Brewpubs vs Breweries: A Basic Look at the Laws in Texas

I have heard many contradictory comments regarding TABC laws for Texas breweries. This article is meant to give a crash course into what breweries can and cannot do in Texas; brewpubs vs breweries.

A lot of the misconceptions come from a general lack of understanding on what the two main permits in Texas are. To operate a place brewing beer in Texas, you will have to have one or the other permits; Brewer’s Permit or Brewpub Permit.

There are some basic differences in the licenses, they are as follows:

Brewer’s Permit:

TABC Description: Permit authorizes holder to manufacture ale and malt liquor and sell the ale and malt liquor only to wholesale permit holders in this state or to qualified persons outside the state. If annual production of ale together with annual production of beer by the holder of a manufacturer’s license at the same premise does not exceed a total of 225,000 barrels, the holder may sell ale produced on the brewer’s premise under the permit to ultimate consumers on the brewer’s premises. Combined sales of ale together with sales of beer to the ultimate consumer may not exceed 5,000 barrels annually.

Basic rules for those who do not want the legal talk:

– Breweries can sell beer on site at the brewery but NEVER is to leave the site (limited to 5k barrels/year on site)
– Breweries essentially have no major obstacle on production limits for their location (unless they go over 225k barrels/year, in which case, they cannot sell for on site consumption)
– Breweries can self distribute or distribute through a distributor (if self distributing, there is a limit of 40k barrels/year and does require another additional license)
– Breweries can only sell their own beer on site (no other beers can be sold there).

Examples of Brewer’s Permit Holders: Austin Beerworks, Community, St. Arnold

Brewpub Permit:

TABC Description: License authorizes the holder to manufacture, brew, bottle, can, package and label malt liquor, ale, and beer; sell or offer without charge, on the premises of the brewpub, to ultimate consumers for consumption on or off those premises, malt liquor, ale or beer produced by the holder in or from a lawful container, to the extent the sales or offers are allowed under the holder’s other permits or licenses; must be held with permit or license authorizing on-premise consumption. Total production cannot exceed 10,000 barrels for each licensed brewpub. Permit holders who also hold a wine and beer retailer’s permit and who sell alcoholic beverages manufactured only on the brewpub’s premises may sell malt liquor or ale produced under the license to retailers and private clubs and beer to distributors, retailers, and private clubs or to qualified persons for shipment and consumption outside the state.

Basic rules for those who do not want the legal talk:

– Brewpubs can make and sell beer on site to sell off and on site. This means, your local brewpub can crowler, growler, can and keg beers to sell from their brewery. You can also drink at their location.
– Brewpubs can sell other brewery’s beers at their location.
– Brewpubs can growler other brewery’s beers on site ONLY IF they do NOT sell liquor on site. If they have a liquor license, they can ONLY sell their beer to go. They can still sell other people’s beer for on site consumption, but only their own beer to go.
– Brewpubs are limited to 10k barrels a year in production.
– Brewpubs can self distribute to stores and bars.

Examples of Brewpub Permit holders: Jester King, Pinthouse Pizza, Braindead, Freetail

There is a common misconception with brewpubs saying that they have to serve food at their location. This is mostly not true, but certain cities may have zoning/licensing requirements that make certain locations do so. But, that is not a TABC rule.

Why would a place get a Brewer’s Permit versus a Brewpub Permit? There are a lot of factors that do go into this, but one common one could just come down to the zoning of the building. It may be easier to find a manufacturing location where you cannot get a brewpub license. Another reason would be that you plan to quickly exceed the 10k barrel mark (which is unlikely for many startup breweries).

The brewpub license definitely does offer more versatility at the beginning for many breweries. Being able to make your beer and sell it on site helps with the income right away. It allows breweries to do limited one off releases straight from taprooms while avoiding having to worry about allocations to specific stores/bars. Jester King is utilizing this weekly.

Now, while they may be very similar in function, they are on two different tiers of the TABC guidelines. Brewer’s Permits falls on the manufacturing tier while Brewpub Permit falls in the retail tier. Due to the way the laws work, an owner of a brewery with a Brewpub Permit may not own a brewery with a Brewer’s Permit. That means, Pinthouse Pizza, even if they decide to build a manufacturing facility, will never be able to receive a Brewer’s Permit for it. It will still have a Brewpub License and limit it’s production to 10k barrels at that location. This is something Freetail already does in San Antonio. Their original location still makes beer to sell at their brewpub/restaurant, while their manufacturing location takes care of the packaging side of things (in addition to other distribution of beer). There are no limits in the number of licenses you hold under the same tier. So, Pinthouse Pizza can continue to open up more brewpubs and continue to increase the amount of beer they can make by 10k barrels.

Hopefully, this clears up some of the misconceptions with what the different permits allow in Texas.