THE PINT BILL: THE JUDICIARY AMENDMENTS

holycitytaps

Have you caught your breath yet after the Senate Judiciary Committee meeting on Tuesday? You have obviously heard about what happened. While not the best moment for South Carolina breweries, all hope is not lost. Please know that top people are working on the issues that have arisen in light of the committee’s amendments. There is no reason to believe that the Pint Bill will not pass. However, supporters might need to prepare themselves for the reality that it will not pass in the form that it was originally presented. As of right now, the bill is waiting. It was brought to the floor yesterday and was carried over. That just means that it’ll be talked about later. That’s by design so that the brewers can work on changing some of the amendments.

I certainly have many thoughts and opinions on the issues, but I think the better thing for me to do at this point is to explain what the new amendments do and what the reality is in regards to them. At a later time, we’ll talk about what you can do to help going forward.

If you would like to read the bill as it stands now, then go to this link: http://www.scstatehouse.gov/sess120_2013-2014/bills/423.htm

The video from the committee hearing is available at http://www.scstatehouse.gov/video/videofeed.php and then look for the Senate Judiciary from Tuesday, April 16. Ok, let’s talk about what has been done.

MONITORING, WARNING, & TRAINING AMENDMENTS

First, let’s talk about the less troublesome amendments. These proposals would require breweries to develop a monitoring system in tracking a consumer’s consumption, placing signs on doors warning of alcohol content and DUI penalties, and providing training to servers of beer. All of these three requirements are things that brewers were already discussing and would be implementing. Obviously, the monitoring system and the training of servers are common sense. Anyone who has gone to a brewery also knows what’s on tap because it is on a board somewhere on site. The posting of signs indicates a theme that has gone on in persuading some legislators on this bill. That being that they seem to understand all craft beers served at South Carolina breweries as being massive ABV beers. The reality is that nothing could be further from the truth. However, nobody is too fired up about these changes to the bill. They’re commonsense things that the breweries would have done anyway and were done in an effort to dissuade concerns.

TASTING LIMITS

Ok, let’s start cutting to it here. It seems that many committee members struggled to understand what a “tasting” or “sampling” is. Going off of the current law involving “samples”, they had a real problem comprehending how coming to the brewery to have more than the current maximum of 16 ounces of less than 8% ABW beer could be considering sampling. Thus, two categories have now been created. The first category is that 16 ounces of samples are free. Now, there’s no detail about how that is to be done. It could be samples, it could be pints, it could be something else. However, as we all know, practically, no brewery gives away free samples. Nor do any breweries want to give away free samples. The reason breweries offer taprooms is to provide themselves with an additional revenue stream.  Giving away beer in the taproom provides little incentive to keep taprooms open.

The second category that has been created is for the sale of beer on-premises. That category has taken our initial bill amount of 64 ounces and changed it to 48 ounces. Obviously, that is one pint less. Now, of that 48 ounces, only 16 of those ounces can be from beers with an 8% ABW or higher. That translates to a 10% ABV roughly. But, as I’ve already said, do you really see many of those type of beers in South Carolina? The answer is no. Recently, only Holy City’s Manuel Fantastico and Westbrook’s Cap’n Skoon’s come to mind. Perhaps you thought of Coast’s Blackbeerd or Boy King. Well, both actually clock in just south of 10%, so they’d be unaffected. Something else to consider: this amendment on an over 8% ABW cap came from one of the bill’s sponsors in an attempt to curb concerns about patrons drinking a lot of big beer and then driving. It’s probably staying in the bill, so start getting used to the idea of a 48 ounce limit.

But, doesn’t 48 ounces that are sold and 16 ounces that are free add up to 64 ounces? You betcha! In drafting the amendments as they did, Senators did not create an either/or proposition. The language is drafted in such a way that it allows for breweries to do both things. Again, would a brewery want to give away beer? No. But, there might be other ways to get around that problem. For example, a brewery could arguably charge a patron for a $5 tour and provide 16 ounces of beer for free that would be separate from the tour. Again, that’s an arguable point. Just don’t expect breweries to start doing buy 3, get 1 free promotions.

INSURANCE

Now, we get to the big one. The newly amended bill requires all breweries that allow service on premises to “maintain liability insurance policies in the amount of at least one million dollars per occurrence, ten million dollars in the aggregate, during the time it is licensed . . .” Although, as written the amendment say ten million dollars, but at the committee hearing, the proposal was only five million dollars for the aggregate.

What the heck does that mean? Well, without being too boring (and please forgive me as I have been an insurance lawyer before), I’ll attempt to explain what this means without speaking lawyer at you and put into terms of what it means for our brewers. The first thing that you need to know is that obviously, this requires all breweries who operate tasting rooms to have insurance. Forget the numbers for a second. It requires insurance! Now, practically, nobody can dispute that it is a good business practice for anybody who serves alcohol to carry insurance. It’s a smart business practice, because businesses who serve alcohol get sued. It happens. It happens just about everyday in this state. Whether the server is at fault or not, that doesn’t stop someone from filing suit. Anyone can file a lawsuit. Comforting, right? So, yes. It’s good to have insurance just in case.

One problem with this requirement is that no business or entity that serves alcohol in South Carolina (whether beer/wine/liquor) is required by law to carry insurance. That means that the bars, restaurants, hotels, taverns, pubs, brewpubs, wineries, distilleries, and anybody else with an alcohol license of any kind isn’t required to have insurance. This amendment discriminates against the brewers and sets them apart from any other entity that serves alcohol. Think about that. Any old bar that serves the same beer as a brewery in potentially unlimited amounts isn’t required to have insurance, but a brewery that will cap the limits on what it serves to patrons is. Absurd, right? Well, welcome to efforts to change South Carolina beer law since 2005!

Ok, now let’s talk about the numbers and what they mean. In insurance speak, the word “occurrence” is a fancy way of saying covered event. If you have auto insurance (which you should, as it’s required in South Carolina if you drive a car), then an occurrence would be a car accident. In insurance policies, the word “occurrence” is usually given several different definitions. Usually, those are things like accidents or property damage or bodily injury. In the brewery world, an accident could be anything from someone slipping and falling on the wet ground to being intentionally over served and then getting into a car crash (which seems to be what legislators are truly concerned with). And there’s good reason for it. Forgive me some lawyer time, but South Carolina recognizes a third party’s right to go after a seller of alcohol for damages caused by acts of an intoxicated patron. Of course, to prevail, the injured party would have to prove that the seller knowingly sold alcohol to an intoxicated person.

Ok, back to the insurance lesson. The word “aggregate” is a fancy way of saying total damages in a policy year. A policy year is the year that your policy is in effect. So, say you purchase a policy today – April 19, 2013. Your policy year would be April 19, 2013 until April 19, 2014. The damages limit is just what is says.

So, let’s apply all of this to see how this would work practically. Let’s use RJ Rockers as an example. Under this amendment, it would be required to have a policy that will pay up to $1M for each accident, but which will not pay over $10M every year of the policy. Does this make a lot of sense? Not really. In fact, any insurance agent who is able to sell such a policy will probably be awarded employee of the year. It’s a big policy that will have some pretty big rates. In fact, most businesses that would buy a $1M policy would probably only have a $2M aggregate. Breweries the size of Thomas Creek and RJ Rockers will be able to shoulder that cost, while small breweries like Frothy Beard would probably not. It’s also an impediment to breweries who want to get into the game. Remember when this bill was going to stimulate the economy for both the state and our breweries? Well, this insurance amendment would pretty well neutralize that.

Obviously, with no other alcohol permit holder required to have insurance and with the big numbers proposed to be mandated on breweries, look for the brewers to really fight this hard.

As a side note, there is current legislation in the Senate that will require any alcohol license holder to carry liability insurance of $50,000. And that seems fairly reasonable. But it has a long way to go before passing. You can view that here: http://www.scstatehouse.gov/sess120_2013-2014/bills/567.htm

I hope this was helpful and explained what is going on. The bill itself will be carried over while folks work behind the scenes to get brewers the best possible outcome. Look for the bill to be brought up for debate in the next two weeks.

It’s a great time to contact your legislators. Use this tool to find them: http://www.scstatehouse.gov/legislatorssearch.php

If you need an explanation of the Pint Bill, then head here: https://beerofsc.com/2013/02/19/the-pint-bill-what-it-does-and-doesnt-do/

For the how-to pass the bill guide, head here: https://beerofsc.com/2013/02/20/passing-the-pint-bill-a-how-to-guide/

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