This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h1451a.RRS
DATE: 2/1/2022
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 1451 Malt Beverages
SPONSOR(S): DiCeglie
TIED BILLS: IDEN./SIM. BILLS:
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Regulatory Reform Subcommittee Wright Anstead
2) Ways & Means Committee
3) Commerce Committee
SUMMARY ANALYSIS
In Florida, alcoholic beverages are regulated by the Beverage Law, which regulates the manufacture,
distribution, and sale of wine, beer, and liquor by manufacturers, distributors, and vendors. The Division of
Alcoholic Beverages and Tobacco (division) in the Department of Business and Professional Regulation
(DBPR) administers and enforces the Beverage Law.
Exceptions to the three-tier regulatory system permit in-state wineries, breweries, and craft distilleries to be
licensed as a vendor and sell directly to consumers under certain circumstances. Examples of exceptions
include brewpubs and craft brewers, which may be both a vendor and a manufacturer, subject to certain
requirements.
There are no regulations in the Beverage Law which directly address contract and alternating proprietorship
brewing, but the federal regulatory agency, the Alcohol and Tobacco Tax and Trade Bureau, allows the
practices under certain circumstances.
The bill:
Provides a definition for “barrel,” which means 31 gallons, and conforms related provisions in the
Beverage Law.
Allows brewpubs to sell their product for consumption on any licensed premises owned by the vendor,
instead of being limited to the brewpub licensed premises or contiguous licensed premises.
Converts the beverage measurement used to calculate excise taxes to 0.375 cents per ounce, from 6
cents per pint or fraction thereof. The measurement is equal, except that the current provision requires
the tax on each fraction of a pint, which requires rounding up to a pint for excise tax payment purposes.
Removes the requirement that alcohol manufacturers must file with the division a surety bond covering
the amount of their estimated excise tax payment.
Provides that only registrants for a brand or label sold to a distributor, not those kept in-house, must
pay an annual registration fee of $30.
Reduces the annual state license tax that each craft brewer engaged in the business of brewing less
than 5,000 barrels of malt beverages pays to $500 for each plant or branch, like a brewpub.
Provides guidelines for contract brewing and alternating proprietorship brewing.
The bill will have a negative fiscal impact on state government, and no impact on local governments.
The bill provides an effective date of July 1, 2022. STORAGE NAME: h1451a.RRS PAGE: 2
DATE: 2/1/2022
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Beverage Law
In Florida, alcoholic beverages are regulated by the Beverage Law,
1
which regulates the manufacture,
distribution, and sale of wine, beer, and liquor by manufacturers, distributors, and vendors.
2
The
Division of Alcoholic Beverages and Tobacco (division) in the Department of Business and Professional
Regulation (DBPR) administers and enforces the Beverage Law.
3
Three-Tier System
In the United States, the regulation of alcohol since the repeal of Prohibition has traditionally been
based upon a “three-tier system.” The system requires separation of the manufacture, distribution, and
sale of alcoholic beverages. The manufacturer creates the beverages, and the distributor obtains the
beverages from the manufacturer to deliver to the vendor. The vendor makes the ultimate sale to the
consumer. A manufacturer, distributor, or exporter may not be licensed as a vendor to sell directly to
consumers.
Generally, Florida has adopted the three-tier system. Only licensed vendors are permitted to sell
alcoholic beverages directly to consumers at retail.
4
Licensed manufacturers, distributors, and
registered exporters are prohibited from also being licensed as vendors.
5
Manufacturers are also
generally prohibited from having an interest in a vendor and from distributing directly to a vendor.
6
Tied House Evil Prohibitions
Certain relationships and interactions of manufacturers and distributors with vendors are regulated by
the Beverage Law in order to prevent a manufacturer or distributor from having a financial interest,
directly or indirectly, in the establishment or business of a licensed vendor, and to prevent a
manufacturer or distributor from giving a vendor gifts, loans or property, or rebates.
7
Exceptions to the
three-tier regulatory system permit in-state wineries,
8
breweries,
9
and craft distilleries to be licensed as
a vendor and sell directly to consumers under certain circumstances.
10
Brewpub Exception
An exception where an entity may obtain both a license as a manufacturer of malt beverages and a
vendor’s license for the sale of alcoholic beverages is often referred to as the Brewpub Exception. This
exception was added to permit a vendor to be licensed as a manufacturer of malt beverages at a single
location, with the following requirements:
11
The brewpub may not brew more than 10,000 kegs (“keg” means 15.5 gallons) of malt
beverages on the premises per year;
Malt beverages “so brewed” must be sold to consumers for consumption on the vendor’s
licensed premises or on contiguous licensed premises owned
12
by the vendor;
Wine or liquor may be sold for on-premises consumption as authorized by its vendor’s license;
The brewpub must keep records and pay excise taxes for the malt beverages it sells or gives to
consumers.
1
S. 561.01(6), F.S., provides that the “The Beverage Law” means chs. 561, 562, 563, 564, 565, 567, and 568, F.S.
2
See s. 561.14, F.S.
3
S. 561.02, F.S.
4
S. 561.14(3), F.S. However, see the exceptions provided in ss. 561.221 and 565.03, F.S.
5
S. 561.22, F.S.
6
Ss. 563.022(14) and 561.14(1), F.S.
7
S. 561.42, F.S.
8
See s. 561.221(1), F.S.
9
See s. 561.221(2), F.S.
10
See s. 565.03, F.S.
11
S. 561.221(3), F.S.
12
“Owned” is undefined. STORAGE NAME: h1451a.RRS PAGE: 3
DATE: 2/1/2022
Craft Brewery Exception
The division is authorized to issue a vendor’s license to a manufacturer of malt beverages for the sale
of alcoholic beverages on property consisting of a single complex that includes a brewery (craft
brewery), which may be divided by no more than one public street or highway.
13
A craft brewery with multiple manufacturing licenses may transfer malt beverages that it produces
between its breweries.
14
Such transfers are limited to an amount equal to 100 percent of the yearly
production of the receiving brewery.
All malt beverages and other alcoholic beverages that are not manufactured by the craft brewery must
be obtained through a distributor, an importer, sales agent, or broker.
The division may not issue more than eight vendor’s licenses to a manufacturer of malt beverages.
15
Excise Tax Reporting and Payment
Manufacturers, distributors, and vendors of malt beverages containing 0.5 percent or more of alcohol
by volume are required to report and pay an excise tax on malt beverages.
16
Manufacturers and
distributors are required to compute and submit the applicable excise taxes on alcoholic beverages with
the required report
17
to the division, on or before the 10th of each month, for all beverages sold during
the previous calendar month.
18
The payable excise tax is:
19
48 cents per gallon on all such beverages in bulk or in kegs or barrels; and
6 cents on each pint or fraction thereof in the container when such beverages are sold in
containers of less than 1 gallon.
Surety Bonds
Each manufacturer and distributor must file a surety bond with the division as surety for the payment of
all taxes. The sum of the surety bond is based on the size of the manufacturer, the type of alcohol
distributed, and the discretion of the division. The maximum bond amount is $25,000, and the minimum
bond amount is $1,000.
20
Brand and Label Registration Fee
No manufacturer, brewer, bottler, distributor, or importer of malt beverages may sell or offer for sale in
Florida, or move or cause to be moved within or into Florida, any malt beverages, without:
21
qualifying to do business in the state and registering its name and the brands or labels under
which the malt beverages are to be sold or moved; and
furnishing any samples and information as to content, quality, and formula of such malt
beverages as the division may require.
Each registrant must pay an annual registration fee of $30 for a brand or label.
22
Plant and Branch License Tax
Each manufacturer engaged in the business of brewing only malt beverages must pay an annual state
license tax of $3,000 for each plant or branch it operates. However, each manufacturer engaged in the
business of brewing less than 10,000 kegs of malt beverages annually for consumption on the
13
S. 561.221(2), F.S.
14
S. 563.022(14)(d), F.S.
15
S. 561.221(2)(e), F.S.
16
S. 563.05, F.S.
17
S. 561.55, F.S.,
18
S. 561.50, F.S.
19
S. 563.05, F.S.
20
S. 561.37, F.S.
21
S. 563.045(1), F.S.
22
S. 563.045(2), F.S. STORAGE NAME: h1451a.RRS PAGE: 4
DATE: 2/1/2022
premises pursuant to the brewpub exception pays a smaller annual state license tax of $500 for each
plant or branch.
23
Contract and Alternating Proprietorship Brewing
There are no regulations in the Beverage Law which directly address contract and alternating
proprietorship brewing, but the federal regulatory agency, the Alcohol and Tobacco Tax and Trade
Bureau (TTB), allows the practices under certain circumstances.
Generally, alternating proprietorship brewing occurs when the proprietor of an existing brewery, the
"host brewery," agrees to rent space and equipment to a "guest brewer." These arrangements
generally allow existing breweries to use excess capacity and give new entrants to the beer business
an opportunity to begin on a small scale, without investing in premises and equipment.
24
Generally, contract brewing occurs when someone pays a brewing company, the “contract brewer,” to
brew the beer per a certain beer recipe. The TTB considers this arrangement to be an ordinary
commercial business relationship.
25
Effect of the Bill
The bill defines “barrel,” which means 31 gallons. The bill conforms the manufacturing limit in the
brewpub exception to the new definition, to 5,000 barrels, from 10,000 kegs.
The bill allows brewpubs to sell their product for consumption on any licensed premises owned by the
vendor, instead of being limited to the brewpub licensed premises or contiguous licensed premises.
Ownership is not defined.
The bill converts the beverage measurement used to calculate excise taxes to 0.375 cents per ounce,
from 6 cents per pint or fraction thereof. The measurement is equal, and will end the practice of
rounding up where there is a fraction of a pint.
The bill removes the requirement that alcohol manufacturers must file a surety bond with the division.
Distributors will still need to file a surety bond with the division.
The bill provides that only registrants for a brand or label sold to a distributor, not those kept in-
house, must pay an annual registration fee of $30. The bill also specifies that no other annual
registration fee for a brand or label is authorized under the provision.
The bill changes the calculation used to determine the annual state license tax that each craft brewer
engaged in the business of brewing must pay from less than 10,000 kegs, to less than 5,000 barrels of
malt beverages, which allows such brewers to pay a smaller annual state license tax of $500 for
each plant or branch, like a brewpub.
The bill provides guidelines for contract and alternating proprietorship brewing. The definitions for that
section are:
"Alternating proprietorship brewing" means an agreement between a guest brewer and host
brewer wherein the guest brewer manufactures malt beverages on the host brewer's licensed
premises.
"Contract brewer" means a licensed manufacturer of malt beverages who brews malt
beverages on its licensed premises for a contracting brewer.
"Contract brewing" means an agreement wherein a contracting brewer pays a contract brewer
to produce malt beverages.
23
S. 563.02(2), F.S.
24
U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau, Brewery Alternating Proprietorships,
https://www.ttb.gov/beer/brewery-alternating-proprietorships (last visited Jan. 24, 2022).
25
Gina McCreadie, Contract Brewing v. Alternating Brewery Proprietorship: Which One is Right for You?, New York State Brewer’s
Association (Oct. 21, 2015), https://newyorkcraftbeer.com/2015/10/contract-brewing-vs-alternating-brewery-proprietorship-which-one-is-
right-for-you/ (last visited Jan. 24, 2022). STORAGE NAME: h1451a.RRS PAGE: 5
DATE: 2/1/2022
"Contracting brewer" means a licensed manufacturer of malt beverages who contracts for the
services of a contract brewer.
"Guest brewer" means a licensed manufacturer of malt beverages who brews malt beverages
at a host brewer's licensed premises.
"Host brewer" means a licensed manufacturer of malt beverages who allows a guest brewer to
brew malt beverages on the manufacturer's licensed premises.
The bill provides that the contract brewer:
May enter into multiple contract brewing agreements for the purpose of manufacturing malt
beverages.
Must comply with all applicable federal and state laws, including labeling laws.
Must pay all federal and state taxes on malt beverages upon removal of the malt beverages
from its licensed premises.
Retains title to malt beverages produced under a contract brewing agreement until such
beverages are removed from its licensed premises.
Must ensure that the contracting brewer's malt beverages remain separate and identifiable from
all other malt beverages at all times.
May transfer malt beverages to the contracting brewer in an amount up to the yearly production
amount of the contracting brewer's facility.
Must report to the division by the 10th day of each month the volume of each label of malt
beverages manufactured on its licensed premises under the contract brewing agreement.
The bill provides that the contracting brewer:
May only engage in the manufacture of malt beverages on its duly licensed premises and on the
licensed premises of a contract brewer as disclosed to the division.
Must report to the division by the 10th day of each month the volume of each label of malt
beverages manufactured on the licensed premises of the contract brewer under the contract
brewing agreement.
The bill provides that the contract brewer and contracting brewer:
Must, before engaging in contract brewing, notify the division, on forms provided by the division,
of their intent to operate as a contract brewer or contracting brewer and disclose the location of
the licensed premises where brewing will occur.
Must maintain all records required to be kept by manufacturers of malt beverages under the
Beverage Law.
Notwithstanding any other provision of the Beverage Law, must comply with applicable
requirements for holders of multiple manufacturing licenses and alcoholic beverages
manufactured by another manufacturer.
The bill requires the host brewer to report to the division by the 10th day of each month the volume of
each label of malt beverages manufactured on its licensed premises under the alternating
proprietorship brewing agreement.
The bill requires the guest brewer to:
Comply with all applicable federal and state laws, including labeling laws.
Pay all federal and state taxes on malt beverages manufactured pursuant to this section upon
removal of the malt beverages from the host brewer's licensed premises.
Retain title to malt beverages manufactured under an alternating proprietorship brewing
agreement.
Report to the division by the 10th day of each month the volume of each label of malt beverages
manufactured at each licensed premises under each alternating proprietorship brewing
agreement.
The bill requires that, before engaging in alternating proprietorship brewing, the host brewer and guest
brewer:
Must each qualify as a brewer with the TTB. STORAGE NAME: h1451a.RRS PAGE: 6
DATE: 2/1/2022
Must submit to the division, on forms provided by the division, information identifying:
o The host brewer.
o The guest brewer.
o The location where the alternating proprietorship brewing will take place.
o The location where any product brewed pursuant to the alternating proprietorship
brewing agreement will be stored.
o The amount of malt beverages to be produced under the alternating proprietorship
brewing agreement.
o The timeframe in which the guest brewer will be manufacturing malt beverages on the
host brewer's licensed premises.
o Proof of occupancy rights to the host brewer's licensed premises for the duration of the
alternating proprietorship brewing agreement.
o Any other information reasonably deemed necessary by the division to ensure the
health, safety, and welfare of the public or to ensure that all applicable taxes on the malt
beverages produced pursuant to an alternating proprietorship brewing agreement are
remitted to the state.
The bill requires each entity engaged in contract brewing or alternating proprietorship brewing to
maintain records, including:
Any agreement authorizing the manufacturing and transfer of malt beverages.
Records of the total volume, in gallons, manufactured as part of the agreement.
Any other records required by the division to ensure compliance with the provisions of the
Beverage Law.
The bill prohibits vendors licensed as a manufacturer pursuant to the brewpub exception from engaging
in contract brewing or alternating proprietorship brewing.
The bill provides an effective date of July 1, 2022.
B. SECTION DIRECTORY:
Section 1 Amends s. 561.01, F.S., adding a definition.
Section 2 Amends s. 561.221, F.S., conforming measurements and revising requirements for
licensed premises.
Section 3 Amends s. 561.37, F.S., revising surety bond requirements.
Section 4 Amends s. 563.042, F.S., authorizing contract and alternating proprietorship brewing.
Section 5 Amends s. 563.045, F.S., revising requirements for brand and label fees.
Section 6 Amends s. 563.05, F.S, revising excise taxes for malt beverages.
Section 7 Amends s. 563.02, F.S., revising fees for malt beverage licenses.
Section 8 Provides an effective date.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
The Revenue Estimating Conference (REC) estimates that the bill will cause a reduction to
licensing fees to the division by $800,000 in FY 22-23, and $900,000 for each subsequent fiscal
year through FY 26-27.
26
26
Office of Economic & Demographic Research, Revenue Estimating Conference, 01/28/2022 Revenue Impact Results, p. 253,
Impact0128.pdf (state.fl.us) (last visited Jan. 29, 2022). STORAGE NAME: h1451a.RRS PAGE: 7
DATE: 2/1/2022
The REC estimates that the bill will cause a reduction to excise taxes collected by the division by
between $48.4 million and $58 million in FY 22-23, $58.5 million in FY 23-24, and $59.9 million for
each subsequent fiscal year through FY 26-27.
27
2. Expenditures:
The bill may cause an indeterminate increase in workload to the division for implementing new
procedures and overseeing contract and alternating proprietor arrangements.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may have a positive impact on craft brewers and brewpubs, who may pay less in fees and
taxes to the division.
The bill will allow alternating proprietorship brewing and contract brewing, which may allow smaller
brewers to expand their businesses without a manufacturing facility of their own.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. This bill does not appear to affect county or municipal governments.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
The bill provides the division with rulemaking authority to adopt rules related to excise taxes on malt
beverages.
C. DRAFTING ISSUES OR OTHER COMMENTS:
None.
IV. AMENDMENTS/COM MITTEE SUBSTITUTE CHANGES
27
Id.