It is no secret that Americans love craft beer. In 2021, at 26.8% of the total retail dollar sales, craft beer accounted for over a quarter of the total U.S. beer sales. Underlying this affinity for craft beer are a variety of regulations and licensing requirements which govern the industry.
Changing Tastes and Impressive Growth
In the span of the past decade, the number of craft breweries operating has increased four times! This growth is driven by changing consumption patterns, with 40 percent of the American population drinking craft beer at least several times a year.
In addition to over a quarter of all retail sales, in 2021, craft beer accounted for an impressive 13.1% of the overall beer production volume. And this percentage is only expected to grow. With each successive year, craft breweries are poised to capture a larger share of overall beer production volume.
Like with wine, California is the leading producer of craft beer in the country, with 931 craft breweries producing over 3.45 million barrels in 2021.
Defining a Craft Beer Brewery
A craft beer brewery is defined as a beer manufacturer which:
- produces less than six million barrels a year
- is independently owned (less than 25 percent of the brewery can be owned by an alcoholic beverage company that is not a craft brewer)
- has an Alcohol and Tobacco Tax and Trade Bureau (TTB) Notice
Regional craft breweries, which are relatively larger operations (annual beer production of between 15,000 and 6,000,000 barrels) account for a majority of the craft beer production volume. The category of craft breweries also includes microbreweries (annual beer production of less than 15,000 barrels), taproom breweries, and brewpubs.
California Department of Alcohol Beverage Control Licenses for Craft Breweries
Operating a craft beer brewery, including a microbrewery, taproom or brewpub, in California is a highly regulated activity subject to licensure from the California Department of Alcohol Beverage Control (“ABC”). The California Department of Alcohol and Beverage Control offers an extensive catalog of licensure and permitting options for businesses and individuals in the craft beer industry; below are the highlights of some of the ABC licenses most relevant to California craft breweries and related businesses:
Type 01 – Beer Manufacturer1 (Large Brewery over 60,000 barrels per year)
The Type 01 license is required by larger brewers, including regional craft brewers producing over 60,000 barrels of beer annually.
Type 23 – Small Beer Manufacturer (Less than 60,000 barrels per year)
Most small scale brewery operations in California are licensed under the Type 23 Small Beer Manufacturer license by the ABC. The most common users of this license are operators of smaller regional craft breweries producing less than 60,000 barrels annually, microbreweries producing less than 15,000 barrels annually, and brewpubs.
The privileges and limitations for this type of license are the same as for the Type 1 – Beer Manufacturer license, and the only difference is the license fees.
Type 75 – Brewpub-Restaurant
The Type 75 is an on-sale retail license with significant differences/limitations in license privileges from those of a true “beer manufacturer” (either Type 01 or Type 23). The Type 75 license from the ABC authorizes the sale of beer, wine and distilled spirits for consumption on a bona fide eating place plus a limited amount of brewing of beer. This license does NOT authorize the sale of alcoholic beverages for off-premise consumption. Minors are allowed on the premises.
Type 84 – Certified Farmers’ Market Beer Sales Permit
Breweries licensed under a Type 01 license (Beer Manufacturer) or Type 23 license (Small Beer Manufacturer) may apply to the ABC for a Certified Farmers’ market Beer Sales Permit.
A Certified Farmers’ Market Beer Sales Permit authorizes the licensee to sell sealed containers of beer for off-site consumption to consumers at certified farmers’ markets.
Apply for your California Craft Brewery License(s)
The above are some high-level considerations regarding the most common Craft Beer Brewery licenses in California. Please contact the beverage industry attorneys at Rogoway Law, if you’d like to further discuss licensing options for your craft brewery, microbrewery, taproom, brewpub or other beverage business based in California.
1. “Beer manufacturer” means any person, except those manufacturing pursuant to Section 23356.2 (home brew), engaged in the manufacture of beer (Section 23012).
Section 23012 – “Beer manufacturer” definedCalifornia Business and Professions Code § 23012 (Amended by Stats 2013 ch 686 (AB 647),s 1, eff. 1/1/2014.)
“Beer manufacturer” means any person that has facilities and equipment for the purposes of, and is engaged in, the commercial manufacture of beer.