Ohio is getting friendlier to the expanding craft beer industry.
State lawmakers have approved creating a new liquor permit available exclusively to small brewers that will lower the annual licensing fee from $3,906 to $1,000.
The new permit, called an A-1c, will replace the A-1 license for breweries that make less than 31 million gallons, or 1 million barrels, a year.
Craft brewers, who often grumble about the high cost of running a brewery in Ohio, hailed the upcoming change, which will take effect when licenses are renewed.
“The more money we save as a small company, the more money we can invest in our small company,” said Jon Kiene, co-owner of Lager Heads Brewing Co. in Medina Township. “It’s a win for the little guy.”
Eric Bean, owner of Columbus Brewing Co. in Columbus and head of the Ohio Craft Brewers Association, agreed, saying the new permit is good news for the industry.
“Almost all of our members are in a growth phase right now and any money we can reinvest in our business, that’s great,” he said.
The state legislation, Senate Bill 48, was passed unanimously by both the House and Senate last week. It now awaits Gov. John Kasich’s signature.
The new permit is expected to cost the state about $250,000 in revenue a year, according to a report by the Ohio Legislative Service Commission. The group said there are 88 brewing licenses issued in the state.
Ohio’s licensing fee was out of whack with many other states. Brewing fees vary widely.
Wisconsin has no fee. North Carolina charges a one-time fee of $300. Oregon charges $500 for a brewery and $250 for a brewpub annually. Colorado charges $1,325 for the first year and then $300 annually. And Pennsylvania charges $1,425 a year.
Michigan has a sliding scale that starts at $50 a year, and can climb to $800 or $1,000, depending on the size of the brewery and how much beer is made.
Like the rest of the nation, Ohio has seen an explosion in the number of craft breweries opening. Lowering the licensing fee is one of the latest moves by state lawmakers to help craft brewers.
Last year, the state allowed brewers to open tasting rooms without buying a separate $3,906 license — a change that resulted in new tasting rooms across the state and a new source of revenue for small brewers.
Only two Ohio brewers definitely make more than 31 million gallons annually and wouldn’t qualify for the new permit: Anheuser-Busch InBev in Columbus and MillerCoors in Trenton. Boston Beer Co. wouldn’t say how much it brews at its Samuel Adams Brewery in Cincinnati.
Despite the license change, brewpubs still have to purchase an A-1a license that costs an additional $3,906 a year. In addition to running a brewery, Lager Heads in Medina Township also is a brewpub.
Asked if he’d like to see the brewpub fee reduced, Kiene responded: “Heck, yeah. It’s a lot of money to play in that game.”
The new permit caught the craft industry by surprise. Several brewers said they were unaware that it was being considered.
The A-1c permit language wasn’t in the original bill — which focused on allowing liquor permits to be transferred as part of economic development projects — when it was introduced in February. Instead, the language was slipped in at the last minute.
Senate Bill 48 also includes several other provisions. One allows brewers to open a tasting room within a half-mile of their production facilities.
Another clarifies language that continues to prohibit large brewers from owning distributors. Anheuser-Busch owns a distributor in Canton and that relationship will be allowed to continue.
The Wholesale Beer & Wine Association of Ohio supported the changes.
“We were happy to help the craft brewers,” association spokesman Bob Tenenbaum said about the permit issue.
The Ohio Division of Liquor Control referred questions to bill sponsor Sen. Troy Balderson, R-Zanesville, who didn’t respond to a request for comment.