Recently, the Louisiana Office of Alcohol and Tobacco Control (“ATC) received numerous inquiries as to whether breweries can be granted additional retail opportunities or granted a conditional restaurant permit. Upon review, the agency determined that granting either request would violate the three tier system under Louisiana law.
Louisiana’s alcohol industry operates under a three tier system. This system is designed to stabilize the industry and prevent unlawful and unfair inducements or business practices (monopolies). It is also intended to promote and maintain a fair and level playing field. The structure of the three tier system is broken down into retail dealers, wholesalers, and manufacturers (breweries). According to Louisiana law, a brewery’s primary function is to manufacture its alcoholic beverages. The manufacturer may then sell the product to a wholesaler which distributes and sells to retail dealers. Each tier is responsible for a specific chain in the alcohol distribution process. Accordingly, La. R.S. 26:85 states in part that no person or business may at the same time, engage in business as an alcohol retailer, wholesaler and/or manufacturer or any combination thereof.
Nevertheless, Louisiana law provides a limited exception to breweries to allow operation of a taproom and to offer for sale its products direct to consumers for personal consumption onsite. Thus, the taproom operates is a way similar to a bar as its primary commodity and function is to sell alcoholic beverages on tap to patrons for consumption in a retail setting. It should be noted that the sales of the brewery’s products in the taproom are classified as retail sales although the taproom is NOT separately permitted as a bar or restaurant.
Considering the above, a brewery does not meet the requirements to be eligible for a conditional restaurant permit. La. R.S. 26:271.21 explicitly requires that an applicant for a restaurant conditional permit must first hold a Class A-General (AG) retail permit (A brewery holds a manufacturer permit). A conditional restaurant permit is a retail permit and thus granting such a permit to a manufacturer or brewery would be in direct violation of the three tier system, tied house rules as well as La. R.S. 26:85.
For the above reasons, it is the agency’s position that granting additional retail opportunities or granting a conditional restaurant retail permit to a brewery is impermissible under the law. Additionally, the proposed actions would violate the three tier system and pose a competitive risk to the other tiers within the alcohol industry.