As Connecticut’s booming craft brewing industry continues to grow, local brewers are pushing to reform the state’s strict regulations.
Connecticut has seen an explosion in its number of microbreweries, growing from a dozen in 2012 to 83 this year. But industry insiders say they still face major setbacks such as state limits on how much beer breweries can sell directly to consumers, and excise tax rates almost twice that of neighboring states.
“Craft breweries offer a popular product, so they ought to be able to increase production to meet demand,” said Steve Fontana, New Haven’s deputy economic development director, who noted that local breweries serve as a powerful engine for the state’s economic growth. “The simplest way to promote economic growth is to loosen — if not remove entirely — the arbitrary limits and taxes that are holding back the industry.”
Due to the recent explosion of craft microbreweries over the past decade, Connecticut is now catching up to other states in terms of the number of breweries in the state.
According to 2017 data from the Brewers Association, a coalition supporting the activities of more than 7,000 small and independent brewers, Connecticut breweries generated $750 million for the state and provided over $200 million in labor income to almost 5,000 employees.
But the size of the craft brewing industry is not the only thing on the rise — Connecticut is also seeing an emerging culture of craft beer tourism.
With several beer festivals, a Connecticut beer trail and a brewer’s guild, Connecticut has become a magnet for beer enthusiasts. With that increase comes greater political bargaining power, Fontana said, and local breweries and brewery associations are using that power to put pressure on the government to revise the current legislation.
Fontana added that breweries are a valuable economic driver, critical to Connecticut’s economic growth, and that reforming current legislation is crucial to help the industry expand.
“If we’re looking to promote economic growth and job creation, we need to examine if these state excise taxes are appropriate,” he said. “Breweries aren’t just clustered in big cities or along the coast; they’re everywhere. The general assembly and next governor really should look at what they can do to further promote the industry.”
Although the state’s craft brewing industry is booming, high excise taxes and strict limits on direct consumer sales are causing the growth of Connecticut breweries to lag significantly behind that of other states, according to Phillip Pappas, executive director of the Connecticut Brewers Guild.
Connecticut currently has a 9-liter limit on retail sales for breweries, equivalent to 21 16-ounce cans, meaning that local breweries have to rely on in-house consumption as their major source of revenue. Only wholesale distributors, including supermarkets, can sell more than nine liters.
According to Pappas, Connecticut has one of the strictest retail sale limits in the country, ranking 47th nationally. 42 other states don’t have limits at all, he added, stressing that this puts Connecticut breweries at a significant disadvantage compared to those in other states.
The state’s excise tax on beer is $7.20 per barrel, while Massachusetts and New York’s rates sit at $3.30 and $4.34, respectively. In these states, among others, small producers are able to get this money back from the state by filing a beer tax return. According to Pappas, Connecticut is not.
House Bill 5036, an act introduced in April, would remove the nine liter off-premise sales limit currently imposed on farm breweries. However, Pappas said the organization met with state officials last year to try and increase the limit of direct consumer sales at breweries, only to hear from the General Assembly that a limit increase is “never going to happen.”
According to Fontana, the beverage industry has resisted the development of the craft brewing industry because they want to remain a “middle man” between beer producers and consumers. Distributors argue that lifting the 9-liter limit on breweries’ retail sales will allow breweries to monopolize the industry, putting wholesale companies out of business, Fontana said.
However, 2017 data from the Brewers Association showed that local breweries produced only 7 percent of total beer produced in the state that year, Pappas said.
“We’re one of the only industries in Connecticut that’s growing,” Pappas told the News. “So our question to the state is, ‘Why are you trying to hinder us instead of helping us grow?’”
New Haven’s East Rock Brewing Company & Beer Hall opened last week and is located on 285 Nicoll St.
Caroline Moore | caroline.moore@yale.edu