Wide ranging impact of HB 2025

Beyond helping bars and restaurants (See our article on this here), HB 2025 also includes several important measures for off-premise beverage alcohol retailers, fairs & festivals, and craft beverage producers. Here are some of the more significant provisions that should interest WV beer, wine, and spirits consumers.

Home delivery by off-premise retailers

As sort of a parallel authority to that given bars and restaurants, off-premise alcohol retailers, such as grocery stores, drug stores, convenience stores, and liquor stores, would also qualify for delivery licenses which would allow them to remotely sell and then deliver the beer, wine and spirits to their local customers, using either their own vehicles or using a licensed third-party beer/wine/liquor delivery service. The delivery license comes at no additional charge to the licensed retailer. A delivery permit is not a shipping permit. Delivering and shipping are two distinct concepts under the law. HB 2025 does not give retailers the authority to ship alcohol to customers using bonded shippers such as FedEx. Wine retailers may also sell wine growlers for an additional $100 permit.

• Liquor stores and WV distilleries can deliver up to five unopened 750 ml bottles of liquor per order (or its equivalent of 128 oz.).
• Wine retailers can deliver up to 384 oz. of wine per order.
• Beer retailers can deliver up to 384 oz. of beer on each order.

WV Distilleries

The bill clarifies that the owner of a WV distillery may also obtain a winery and/or brewery license. It allows a distillery to serve its liquor for on-premise consumption if it obtains a private manufacturer club license. Previously, distilleries had no path to sell drinks to customers, but could only offer free samples and sell bottles to-go.

Direct shipping for distillers. The adopted liquor direct shipping system appears to allow in-state and out-of-state distilleries to obtain a WV direct shippers license for $250 and then register the list of distilled spirits it is making available to WV consumers. They may sell those products through an online or telephone transaction, collect the money from the sale, remit WV alcohol taxes to the state monthly, and ship out the product to WV. Here’s the catch. Instead of shipping directly to the customer, the distillery must ship the order to the licensed WV liquor store closest to the customer’s address. The customer must then drive to the liquor store to pick up the bottles. Shipping to the liquor store seems a totally unnecessary and costly step since the store may add on a 10% fee for its service. Sometimes a customer may live many miles from the closest liquor store. It seems like an unnecessary inconvenience.  West Virgina distilleries shipping to out-of-state customers must get licensed in those states and follow those states’ rules.

Wineries

HB 2025 allows wineries to sell wine growlers, up to one gallon in size. Wineries may sell and serve glasses of wine for consumption at their wineries if they also obtain a private wine restaurant or private manufacturer club license.

Hard cider industry

The bill picked up and endorsed a measure for the hard cider industry that had passed the legislature one year ago but was vetoed by the governor due to a technical error in that bill. HB 2025 now creates a separate category within the wine law for craft cider, where before, cider was simply considered another wine.

Now, cider has:

• its own definition and manufacturing license,
• an industry development fund,
• a unique gallonage tax, and
• increased distribution opportunities.

Probably the most important point to cideries is the new lower tax rate. Where previously cideries paid an excise tax of $1.00 per gallon, now they will pay only 22.6 cents per gallon (a tax decrease of 77%). This will put cider on a more even level with beer, which the cider industry desires be compared to and to compete with. The taxes collected on cider sales will go to help promote the development and growth of a cider industry using more WV fruit. The bill allows beer or wine distributors to sell hard cider, where previously, only wine distributors could sell cider. Any WV business that is licensed to engage in any activity concerning the manufacture, sale, or distribution of wine may also engage in the manufacture, sale, or distribution of hard cider without obtaining a separate hard cider license.

Fairs & Festivals

Temporary Special Brewery License

Beer festivals get a benefit that may be the best thing for them since they were originally allowed to be licensed. HB 2025 authorizes unlicensed small brewers (i.e. out-of-state small breweries that do not currently sell beer in WV) to obtain a one-day temporary special license so they can offer their beer at fairs and festivals that have WV beer festival licenses. This means there is a path for festivals to obtain scores of really special beers that have never before been available in the state. Other states have allowed this temporary license concept for years, and this measure could now put our festivals on a level playing field with major out-of-state festivals.

Beer offered under this temporary license is exempt from state label registration and franchised distributor requirements. An eligible brewer must produce less than 25,000 barrels annually. Brewery must submit a list of beers to be sold/sampled with the license application. $150 fee covers two, one-day events, so a brewer could plan to attend two WV beer festivals for the one fee. Brewer must pay the beer barrel tax on all beer they sell/sample. Brewer must also obtain a WV beer transportation permit (free). Homebrewers may also apply for this special temporary permit which would allow a beer festival to offer homebrew to its attendees.

The only drawback here is the limit to breweries producing no more that 25,000 barrels annually. Is there a logical reason to limit the size of the brewery? Several breweries in our region that are large enough to have a budget allowing them to attend a WV beer festival would be excluded. Breweries such as Fat Heads, Rhinegeist, MadTree, Troegs, Highland, and Sun King would not be eligible.

Multi-Vendor Festival License. HB 2025 also establishes a new $500 license option for fairs and festivals allowing them to have multiple vendors selling beer, wine, and liquor by the drink for up to a 15 day duration. Think of a two-week, multi-vendor Christmas Market at a city park where German-style glühwein, beer and hot mulled hard cider are served. Or maybe a weeklong county fair or multi-day craft fair that wants to have a craft beverage tent with multiple vendors selling beer, wines, and cocktails by the glass. That’s the kind of thing that could now happen.

WV Breweries

Assuming that the WVABCA determines that WV breweries are also qualified as Class B off-premise beer retailers, then WV breweries could deliver remote ordered beer to customers locally without it being accompanied by food. Otherwise, since most every WV brewery is also licensed as private club or tavern, brewers could obtain a beer delivery license as a Class A beer retailer. This would allow them to take remote orders by phone or internet, and deliver beer to the customer as long as it was accompanied by a meal. For delivery, they could use their own vehicles or use a licensed third-party beer delivery service.

A provision allowing WV breweries to direct ship beer to other states was included in the bill, as was a provision allowing out-of-state brewers to ship into WV. There is still a question about the impact and intent of the final language that made it into the bill on this topic. As soon as we get a clarification as to the meaning of the language in this direct shipper section, we will update this article.

HB 2025 passed the legislature with large majorities in both the House and Senate on Saturday night.