it must obtain an Off-Premises Class A or B Retailer license. However, the store must sell at least six of the following: “fresh fruits and vegetables; fresh and uncooked meats, poultry and seafood; dairy products; canned foods; frozen foods; dry groceries and baked goods, and non-alcoholic beverages.” The store must devote either 50% of the square footage or 6,000 square feet to selling the above.

As you can see, there are a lot of moving pieces to beer regulations, and those pieces are shifting constantly. Due in no small part to the efforts of the DC Brewers’ Guild, as of 2015, breweries can now serve beer on outdoor patios. Provided a manufacturer (a holder of a Class B license) has an On-Site Sales and Consumption Permit, it can also apply for a “Sidewalk Cafe and Summer Garden Endorsement.” The hours of operation are the same: 1:00 pm to 9:00 pm, seven days a week. This permit has no impact on brew pubs - so Right Proper, for example, didn’t have to take any action directly related to their patio.

All in all, I was expecting to come across a lot of ridiculous laws in DC pertaining to beer regulations. While there is still a significant amount of work to be done to fully modernize alcohol regulations in DC, it is clear that things are trending in that direction.

I would like to take a moment to thank Jesse Cornelius of DC ABRA and Kathy Rizzo of the DC Brewers’ Guild for their time and effort answering questions for this piece.

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Code sections: http://abra.dc.gov/service/learn-about-abc-laws-and-regulations

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