SESSION OF 2024
SUPPLEMENTAL NOTE ON SENATE SUBSTITUTE FOR
HOUSE BILL NO. 2124
As Recommended by Senate Committee on
Federal and State Affairs
Brief*
Senate Sub. for HB 2124 would amend law pertaining to
microbreweries, including, but not limited to, permitting
microbreweries to self-distribute beer and hard cider up to
certain limits and lowering the number of barrels per year a
microbrewery may manufacture and store.
Microbrewery Licenses
Annual Barrel Limit
The bill would lower the number of barrels of beer per
calendar year a microbrewery licensee could manufacture
and store from 60,000 barrels to 30,000 barrels.
[Note: Continuing law provides that a microbrewery
licensee may manufacture and store up to 100,000 gallons of
hard cider during the calendar year.]
Self-Distribution
Under the bill, a microbrewery licensee would be
allowed to sell beer and hard cider manufactured by such
licensee to licensed beer and wine distributors, retailers,
public venues, clubs, drinking establishments, caterers, and
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org temporary permit holders. The bill would limit the total annual
sales to:
●1,000 barrels of beer; and
●3,000 gallons of hard cider.
The bill would also allow a microbrewery licensee to sell
beer and hard cider manufactured by the licensee both on the
licensed premises and off the licensed premises at special
events monitored and regulated by the Department of
Revenue’s Division of Alcoholic Beverage Control (ABC).
[Note: This is similar to a provision currently applicable to
farm wineries under KSA 41-308a.]
Ownership Interest
The bill would permit a microbrewery or an owner,
officer, stockholder, or director of a microbrewery to have an
interest in a licensed club, drinking establishment, or caterer,
and the limit on total annual sales would not apply to the
distribution of beer or hard cider by a microbrewery licensee
to either:
●A drinking establishment or caterer licensed under
the Club and Drinking Establishment Act in which
such microbrewery licensee holds a 25 percent or
greater ownership interest; or
●Another microbrewery licensee or a licensed
microbrewery packaging and warehouse facility in
which such microbrewery licensee holds a 25
percent or greater ownership interest.
2- 2124 Distributor Requirements
The bill would apply requirements for distributors under
continuing law to microbreweries and would also require the
Secretary of Revenue to include microbreweries in certain
rules and regulations applicable to manufacturers or
distributors.
The bill would specify that a microbrewery would be
prohibited from selling or attempting to sell any beer or hard
cider within the state except to retailers licensed under the
Kansas Liquor Control Act or the Kansas Cereal Malt
Beverage Act or a licensee under the Club and Drinking
Establishment Act. The bill would also require such sales be
made within a geographic territory described in a notice filed
with the Director of ABC.
The bill would permit a distributor or microbrewery to
buy back or exchange any beer or cereal malt beverage
within 30 days of its expiration date at the original sales price.
Temporary Permits
The bill would allow a temporary permit holder to offer
for sale, sell, and serve beer or hard cider that is:
●Manufactured by a microbrewery licensee; and
●Purchased or acquired from a microbrewery
licensee for consumption on licensed or unlicensed
premises, or other premises subject to a separate
temporary permit that may be open to the public
and subject to terms of such permit.
3- 2124 Drinking Establishments
The bill would allow drinking establishments to acquire
and sell beer from a microbrewery licensed under the Kansas
Liquor Control Act.
The bill would also allow a drinking establishment to
acquire hard cider from a Kansas-licensed microbrewery that
possesses a federal wholesaler’s basic permit.
Technical and Conforming Amendments
The bill would remove provisions that expired on
January 1, 2023, requiring a certain percentage of the
products utilized in the manufacture of hard cider by a
microbrewery to be grown in Kansas.
The bill would also make technical and conforming
amendments throughout to implement the provisions of the
bill.
Background
The Senate Committee on Federal and State Affairs
removed the contents of HB 2124, inserted the contents of
SB 511, and recommended a substitute bill be passed.
[Note: As passed by the House, HB 2436 would have
amended provisions in the Kansas Cereal Malt Beverage Act
concerning on-premises Sunday sales of cereal malt
beverage to remove the 30 percent food sales requirement
for Sunday sales.]
SB 511 (Microbreweries)
The bill was introduced by the Senate Committee on
Federal and State Affairs at the request of a representative of
the Kansas Craft Brewers Guild, Inc.
4- 2124 Senate Committee on Federal and State Affairs
In the Senate Committee hearing, proponent testimony
was provided by representatives of Americans for Prosperity
and three microbreweries. The conferees generally stated the
bill would remove barriers for microbreweries to sell directly to
retailers and help improve growth and sustainability for
microbreweries, especially in rural communities. The
conferees also noted that the provisions of the bill are
modeled after provisions permitting farm wineries to sell
directly to retailers, and 41 other states permit direct sales in
some form.
Written-only proponent testimony was provided by
representatives of Great Plains Biosciences Group, LLC; the
Greater Topeka Chamber; Kansas Craft Brewers Guild, Inc.;
Leavenworth-Lansing Chamber of Commerce ; Republic
County Economic Development; and 11 microbreweries.
Neutral testimony was provided by a representative of
the ABC. The conferee discussed concerns that the bill would
blur the lines of the three-tier system used to regulate alcohol
and allow any microbrewery to self-distribute in Kansas
because the U.S. Supreme Court has held that in-state and
out-of-state licensees cannot be treated differently (Granholm
v. Heald, 544 U.S. 406 (2005)). Further, the conferee stated
one of the reasons that farm wineries were authorized to self-
distribute was to promote agritourism because 60 percent of
products utilized in the manufacture of the wine was required
to be grown in Kansas. [Note: There is no requirement for
Kansas products to be utilized in current law. The Kansas-
grown products requirement expired on January 1, 2023.]
Opponent testimony was provided by representatives of
the Kansas Association of Beverage Retailers and Kansas
Beer Wholesalers Association. The conferees generally
stated the bill would be a major departure from the three-tier
system used to regulate alcohol, allow large brewers to
control the market, and open the door to liquor laws being
drafted by courts instead of the Legislature. The conferees
5- 2124 also expressed concerns about microbreweries acting as
distributors without having to comply with the same
requirements as distributor licensees.
Written-only opponent testimony was provided by a
representative of the Kansas Wine and Spirits Wholesalers
Association.
The Senate Committee amended the bill to:
●Decrease the number of barrels of beer per
calendar year a microbrewery licensee may
manufacture and store from 60,000 barrels to
30,000 barrels;
●Limit a microbrewery’s total annual sales of beer
and hard cider to retailers, public venues, clubs,
drinking establishments, caterers, and temporary
permit holders to 1,000 barrels of beer and 3,000
gallons of hard cider;
●Provide exceptions to the limit on total annual sales
for microbrewery licensees that hold a 25 percent
or greater ownership interest in drinking
establishments, caterers, licensed microbrewery
packaging, and warehouse facilities, or other
microbrewery licensees;
●Subject microbrewery licensees to requirements for
distributors under continuing law;
●Permit distributors and microbreweries to buy back
or exchange any beer or cereal malt beverage
within 30 days of its expiration date and at the
original sales price; and
●Make technical and conforming amendments.
6- 2124 Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on SB 511, as introduced, the Department of
Revenue indicates that ABC and the Division of Taxation
would use existing resources to update forms, publications,
and handbooks.
Microbrewery; beer; cider; self-distribution; Division of Alcoholic Beverage Control
7- 2124