Zoned Here For The Beer

August 29, 2017
Posted in Real Estate Law
Zoned Here For The Beer

Armed with brewing talent, a good business sense, and an inherent love of “good beer,” microbrewers are obtaining brewery licenses and moving their basement operations into the cities, suburbs, and rural landscapes across Pennsylvania.  In expanding their operations, brewers need a location that will permit their honed brewing process and accommodate their larger equipment, but will also create a vibrant, entertaining environment to attract new, loyal customers.  Further, these needs usually must be met under tight budget restraints due to their fledgling operation.  In order to meet all of these needs, brewers are finding the perfect locations in industrial parks and other areas zoned for manufacturing, production and processing.  However, the beloved marriage between beer brewing and beer consuming often creates challenges for both the entrepreneurial brewers and the municipalities in which the breweries are located.

As all good brewers know, the beer comes first.  As such, the need to produce/manufacture the beer generally limits the permitted zoning locations to such industrial areas, as residential or commercial zoning districts usually will not permit commercial beer production and distribution.  Furthermore, the space needed to fit the sizable brewing equipment and store the brewing materials lends itself to the large, open, warehouse-type spaces found in most industrial sites.  As such, brewery owners may be confined to open their operations in industrial zoned areas.  However, such restrictions are advantageous to the brewers as the industrial spaces are typically one-third the price per square foot than commercial retail or restaurant spaces (with further savings resulting from the popular brewery ambiance of limited interior finishings), and provides sufficient open floor plans for future expansion, customer seating areas, and the tasting/tap room.

Although industrial areas work well for craft brewing operations, municipalities may question whether the primary use of the space is the production and distribution use (i.e. brewing) or the resulting beer consumption use.  As the brewery becomes more successful, with significant income coming from on-premises beer sales, it may appear to the municipality that the brewery location is primarily used as a bar, restaurant or entertainment venue, with the beer production/distribution being merely an accessory use.  For example, the breweries may arrange for food trucks and bands to frequent their location to nourish and entertain their customers, sell brewery related merchandise to establish their brand, provide brewery tours, and hold special events that attract large, boisterous crowds.  Because bar/restaurant uses generally are not permitted in industrial/manufacturing zoned areas, it is imperative that the brewery owners can establish that these frills and attractions are secondary to the beer brewing and distribution, and not vice versa.  Moreover, the municipality may take the position that any consumption of beer, apart from mere tastings, would cause the business to be an unpermitted drinking establishment.

In dealing with municipalities, it is helpful for brewery owners to educate municipal officials on what uses are permitted under the Pennsylvania Liquor Code.  It is commonplace that new brewery owners will only obtain a brewery license (as opposed to a brewery pub, restaurant liquor, or eating place retail dispenser license), as brewery licenses are more available and much more cost effective for their intended, primary use.  In this regard, municipalities should be advised that the Pennsylvania’s Liquor Code permits the holder of a brewery license to allow on-premises consumption on their licensed premises on the condition that the hours of consumption are between 10:00 a.m. and midnight, that only the beer brewed at the premises are consumed, that at least ten seats are available for their customers, and that food is available to their customers while they drink their beers (at a minimum, chips and pretzels).  Such conditions usually are not an issue for brewery owners, as only minimum seat and food requirements are established and they are only attempting to sell their own beer.

Due to these issues, we recommend that potential brewery owners meet with municipal officials prior to deciding on a location in order to ensure that no zoning issues will arise once the taps are open, and that the municipality approves of the scope of the beer drinking use and related issues such as parking, noise, and sanitation.  If you need assistance turning your beer brewing hobby into a business, please contact one of the attorneys at Hamburg, Rubin, Mullin, Maxwell & Lupin, P.C.

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