Q&A for Breweries: The FISA Lawsuit

FISA PetitionWhat does the lawsuit by Florida Independent Spirits Association (FISA) mean for Florida’s existing breweries and breweries-in-process? Our take on January 14, 2015 is contained in this Q&A.

Q: What happened?
A: On Friday, January 8, 2015, Florida Independent Spirits Association, Inc. (“FISA”) filed a lawsuit with against the ABT with the State of Florida Division of Administrative Hearings. On Monday, January 13, 2015, the Florida Beer Wholesalers Association (FBWA) and the Beer Industry of Florida (BiF), lobbyist groups for Florida distributors, joined the lawsuit in support of FISA’s petition.
Q: Who is FISA?
A: FISA is a lobbying group formed in 2013 to advocate for Florida package stores. It’s membership includes ABC Fine Wine & Spirits, Foremost Liquors & Wines (Jacksonville), Liquor at Ovation (Orlando), Knightly Spirits (Orlando), Southside Lounge & Package (Lakeland), Beach Liquors & Wine Merchants (Ft. Walton Beach), and B&S Liquors (Panama City).
Q: What is the Division of Administrative Hearings?
A: It is a state agency that provides judicial oversight to Florida’s administrative agencies. One of its focuses is to ensure that administrative rules are adopted and enforced in fair ways.
Q: What is the basis for FISA’s lawsuit?
A: In its Petition Challenging Unadopted Rules and Existing Rule, FISA claims that the ABT has a rule for interpreting the Taproom Exception which was not approved in the appropriate way, and that the ABT’s taproom license application violates the law, all because the taproom license applicants are not required to show that their premises include “structures which promote the brewery and the tourist industry of the state.”
Q: What is the Taproom Exception?
A: The Taproom Exception is the part of the Florida Beverage Law that authorizes the ABT to issue vendor licenses to breweries “for the sale of alcoholic beverages on properties consisting of a single complex, which property shall include a brewery and such other structures which promote the brewery and the tourist industry of the state.” The Taproom Exception is an exception to Florida’s Tied House Evil Law, which generally keeps separate the activities and interests of alcoholic beverage manufacturers, distributors, and vendors. The Taproom Exception is sometimes called the Tourism Exception or Busch Gardens Exception, because it was originally conceived to allows Busch Garden’s in Tampa to make and sell beer on the same property.
Q: What happens if FISA wins?
A: FISA has asked the Division of Administrative Hearings to enter an order stating that the ABT’s interpretative rule apply the Taproom Exception was not properly approved and that the ABT’s CMB application is an unlaw application of that unapproved rule. If the Division enters this order, the ABT will be in a position where it must submit to the formal rule approval process concerning the Taproom Exception and the ABT would have to change its taproom license application.
Q: What is involved in the formal rule approval process?
A: Proposed rules must published in advance and members of the public (and their lobbying organizations) must be allowed to comment on the proposed rule. The process can take several months to more than a year and involve lots of voices.
Q: What would happen to the taproom licenses that have been approved prior to the court’s ruling on FISA’s petition?
A: It will be up to the administrative law judge who is deciding the matter to say what, if anything, happens to already licensed taprooms. Generally speaking, courts do not like to apply rulings back in time, especially if the result would harm people who were following the law as it was understood at the time. Based only on FISA’s petition, it seems unlikely that the judge would invalidate the licenses already issued to taprooms.
Q: What would happen to taproom license applications that are in process or that are not filed until after the ruling on FISA’s petition?
A: It will also be up to the judge as to what happens with pending taproom license applications and later-filed applications. It is very possible, however, that if the ABT is required to submit to the formal rule approval process and revamp its taproom license applications, it will hold processing applications during that time.
Q: How long will it take for the judge to make a ruling on FISA’s petition?
A: It’s not entirely clear right now, but probably several months at least. The judge will first decide if there are any specific parties who would be affected by its ruling and they must be given notice and the opportunity to respond. Whether existing breweries are included on the list of specifically-affected parties will be a good first indication of how far the judge’s ruling could go. Not until all the affected parties are given time to respond, and any other procedural issues are dealt with, will the judge rule on the petition. As a pure guess, it probably will not be for 4 months at least–after the 2015 Legislative Session.
Q: What does FISA’s petition have to do with the 2015 Legislative Session?
A: Everything, in my opinion. I believe that the whole point of the lawsuit is to make sure the Florida Legislature is focused on cleaning-up, revising, and updating the Florida Beverage Laws, especially those that apply specifically to brewery taprooms. The distributors and ABC’s FISA’s lobbyists will be out in force talking to legislators about what a mess things are in the beverage laws and that they should be the ones fixing them. The #1 item on their fix-it list is to rein in the opportunity breweries have to sell beer directly to consumers, bypassing the other two members of the Three-Tier System. Even if the Florida Legislature fails or refuses to act in 2015, FISA, FBWA, and BiF have laid the ground work for another means of accomplishing its goals.
Q: What should breweries-in-process do now?
A: If you can, get your taproom license application filed ASAP, within 3 months if possible. There are no guaranties, but I think it unlikely that an administrative law judge will invalidate licenses granted before its ruling. If you cannot get your taproom license application filed within 3 months, you might consider an alternative approach. You might revise your business plan as a brewpub or brewery without taproom. Or you might put your plans on hold for 6 months to see where we are in the summer.
Q: What should existing breweries do now?
A: Speak out for yourself, your business, and others who are joining the industry. Beer sold in brewery taprooms account for about 0.30% of all beer sold in Florida–3 out of 1,000 beers. Your supporters, your neighbors, and your legislators need to know this.