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  • Jun 05, 2020Liquor License Laws, Medical Marijuana & Service Animals: Impact on Real Estate

    Richard B. Somach, a Member of law firm Norris McLaughlin, P.A., along with the firm’s Associates Matthew B. Andersen, David C. Berger, and Alyssa M. Hicks, will present the livestream webinar, “Liquor License Laws, Medical Marijuana & Service Animals: Impact on Real Estate,” for Greater Lehigh Valley REALTORS®, a trade association that represents nearly 3,000 real estate professionals.

    About the Impact on Real Estate

    Discussion topics will include:

    • What landlords must consider when renting a property to a tenant with a liquor license
    • The implications of leasing a property to a manufacturer of medical marijuana
    • The eviction process and the restrictions on property use
    • The legal vs. illegal uses of marijuana
    • The rights and responsibilities of landlords, tenants, and property buyers
    • The difference between a service animal and an emotional support animal
    • The responsibilities and liability of having an animal on their premises

    When: Monday, August 17, 2020

    1:00 – 4:30 p.m.

    Where: Greater Lehigh Valley Real Estate Academy

    10 S. Commerce Way, Bethlehem, PA 18017

    Registration: glvreacademy.com

    • Members: $45.00
    • Non-Members: $65.00

    About Your Attorneys

    Rich Somach

    Rich focuses his practice on real estate, commercial law, and creditors’ remedies, representing real estate development companies, shopping centers, and local banks. He has represented real estate owners, developers, and investors in a broad range of real estate transactions, including zoning matters,  subdivisions, and shopping center development.

    As a licensed title insurance agent, Rich is the founder of the title insurance and settlement company ABE Settlement Services, creatively serving client needs. He currently serves as legal counsel to the Greater Lehigh Valley REALTORS®.

    As a former Assistant Lehigh County Solicitor, Rich advised the Sheriff’s Office, the Tax Assessment Office, and the Tax Claim Bureau, and frequently writes and lectures on real estate matters, including sheriff’s sales, real estate tax sales, and lien priority issues for the Pennsylvania Bar Institute. He has also presented numerous lectures at the annual Real Estate Institute program.

    Matt Andersen

    Matt concentrates his practice on business law and liquor law.

    In his liquor law practice, Matt works with all tiers of the alcohol industry, advising manufacturers, retailers, and wholesalers. He assists breweries, distilleries, wineries, wholesalers, distributors, restaurants, and hotels on obtaining and transferring liquor licenses, obtaining state and federal manufacturing permits and licensing, complying with federal/state liquor regulations and laws, providing transactional counseling, and defending citations and protests before the Pennsylvania Liquor Control Board. Matt has presented at numerous events held by the Brewers of Pennsylvania trade organization on subjects such as U.S. Food and Drug Administration compliance for alcohol manufacturers, legal updates affecting the industry members, and general compliance. Additionally, he has presented to a local and national audience on Pennsylvania, New Jersey, and Federal laws affecting brewery and distillery businesses. Matt is a frequent contributor to the Norris McLaughlin Liquor Law Blog, Legal Liquor, and has been quoted by various newspapers and publications on liquor-related matters.

    As a business lawyer, Matt is involved in the day-to-day legal counseling of businesses, formation of business entities, general contract matters, drafting of agreements between partners, corporate restructurings, lending, and shareholder disputes. He has the experience to assist his business and liquor clients in matters that impact real estate, such as property acquisition, leasing, and zoning and land use issues. Matt’s liquor law and business law practices often coincide in the legal counseling of start-up businesses entering the alcohol industry. He frequently advises clients from the idea stage to the operational stage of their alcohol business and is well versed in discussing the issues that come up in between.

    David Berger

    David concentrates his practice on business, real estate, and liquor law. He actively counsels clients on general business topics including organization and formation, corporate governance, lease negotiations, restructurings, and finance.

    A licensed title agent, David works closely with lenders, real estate developers, and homebuilding companies. He handles both residential and commercial real estate development including acquisitions, land use and zoning matters, title review, and other due diligence requirements.

    In his liquor law practice, David handles sale and purchase of liquor licenses and provides transactional counseling, including defending licenses who have received citations from the Pennsylvania Bureau of Liquor Control Enforcement.

    Alyssa Hicks

    Alyssa devotes her practice to business law and general civil litigation.

    Alyssa actively assists clients with commercial transactions, including financing and loan documentation; asset purchases and sales; entity selection, formation, and organization; and general contract drafting and review. She also counsels businesses in all aspects of employment law including discrimination, contracts, policies, and handbook reviews. Alyssa represents companies in employment-related litigation and handles administration matters before the EEOC and PHRC.

    In her litigation practice, Alyssa handles all aspects of litigation from pre-trial counseling, discovery, and drafting pleadings and motions to representation at depositions and judicial conferences.

    Posted in: Alyssa M. Hicks, Cannabis Law, David C. Berger, Events, Liquor Law, Licensing, Manufacturing and Distribution, Matthew B. Andersen, Real Estate & Finance, Richard B. Somach | Tags: , , , , , ,

  • Jun 05, 2020Liquor License Laws, Medical Marijuana & Service Animals: Impact on Real Estate

    Richard B. Somach, a Member of law firm Norris McLaughlin, P.A., along with the firm’s Associates Matthew B. Andersen, David C. Berger, and Alyssa M. Hicks, will present the livestream webinar, “Liquor License Laws, Medical Marijuana & Service Animals: Impact on Real Estate,” for Greater Lehigh Valley REALTORS®, a trade association that represents nearly 3,000 real estate professionals.

    About the Impact on Real Estate

    Discussion topics will include:

    • What landlords must consider when renting a property to a tenant with a liquor license
    • The implications of leasing a property to a manufacturer of medical marijuana
    • The eviction process and the restrictions on property use
    • The legal vs. illegal uses of marijuana
    • The rights and responsibilities of landlords, tenants, and property buyers
    • The difference between a service animal and an emotional support animal
    • The responsibilities and liability of having an animal on their premises

    When: Monday, June 15, 2020

    • 1:00 – 4:30 p.m.

    Registration: glvreacademy.com

    • Members: $45.00
    • Non-Members: $65.00

    About Your Attorneys

    Rich Somach

    Rich focuses his practice on real estate, commercial law, and creditors’ remedies, representing real estate development companies, shopping centers, and local banks. He has represented real estate owners, developers, and investors in a broad range of real estate transactions, including zoning matters,  subdivisions, and shopping center development.

    As a licensed title insurance agent, Rich is the founder of the title insurance and settlement company ABE Settlement Services, creatively serving client needs. He currently serves as legal counsel to the Greater Lehigh Valley REALTORS®.

    As a former Assistant Lehigh County Solicitor, Rich advised the Sheriff’s Office, the Tax Assessment Office, and the Tax Claim Bureau, and frequently writes and lectures on real estate matters, including sheriff’s sales, real estate tax sales, and lien priority issues for the Pennsylvania Bar Institute. He has also presented numerous lectures at the annual Real Estate Institute program.

    Matt Andersen

    Matt concentrates his practice on business law and liquor law.

    In his liquor law practice, Matt works with all tiers of the alcohol industry, advising manufacturers, retailers, and wholesalers. He assists breweries, distilleries, wineries, wholesalers, distributors, restaurants, and hotels on obtaining and transferring liquor licenses, obtaining state and federal manufacturing permits and licensing, complying with federal/state liquor regulations and laws, providing transactional counseling, and defending citations and protests before the Pennsylvania Liquor Control Board. Matt has presented at numerous events held by the Brewers of Pennsylvania trade organization on subjects such as U.S. Food and Drug Administration compliance for alcohol manufacturers, legal updates affecting the industry members, and general compliance. Additionally, he has presented to a local and national audience on Pennsylvania, New Jersey, and Federal laws affecting brewery and distillery businesses. Matt is a frequent contributor to the Norris McLaughlin Liquor Law Blog, Legal Liquor, and has been quoted by various newspapers and publications on liquor-related matters.

    As a business lawyer, Matt is involved in the day-to-day legal counseling of businesses, formation of business entities, general contract matters, drafting of agreements between partners, corporate restructurings, lending, and shareholder disputes. He has the experience to assist his business and liquor clients in matters that impact real estate, such as property acquisition, leasing, and zoning and land use issues. Matt’s liquor law and business law practices often coincide in the legal counseling of start-up businesses entering the alcohol industry. He frequently advises clients from the idea stage to the operational stage of their alcohol business and is well versed in discussing the issues that come up in between.

    David Berger

    David concentrates his practice on business, real estate, and liquor law. He actively counsels clients on general business topics including organization and formation, corporate governance, lease negotiations, restructurings, and finance.

    A licensed title agent, David works closely with lenders, real estate developers, and homebuilding companies. He handles both residential and commercial real estate development including acquisitions, land use and zoning matters, title review, and other due diligence requirements.

    In his liquor law practice, David handles sale and purchase of liquor licenses and provides transactional counseling, including defending licenses who have received citations from the Pennsylvania Bureau of Liquor Control Enforcement.

    Alyssa Hicks

    Alyssa devotes her practice to business law and general civil litigation.

    Alyssa actively assists clients with commercial transactions, including financing and loan documentation; asset purchases and sales; entity selection, formation, and organization; and general contract drafting and review. She also counsels businesses in all aspects of employment law including discrimination, contracts, policies, and handbook reviews. Alyssa represents companies in employment-related litigation and handles administration matters before the EEOC and PHRC.

    In her litigation practice, Alyssa handles all aspects of litigation from pre-trial counseling, discovery, and drafting pleadings and motions to representation at depositions and judicial conferences.

    Posted in: Alyssa M. Hicks, Cannabis Law, David C. Berger, Events, Liquor Law, Licensing, Manufacturing and Distribution, Matthew B. Andersen, Real Estate & Finance, Richard B. Somach | Tags: , , , , , ,

  • Feb 25, 2020New Craft Beverage Tastes Run Afoul of Distribution Laws

    By Theodore J. Zeller III and Matthew B. Andersen

    Cheers to the bevy of new craft beverages appealing to new consumer tastes and dramatically changing the alcohol manufacturing industry. Craft breweries, local wineries and craft distilleries have taken innovation in the industry to new heights. Some of these craft beverages can be traditional beer with a twist, literally, ciders, mead and the new emerging “kid on the block,” hard seltzer. While these are all defined as malt or brewed beverages for distribution purposes under the Liquor Code, there are also new craft beverages like “canned cocktails” and wine-based beverages having different manufacturing origins that create other legal implications.

    While hard seltzer is the new darling of the alcohol ball and it’s typically made by a brewery as a malt base or sugar fermentation, it can also be made with a distillation from a distillery. Craft distilleries are starting to produce some unique “canned cocktails” and wineries continue to push out ciders that also can be made by a brewery license as long as it does not exceed 8.5% alcohol by volume (ABV). Wineries are creating wine-based products that have similar taste profiles to other products offered by breweries and distilleries. The difference in today’s industry is that there was a time when distilleries, wineries and breweries all competed for the same consumer but with distinct flavor profiles and marked ABV differentials. Now, the taste profiles have merged with similar ABV offerings yet, depending upon the category of manufacturer producing the product, the distribution channel can vary greatly.

    Pennsylvania is no different and many states face similar challenges to this new emerging marketplace in the alcohol industry. Surprisingly, beer which is generally the lowest ABV product of the three manufacturing categories, faces the most regulation and tax. In Pennsylvania, like many states, breweries (except for the few in-state breweries that choose self-distribution) are bound by franchise laws and must appoint an exclusive beer wholesaler to represent its products in the retail trade in defined territories. The Pennsylvania Liquor Code and Pennsylvania Liquor Control Board opinions mandate that these relationships are perpetual and cannot be terminated except for good cause. These franchise laws were necessary over a half a century ago to protect wholesalers from larger breweries. Now, wholesalers are usually larger than the breweries they represent, and it has become a significant obstruction to smaller breweries that cannot freely change their wholesale partner without the threat of an expensive court battle.

    Breweries pay the Pennsylvania Malt Beverage Excise Tax and distilleries do not pay any state excise tax. While wineries pay a promotional board assessment, wineries, like distilleries, are not burdened with franchise laws and enjoy up to five satellite locations, which act as tasting rooms and offer bottle and case sales. Breweries only get two additional taproom locations and have to maintain at least 10 seats and offer food, while wineries and distilleries have no such requirement. These differences are significant and would have an even more drastic effect on the brewery industry in the state but for convoluted distribution laws that affect each category of manufacturer differently.

    Beer, cider, seltzer and mead can be made by a brewery license and distributed by an importing distributor (also known as a beer wholesaler) which can sell it to retailers and other smaller distributors. Distributors may sell these products by the can, bottle, six-pack, 12-pack, case and keg and retail licenses can sell up to 192 ounces of these products; our famous Pennsylvania two six-packs rule. If a hard seltzer is made by a distillery, it cannot be sold by distributors or retailers for off-premises consumption since distilled spirits are controlled by our Pennsylvania State Store system. A winery can make mead and cider and, as long as it is below 8.5% ABV, distributors and retailers can sell those products to consumers, but those manufacturers are not bound by the beer franchise laws with its wholesale partner because their licenses are granted under Article 5 of the Pennsylvania Liquor Code, as opposed to Article 4 where the beer franchise laws are located. Wineries that make wine coolers, mead and cider over 8.5% ABV, or traditional wine, can have their product sold by retailers if the retailer obtains a wine expanded permit (WEP), which allows the sale of four bottles of wine to-go.

    Distilled spirits remain locked up by Pennsylvania Liquor Control Board wholesale and retail state store system. Just walk into your local Pennsylvania State Store and you will find a loosely organized collection of various products including canned cocktails, “alcohol concentrates” which fit into a Keurig-like machine to make a canned cocktail, wine cooler, canned wine, sparkling canned wine, mead and cider over 8.5%. These state store offerings and their shelf space must be approved by the Pennsylvania Liquor Control Board. At the Pennsylvania Liquor Control Board meeting on Sept. 11, 2019, the board approved 19 new listings for flavored alcohol concentrates for Anheuser-Busch alone. If a retailer wants to sell these items, it must purchase them from the Pennsylvania Liquor Control Board wholesale system (unless they are directly distributed by a “Pennsylvania” limited winery or distillery). If the retailer has a WEP, it can sell the wine-based products for off-premises consumption but cannot sell the distillery- based products in the same manner.

    While all three categories of manufacturing do have self-distribution rights directly to retail, those manufacturers have to be Pennsylvania licensed or they do not obtain those benefits. In addition, depending upon whether you are categorized as a malt or brewed beverage, a wine, or a distilled spirit, there are multiple distribution models that do not completely overlap and are certainly unique to some and exclusive to others. Ironically, some canned cocktails and wine-based products are lower ABV than malt beverages that enjoy wider distribution channels than the 600 or so Pennsylvania State Stores.

    The alcohol industry is changing rapidly. Seltzer is not a fad and is already a $500 million industry projected to grow to $2.5 billion in just a few years. It is low- or no-carb, gluten free and sugar free. Canned cocktails can make similar claims but are excluded from the Pennsylvania retail and distributor marketplace except for state stores. Yard’s Pynk Sparkling Berry Ale and Troegs 402 Raspberry Lime Tart Ale compete for the same consumer as Cosmic Cider from Lavery Brewery and East End’s Along Came A Cider. Now, along came a seltzer from Sam Adams in Truly. What will this iconic American brewery, which just merged with Dogfish Head with its distillery just across the border in Delaware, do next? Even America’s oldest brewery, D.G. Yuengling & Son, Inc., recently announced a new brand, named Flight, a low-carb and low-calorie light beer. Clearly, consumers are driving the industry to new boundaries.

    The alcohol manufacturing industry is vastly different from the era when our distribution laws were framed. In that time period, the stakeholders in the alcohol industry have staunchly defended their ground. It will be interesting to follow whether protectionism yields to progression, consumer convenience and distribution modernization.

    Reprinted with permission from the February 16, 2020, edition of “The Legal Intelligencer” © 2020 ALM Media Properties, LLC. All rights reserved.

    Further duplication without permission is prohibited. ALMReprints.com – 877-257-3382 – reprints@alm.com.

    Posted in: Liquor Law, Licensing, Manufacturing and Distribution, Matthew B. Andersen, Theodore J. Zeller III |

  • Feb 04, 2020State of Craft Beer in PA: How Long Before the Suds Explosion Goes Flat?

    Brewing beer was never part of Al Kominski’s grand plan.

    The owner of Al’s of Hampden near Mechanicsburg was selling an eclectic mix of craft beers to appeal to the pizza and sub-eating crowd.

    Those thirsty for the latest and most innovative pilsners, stouts and pale ales headed to Al’s. But as the popularity of craft beer exploded, so did the number of bars, grocery stores and restaurants selling it.

    Competition spiked. So Kominski pivoted.

    In 2012, driven by the boom and antiquated state liquor laws, he began brewing beer under the Pizza Boy Brewing label. He envisioned 100 gallon batches would easily meet demand.

    “I didn’t want to sell the same beer as anyone else. I started to brew beer, so we had an edge. I never thought we would be brewing 1,600-gallon batches,” Kominski said.

    These days, Pizza Boy is holding its own, even as the craft landscape is showing signs of leveling off after years of explosive growth. Kominski’s brewery produces dozens of beers, many on tap at the restaurant and for sale in Pennsylvania and New York. Along the way it has picked up a slew of medals and accolades.

    Recently, the brand partnered with Official BBQ & Burgers in Lower Paxton Township. Customers can sip 20 different Pizza Boy beers on draft at a taproom alongside orders of ribs, pulled pork and brisket sandwiches.

    Across the nation, the craft beer movement boomed in the past decade thanks to brewers such as Kominski. Breweries and taprooms have popped up faster than beer drinkers can order pints of hazy IPAs and barrel-aged sours.

    Roughly 7,450 breweries operated in the United States in 2018, a jump from 1,500 a decade earlier, according to the Brewers Association, a trade group representing independent brewers in Boulder, Colorado.

    Pennsylvania has been a major player in the industry’s rise.

    Eighty-eight breweries operated in the state in 2008. Today, there are more than 354, and, according to the Brewers Association’s most recent figures, Pennsylvania ranks No. 1 in craft beer production at 3.71 million barrels and No. 2 in economic output at $6.3 billion.

    “It’s odd to have an industry where in the past decade everyone has succeeded,” said Bart Watson, the group’s chief economist. “The closing rates have been shockingly low.”

    A thirst for fuller flavor, greater variety and locally made products is driving demand. But while many are raising a toast to a decade or more of success, others are wondering if the buzz is starting to wear off.

    Two years ago, a record 219 craft breweries ceased operations, according to the association. Craft beer volume growth also slowed for the third straight year at 4 percent. In central Pennsylvania a couple of small brewers have closed in the past year.

    Some craft brewers have joined forces to ensure they can compete with – or avoid being consumed by – the beer industry titans. In 2016, Victory Brewing, an earlier pioneer in Pennsylvania craft brewing, merged with Southern Tier Brewing in N.Y.

    “It’s in our culture”

    Beer has influenced Pennsylvania’s history since the 1680s, when William Penn founded the state. During colonial times, Philadelphia was considered a “world class brewing center.”

    By 1829, D.G. Yuengling & Son opened in Pottsville, and continues to brew under the “America’s Oldest Brewery” moniker, with other longtime brands such as Straub Brewery in St. Mary’s and Iron City Brewing in western Pennsylvania.

    Before Prohibition, the state was the largest producer of beer in the country.

    Pennsylvania was also a leader among microbreweries prior to the current craft beer craze, with the opening of Dock Street Brewery in 1985 and Stoudt’s Brewing Company in Adamstown in 1987.

    “It’s something that is under-appreciated on the public level. Pennsylvania has always historically had a lot of breweries,” said Fred Maier, co-founder of Susquehanna Brewing Co. in Pittston.

    Today, Pennsylvania ranks sixth in the nation for number of breweries with 354, behind No. 1 ranked California with 841 breweries, according to the Brewers Association. Colorado slides into second with 396, followed by Washington state with 394.

    Partly fueling recent growth have been significant revisions to the state’s liquor laws, said Jim Weber, columnist for Mid-Atlantic Brew News.

    The big push started in 2015 when revisions paved the way and allowed breweries to sell beer directly to consumers. For the first time, brewers could open taprooms and and two off-site satellite locations.

    The following year, Gov. Tom Wolf signed Act 39, allowing breweries to sell Pennsylvania wines and spirits – essentially a full bar. Those reforms gave brewers a more competitive edge without having to invest in hard-to-find and expensive restaurant liquor licenses, some priced upwards of $500,000.

    “It definitely opened up full bar potential in a very expensive liquor license market,” Weber said.

    Pennsylvania’s reputation also has been boosted by a few key players. When you look at the numbers, the state is tops in production thanks to Yuengling and Sam Adams, Kominski said.

    The Boston Beer Co, producer of Sam Adams, brews in Breinigsville and is the nation’s second top craft producer in sales volume. Last year, Boston Beer acquired Dogfish Head Brewery in Delaware, aiming to hold steady as international beer giants have bought smaller breweries.

    Meanwhile, Yuengling reigns as the nation’s largest craft brewer. It was propelled to the top in 2014 when the Brewers Association made a controversial revision to the definition of craft beer to allow corn as an ingredient. Under the association’s guidelines, a company must produce fewer than six million barrels of beer per year to be considered a craft brewer.

    When you think about it, Pennsylvania is no different than other states, said Alan Miller, owner of Boneshire Brew Works in Swatara Township.

    “What has happened is there is a strong local connection for people. Breweries are becoming the neighborhood watering hole,” he said.

    Competition creates better beer

    From sprawling beer halls to tiny taprooms with a few stools, the number of places to imbibe in the latest and greatest craft beers is expanding at a rapid rate. These days beer drinkers can be discriminating about where they go and what they drink.

    “The quality of brewing has risen in general,” said Mid-Atlantic’s Weber. “Nobody is really making bad beer, so it’s harder to stand out. Now is the best time in the history of the world to be a beer drinker.”

    Three years ago, Miller opened Boneshire in a small, nondescript shopping center along Derry Street. The 40-seat taproom pours a wide variety of styles — Irish Red Ale to coffee stout to a Pink Hippo fruit beer, along with craft sodas and Pennsylvania wines and spirits.

    Since then, he estimates about 20 breweries have emerged or are on the cusp of opening in central Pennsylvania. Nearby, Newfangled Brew pulled into Lower Paxton Township in 2018 in the Union Station development.

    Hershey is not only a place for chocolate and coasters. It has been a hotbed of brewing activity. Iron Hill Brewery & Restaurant joined the Hershey Towne Square, Tattered Flag Brewery & Still Works in Middletown opened a lounge on West Chocolate Avenue and Englewood Barn is due to begin brewing later this year near the Penn State Health Milton S. Hershey Medical Center. Rubber Soul Brewing is on pace to open in Hummelstown.

    In Perry County, Lindgren Craft Brewery is on tap and Liquid Noise Brewing Co. hosted a grand opening last weekend. On the West Shore, Wolf Brewing Co. is planning to open a brewery and taproom in Landmark Legacy Park in Mechanicsburg, while Hemauer Brewing Company will open one in Lower Allen Township and Millworks is aiming to open in Camp Hill.

    But it’s not just a barrage of newcomers breweries face. Miller said more bars and restaurants are dedicating taps to craft beer, while the popularity of alternative beverages like hard seltzer grow. The boozy, fizzy water come in such flavors such as black cherry, lime and watermelon, and are bubbling up in the market — and cutting into beer sales.

    Forbes reported that according to Nielsen, sales of the adult beverages at off-premise retail stores reached $1.3 billion over a 52-week period ending Nov. 2, 2019. Drinkers spent more on seltzer than they did on on sauvignon blanc or craft beer 12-packs, according to the report.

    Pat Devlin, co-founder of Tattered Flag Brewery and Still Works in Middletown, said while beer enthusiasts used to be satisfied drinking mediocre brews, now they need a reason to patronize an establishment. Breweries have to remain relevant if they want to succeed, he said.

    That can often mean configuring new products, from seltzers to experimental beers. Now you see breweries pouring more adventuresome beverages – fruity goses to breakfast cereal stouts, gluten-free pale ales, low-calorie and even non-alcoholic entrants.

    “These things don’t get started unless you have so much competition and you try and be innovative. This is a good time for innovations. I think the consumer is going to win,” Devlin said.

    Unfortunately, Devlin noted that for the brewers who want to stay on top, it’s a constant merry-go-round of investments, whether it’s new equipment or paying for marketing or new labels. This year, Tattered Flag is experimenting with different yeast strains, releasing a low-calorie IPA and possibly canning hard seltzer.

    Devlin said a product startup can come with a $3,000 or more price tag, depending on equipment and laboratory work.

    Pizza Boy’s Kominski said factoring in raw ingredients such as hops, malt and water, it costs about one to three cents an ounce to produce most craft beer. When you consider labor and equipment, the beer becomes more expensive, he said.

    Kominski said he’d love to brew just a few beers, “But I’m not buying the beer, the customers are. We have to brew what the customers want, and through detail reporting we see what is selling and that’s what we brew.”

    Ultimately, Susquehanna Brewing’s Maier said craft brewers aren’t competing against each other as much as they are trying to attract beer drinkers, who for years have believed good beer is made in St. Louis and Milwaukee.

    People think the craft beer market is three times bigger than it is, he said, adding it’s a fraction of the market at 12-13 percent. The majority of beer drinkers are still buying factory-made brands like Miller Lite and Budweiser.

    In some cases, the giants are taking over independent brands, such as Anheuser-Busch InBev’s purchase of Goose Island, Blue Point and Elysian.

    “So, every time you get someone to put down a mass-produced beer and pick up a Pennsylvania craft beer, we are winning,” Maier said

    Gazing into the crystal ball

    In five or 10 years, the craft beer industry won’t look like it does today. The days of unprecedented growth are behind us, which is not to say more breweries won’t open.

    The Brewers Association’s Watson said the past decade was “weird,” but in the coming years the market will begin to mature. As new breweries come on board with new products or unique settings, it might displace someone else, Watson said.

    This week, Crystal Ball Brewing in York County announced it is closing. Owner Jesse De Salvo told the York Daily Record, “Things are 100 percent not how they were when we opened. … We didn’t go into this thing thinking we were going to be out in five years, but things change.”

    Last year, two central Pa. players — JoBoy’s Brew Pub in Lititz and Harty Brewing in Silver Spring Township — closed. On a social media post JoBoy’s owners said the landlord refused to work toward a solution and terminated the lease.

    Harty Brewing faced a similar situation in September. Owners Michael Hardy and Lauren Ishaq said they were forced out by Charter Homes & Neighborhoods over an issue with unpaid rent.

    In Easton, Weyerbacher Brewing Company didn’t close but sold a majority stake to a Philadelphia-based private investment group and filed for Chapter 11 bankruptcy. The brewer said it fell into trouble after incurring debt from a $2-million-dollar expansion project, as well as competition in the pumpkin beer sector.

    Beyond Pennsylvania, there have been other closings. This month, Colorado’s oldest craft brewery, Boulder Beer Company, shut down its Boulder taproom after 40 years. Lompoc Brewing, one of the first craft brewers in Portland, Ore., closed its doors last year. Lake Superior Brewing in Duluth, Minnesota, also closed for an undetermined amount of time.

    Theodore Zeller, general counsel for the Brewers of Pennsylvania trade group, said mid-sized brewers are struggling the most as they compete for tap and shelf space in a crowded beer market.

    “Couple that with our millennial consumer, [who] is easily distracted to what is new as opposed to brand loyalty,” he said.

    Zeller pointed to Sierra Nevada Brewing, which after two years of declining sales recovered with Hazy Little Thing, a New England-style IPA. Sierra Nevada’s chief commercial officer Joe Whitney told BrewBound, an industry-wide publication, the declines resulted from lagging sales of its products at restaurants and bars. The arrival of thousands of breweries, he said, is driving demand for more local products.

    “Every year we’ve seen people chipping away at us,” Whitney said.

    Many say the casualties have little to do with over-saturation and more to do with knowing how to run a business.

    “I think we have a saturation of bad business owners or inexperienced business owners,” Kominski said. “A lot of people opening a brewery think it would be cool, so they think they can run a business. It’s not real life. I can make a pizza at home but can I run a pizza shop?

    “Returning to our roots.”

    The past 40 years have brought major change and innovation to the beer industry, one that is more than 200 years old, said Susquehanna’s Maier.

    He said he likes to quote Garrett Oliver, owner of Brooklyn Brewery in Brooklyn, who has said craft brewing is not a trend but a “return to normality.”

    “We’re just on the leading edge of returning to our roots,” Maier said.

    Pennsylvania is helping to ensure craft thrives. In December, Gov. Wolf announced the Pennsylvania Liquor Control Board approved $1.2 million in grants for 18 projects to increase the production of Pennsylvania-made malt and brewed beverages.

    The money will be used to boost the state’s image as top destination for craft beer, support the black brewing community and fund “Poured in Pennsylvania, The Series,” a series focusing on the impact of the craft beer industry in the state.

    The Brewer’s Association’s Watson said there are still opportunities but brewers need to be cautious. He added the industry wouldn’t be where it is today without loyal beer drinkers.

    “Fundamentally this is driven by demand. You don’t get as many breweries without customers liking them,” he said.

    Posted in: Liquor Law, Licensing, Manufacturing and Distribution, Theodore J. Zeller III |

  • Jan 22, 2020Brewers Get a Reprieve With Excise Tax Extension

    By: Brian Pedersen

    First published in Lehigh Valley Business on January 17, 2020, which you may view if you have a subscription.

    Brewers get a reprieve with excise tax extension

    The extension of the excise tax on brewing is a win-win, says Chris Lampe, president of the Brewers of Pennsylvania and an owner of Weyerbacher Brewing Co. in Easton.

    Brewers can breathe a little easier. And so can beer drinkers.

    Congress enacted legislation that will avoid a massive tax hike on beer in 2020.

    For now.

    As 2019 ended, the Brewers of Pennsylvania and other beer industry groups lobbied Congress to pass the Craft Beverage Modernization and Tax Reform Act, or extend the current excise tax rate before Dec. 31.

    They extended the tax.

    Not doing so would have meant higher taxes for brewers across the state and potentially, higher prices for consumers. However, for brewers, the $3.50 per barrel tax will remain. Had Congress not acted, the tax would have returned to its $7 rate.

    In a statement, Jim McGreevy, president and CEO of the Beer Institute, said the recently signed legislation extending excise tax relief for all brewers and beer importers provides brewers and beer importers the certainty they need to continue growing and reinvesting in their businesses.

    “More than two-thirds of Americans across the political spectrum want excise tax relief for the beer industry, which supports more than 2.1 million American jobs,” McGreevy said. “As we look forward to 2020, Congress must continue working to pass the extremely popular bipartisan, bicameral Craft Beverage Modernization and Tax Reform Act, and make the current beer excise tax rates permanent.”

    Making the current excise tax rates permanent for all brewers would avoid a repeat of the uncertainty leading up to the end of the year, uncertainty that affects decision-making, job growth and planning for all brewers.

    “Obviously, people are very happy,” said Ted Zeller, general counsel for the Brewers of Pennsylvania and an attorney for Norris McLaughlin in Allentown. “There’s a whole segment of brewers who don’t know of any other tax. Their whole business model is formulated on the lower tax. This is what they perceive it will always be.”

    Planning for a potential tax hike is something that brewers should do this year, said Zeller, who specializes in liquor law. There’s always the chance Congress may not act in time to extend the current rate again.

    “Plan on it not being extended and then be happy when it is,” he said. “The industry is rapidly changing so we’ll see what this year brings. It’s a highly regulated industry and it’s very difficult to predict.”

    Chris Lampe, president of the Brewers of Pennsylvania and an owner of Weyerbacher Brewing Co. in Easton, said the National Brewers Association has been working hard to get the excise tax extended again.

    “I don’t know how it’s going to affect Weyerbacher this year,” Lampe said. “For brewers in general, it’s a win-win because you can use the credit to purchase equipment. If you purchase equipment you can roll money back into the business.”

    For one growing brewery, the news of the extension proved particularly welcoming.

    “It is so beneficial to craft brewing, to what we do,” said Fred Maier, co-founder and vice president of Susquehanna Brewing Co. in Pittston, Luzerne County.

    With 35 full- and part-time employees, and seven years in business, Maier has been hiring more employees and constantly buying equipment to advance the business.

    “We haven’t stopped buying new equipment,” he said. “We probably would have had to spend it regardless. We are always investing back into the brewery.”

    Susquehanna Brewing recently installed a can production line, which he said was a necessary investment.

    He wasn’t certain that the federal government would extend the excise tax and said he was thankful for what the brewers could get.

    “We were making plans on kissing it goodbye,” Maier said. “Until it’s made permanent, we don’t act like it’s permanent.”

    Posted in: Liquor Law, Licensing, Manufacturing and Distribution, Theodore J. Zeller III |

  • Nov 25, 2019Ted Zeller Named Pennsylvania Trailblazer

    Theodore J. Zeller III, a Member of law firm Norris McLaughlin, P.A., Chair of its Liquor Law, Licensing, Manufacturing, and Distribution Practice Group, has been named to The Legal Intelligencer’s 2019 list of “Pennsylvania Trailblazers.”

    Pennsylvania Trailblazers” is a special supplement of The Legal Intelligencer that recognizes professionals who have made a significant impact within the legal industry, specifically on the practice, policy, or technological advancements within their sector. Zeller was named because of his contributions that “helped make Pennsylvania the top U.S. producer of domestically-crafted beers and a leader of direct sales to consumers.”

    “It is an incredible honor to be recognized in this first edition of ‘Pennsylvania Trailblazers.’ I feel privileged to be able to merge my passion for Pennsylvania and its breweries with my practice at Norris McLaughlin. The alcohol industry is changing rapidly, and I look forward to those new challenges,” said Zeller.

    About Ted Zeller

    As longtime counsel to the Brewers of Pennsylvania (BOP) lobbying group, Zeller often advocates for changes in the liquor code. His client bases include restaurants, bars, caterers, breweries, distilleries, and wineries, and as his influence in the industry has grown, so has his client list, which also now includes D.G. Yuengling & Son, Inc. and Victory Brewing Company. Large or small, Zeller offers clients critical business counsel in the alcohol regulatory field and, if needed, all other areas of counseling and support – whichever they need to grow their business.

    Growth often requires legislative change for the freedom to operate a business profitably. In 2011, his efforts began with the Pennsylvania Legislature which resulted in important changes, including an adjustment to brand registration fees for malt or brewed beverages. More recently, Zeller rewrote a portion of the Pennsylvania Liquor Code and Pennsylvania Liquor Control Board regulations for breweries to serve beer on their own premises directly to consumers. That led to the right for a brewery to sell its own beer for on-premises consumption from a brewery’s storage location, without any production requirement at that site.

    Zeller’s clients also count on him for the acquisition of liquor licenses and coordinating liquor license transactions in conjunction with deals and transactions handled by his team at the firm, such as real estate, business law, financing, tax law, intellectual property, and litigation.

    Read more about this 2019 Trailblazer honoree and check out his attorney bio for updates on his writing, speaking and press mentions.

    About Norris McLaughlin

    Norris McLaughlin’s liquor law attorneys handle all issues related to liquor law in Pennsylvania and New Jersey, such as licensing, business planning and structuring, transactional counseling, and litigation. They also handle all aspects of federal regulatory permitting from the Alcohol and Tobacco Tax and Trade Bureau and trademark filings with the United States Patent and Trademark Office.

    The firm’s liquor clients include brewers, distillers, wholesalers, distributors, restaurants, bars, hotels, stadiums, and other public venues. Many of these businesses are start-ups who are able to leverage the group’s experience into controlling initial costs.

    Norris McLaughlin’s liquor law attorneys are frequent lecturers in the area of liquor law and regularly contribute to the firm’s liquor law blog, Legal Liquor, highlighting legal and business issues in the industry.

    Posted in: Liquor Law, Licensing, Manufacturing and Distribution, News, Theodore J. Zeller III | Tags: ,

  • Aug 30, 2019Ted Zeller and Matt Andersen to Present at Brewers of PA Mid Atlantic Brewers Symposium

    Theodore J. Zeller III, a Member of law firm Norris McLaughlin, P.A., Chair of its Liquor Law Practice Group, and General Counsel to the Brewers of Pennsylvania (BOP), and Matthew B. Andersen, an Associate of the firm, will present “Pennsylvania Liquor Law Legal Update” on Friday, September 6, 8:45 – 9:30 a.m., at the Days Inn Penn State in State College. Zeller’s presentation will include participation from the Pennsylvania Department of Revenue concerning the recent changes to the Pennsylvania Tax Code affecting breweries. Andersen will address changes to the laws affecting Pennsylvania breweries, including common regulatory mistakes to avoid in the operation of their businesses.

    “Pennsylvania is one of the best beer states, if not the best beer state, in the United States. It’s been my pleasure to be a part of this journey for breweries in Pennsylvania and I look forward to continuing our work, starting with providing fellow BOP members with this liquor law legal update, including the latest on the new sales tax law,” said Zeller.

    The update is part of the 5th Annual Mid Atlantic Brewers’ Symposium, “The Business of Brewing. The Science of Brewing. The Network of Brewers.,” to take place September 5-7. Also included will be educational seminars, a welcome reception with industry exhibitors, a networking happy hour at Liberty Craft House, and a Penn State Tailgate for BOP Brewery and Associate Members with state legislators. Discussion topics include sales and profits, finance and accounting, branding and marketing, diversity and inclusion, sustainability, fermentation, and liquor law. For more information and to register as a BOP member, non-member licensed brewer, or homebrewer, visit the BOP website.

    Zeller has extensive experience in liquor law, regulatory licensing, commercial transactions, real estate transactions, and litigation. He began his legal career as a litigator and has tried multiple cases in county and federal court, including jury trials, and hundreds of cases before arbitration panels, district justices, and administrative law judges. He was lead counsel in a beer rights case brought against the world’s largest brewers and now serves as counsel to D.G. Yuengling & Son, Inc., among others.

    Zeller’s lobbying efforts helped to modernize parts of the Pennsylvania liquor code. He has authored numerous provisions that have been enacted into law. The bills helped small brewers by allowing more efficient and cost-effective brand registration, as well as altered the package laws for brewery licenses. Zeller also appeared before the House Liquor Committee with the Brewers of Pennsylvania in the Privatization Hearings. Most importantly, his efforts helped change brewery regulations to allow for tap rooms. Zeller authored the Malt Beverage Tax Excise Credit legislation and has written extensively about Acts 39 and 166. As counsel to the Brewers of Pennsylvania, he worked with the Pennsylvania Department of Revenue to enact a new tax law, which imposes a fair sales and use tax on consumer sales by breweries, prior to the effective date of a new Tax Bulletin, which imposed a tax rate that was four times what was subsequently enacted and signed into law.

    Zeller counsels clients on the acquisition of liquor licenses and coordinates liquor license transactions with other practice areas, such as real estate, business law, financing, tax law, intellectual property, and litigation. He has helped numerous startup breweries, wineries, distilleries, and retailers. Known throughout the Commonwealth of Pennsylvania, Zeller also represents beer interests on a national level and advises breweries and wholesalers on state regulatory matters involving beer distribution and franchise laws. He regularly prepares distribution agreements for his clients and coordinates state and federal licensing for manufacturing and national distribution.

    Zeller earned his B.A. from the University of Notre Dame in 1989 and his J.D. from The Dickinson School of Law of The Pennsylvania State University in 1992. As a volunteer, Zeller is Chairman of the Allentown Parking Authority and youth soccer coach.

    Andersen works with all tiers of the alcohol industry, advising manufacturers, retailers and wholesalers. He assists breweries, distilleries, wineries, wholesalers, distributors, restaurants, and hotels on obtaining and transferring liquor licenses, obtaining state and federal manufacturing permits and licensing, complying with federal/state liquor regulations and laws, providing transactional counseling, and defending citations and protests before the Pennsylvania Liquor Control Board. Andersen is experienced in drafting and negotiating distribution agreements between alcohol manufacturers and distributors to assist manufacturers in expanding the reach of their brands. Additionally, he has worked with nonprofit organizations and event planners on obtaining temporary alcohol permits for various events. Andersen takes pride in helping new and veteran alcohol businesses navigate the complex regulatory framework of state and federal liquor laws, as well as helping them establish and grow their brands on a state and national level.

    Andersen’s liquor law and business law practices often coincide in the legal counseling of start-up businesses entering the alcohol industry. He frequently advises clients from the idea stage to the operational stage of their alcohol business and is well versed in discussing the issues that come up in between. Whether it is, among other things, entity selection, drafting operational business documents, lease review, real estate acquisitions, zoning issues, and alcohol licensing/permitting, Andersen can assist you in turning your ideas into a successful business. He takes great pleasure in assisting dreamers, no matter what age, in preparing their business for future success.

    Andersen earned his B.A. from Pennsylvania State University in 2012 and his J.D. from Duquesne University School of Law in 2015. As a young professional, Andersen feels it is important to give back to the community. He is an assistant lacrosse coach at Northwestern Lehigh High School and enjoys teaching the knowledge, experience, and lessons taught to him throughout his life to the young people in our community.

    Posted in: Liquor Law, Licensing, Manufacturing and Distribution, Matthew B. Andersen, News, Theodore J. Zeller III | Tags: , ,

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