Expert’s Opinion: The Explosion of Brewpubs and Microbreweries

by Scott A. Breen

It has been amazing to see how many new craft beers have made it to market in the past couple of decades.

This shows the passion that people have for creating new beer flavors and styles and the demand for these products.

Along with this growth has been the explosion of new brewpubs and micro breweries.

Brewpubs and micro breweries both brew their own beer and can sell it within their restaurants as well as to customers for off-premises consumption.

Contrary to micro breweries, a brewpub license is issued in connection with a “Class C” (or another on-premises license) so brewpubs are also authorized to sell beer, wine, and spirits produced by other manufacturers of alcohol.

In order to open a brewpub or micro brewery, there are many state and federal licenses and permits that must be obtained. The applicant company must first apply for the applicable license with the Michigan Liquor Control Commission.

In addition to the main license, the applicant should consider whether they wish to obtain permits for certain activities such as “dance”, “entertainment”, or “outdoor service”.

Each owner (e.g. shareholder of the corporation or member of the limited liability company) must submit personal information, pass a criminal investigation, and possibly submit fingerprints.

There are a number of documents and financial records that also must be submitted during the application process (including necessary approvals from local units of government).

In addition, an investigator will want to meet with the owners and inspect the premises.

The applicant will also need to obtain a “Basic Permit” from the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), which is a federal agency in charge of manufacturers and wholesalers of alcohol.

The amount of information and documentation submitted to the TTB for brewpubs and micro breweries is extensive and can take many months.

As with the applications filed with the Michigan Liquor Control Commission, the TTB applications require the submission of personal information of the applicant’s owners and managers. After approval by both the Michigan Liquor Control Commission and the TTB, it is very important to understand that there are continuing obligations with which the licensee must also comply.

For example, the licensee must comply with state and federal registration requirements for beer products (e.g. labeling and reporting) and proper taxes and annual fees must be paid.

It is also imperative that notification be provided to both the state and federal agencies in the event of a transfer of ownership interests (e.g. stock or membership interests) in the licensed company.

In addition, if beer is going to be sold to consumers from a location outside of the licensed premises, the licensee will need to follow the proper procedures related to distribution.

As outlined above, there are numerous technical requirements before a brewpub or micro brewery can be licensed to sell alcohol to consumers. However, it is easily manageable with the right team on your side.

These types of establishments seem to be increasing in popularity and can be very rewarding to the business owners. If you have an interest in opening a brewpub or micro brewery, the attorneys at Willingham & Cote’, P.C. would be happy to discuss these issues with you.

Scott A. Breen is an attorney and shareholder at Willingham & Cote’, P.C. in East Lansing, Michigan. He specializes in the areas of hospitality and alcohol beverage law as well as business and real estate transactions. Mr. Breen may be reached at 517-324-1021 or sbreen@willinghamcote.com.