When Chico, Calif.-based Sierra Nevada Brewing Co. put out the “bat signal” seeking help to support victims of last year’s catastrophic Camp Fire in northern California, the Michigan craft brewing industry set into motion.
Their rallying point: Resilience Butte County Proud IPA. Sierra Nevada created the beer as a fundraiser, pledging to donate 100 percent of its profits from the sale of the product to the Camp Fire Relief Fund. The 10th-largest U.S. brewery then shared the recipe online and encouraged breweries all over the country to participate.
In the end, more than 30 Michigan breweries heeded the call, their donations estimated as reaching into the tens of thousands of dollars to support the fund, which received an estimated $10 million from breweries across the country, according to Sierra Nevada.
But the Michigan Liquor Control Commission appears intent on letting no good deed from the state’s craft brewing industry go without the threat of punishment.
At issue is a provision in the state’s liquor control code that notes “a licensee shall not allow a person whose name does not appear on the license to use or benefit from the license.” Per the MLCC, a charity directly receiving the profits from various Michigan-made iterations of Resilience IPA would be considered a violation.
According to a Department of Licensing and Regulatory Affairs (LARA) spokesperson, MLCC issued the guidance at the request of some breweries to “make sure the giving was done in a manner consistent with what state law allows, and to not discourage charitable giving.”
“If all the sales and profits accrue to the license holder, and a donation is made later by the license holder to the charitable organization, it wouldn’t appear to be a violation,” David Harns, communications manager for LARA, said in an email to MiBiz, noting there’s “a fine line” between what is and isn’t allowed. “If, however, the sales and profits were accruing directly to the books of the unlicensed entity, that would appear to be a violation.”
Industry sources contacted for this report said they couldn’t see how their donations to the Camp Fire Relief Fund would be considered a violation since the funds would have to show up on their books before they cut the check to a charity. Several people indicated it was further evidence that the MLCC enforcement division lacks understanding of the businesses they’re tasked with regulating.
In a letter to members developed alongside the MLCC’s enforcement unit, Michigan Brewers Guild President Scott Newman-Bale, a partner at Bellaire-based Short’s Brewing Co., encouraged breweries to avoid linking their donations to a set amount per pint, a percentage of sales or the profits from beer or food.
Short’s Brewing sold $4,413 worth of Resilience IPA and chose to donate $5,000 to the fund to avoid a violation.
“It all comes down to one sentence in the code,” Newman-Bale said, noting the MLCC approached brewers about proactively finding a solution to the possibly widespread issue. “We’re just starting that engagement now (and figuring out) do we need to change this or can the commission do it through some sort of ruling. … As with a lot of laws, they can create unintended consequences and be a bit vague.”
Newman-Bale said the Guild was in the process of reaching out to other affected industry groups to discuss a possible fix, which could include encouraging the commission leadership to issue a resolution or taking legislative steps.
By most accounts, the rule in question is on the books to prevent someone who shouldn’t receive a liquor license in the first place — a person with a major criminal record, for example — from finding a way to skirt the law and run a bar or other licensed operation.
Industry sources say that’s a far cry from a local craft brewery wanting to use its products to support a good cause.
“They’re trying to brew beer for the greater good. They’re using something that’s attractive — small batch brews are very popular — and also highlighting causes,” said Stephanie Adams, executive director of the nonprofit Friends of Grand Rapids Parks. “It’s really too bad when it becomes something that’s so overly scrutinized when everyone is trying to do something great.”
For example, this year Friends of Grand Rapids Parks partnered with 22 breweries in metro Grand Rapids on its Tree Beer promotion, which is designed to raise awareness for creating a sustainable urban forest. The month-long campaign ran through last week.
The participating breweries each brewed their own recipes inspired by trees or using locally sourced tree-based products. In many cases, the breweries promoted their tree beer as a fundraiser and offered to donate a couple of dollars from every pint to support Friends of Grand Rapids Parks’ tree-planting initiatives.
In 2018, the effort raised upwards of $8,000, or enough to plant 30 trees in Grand Rapids, Adams said.
“I don’t think anyone is trying to do anything wrong,” she said. “I’d hate for this program to go away.”
'Force for good'
Craft brewers have a long track record of working closely with various nonprofits and charities. The same is also true for plenty of MLCC-licensed bars and restaurants that hold fundraisers for various causes, often donating a portion of a day’s sales to support local school groups, families in need, wounded veterans or a range of other issues.
Most of them are small business owners trying to find ways to leverage their operations to give back as good corporate citizens.
“Every day, Michigan breweries prove that craft beer can be a force for good. We are active in our communities and quick to respond to the challenges they face,” said Chris Andrus, co-founder of Grand Rapids-based The Mitten Brewing Co. LLC, which has donated more than $200,000 to local charities since opening in 2012. “Though I disagree with it, I am hopeful that we can bring about a change to the MLCC code and breweries throughout Michigan will be able to continue to pursue philanthropy without restriction.”
Kris Spaulding, co-owner of Grand Rapids-based Brewery Vivant with husband Jason Spaulding, said the kerfuffle over charitable giving is another example of the state’s lack of acceptance for community-minded business models. For example, Brewery Vivant is a certified B Corporation, a designation intended to show the company’s commitment to sustainability, accountability and transparency, but state law does not recognize it as a legal status for businesses.
“It’s dumb: I own this company along with Jason. If we choose to use the revenues and the profits we earn to support these causes, I don’t know why the government needs to be a part of that,” Spaulding said, noting the team members at Brewery Vivant are “having the next level of conversations” to avoid running into any trouble.
“It does make us nervous a little bit. Are we violating things without realizing it and we’ll find out by someone knocking on our door? (The solution is) clarity, but what’s the real issue they’re trying to solve?”
Editor’s Note: This story has been updated to correct the spelling of David Harns’ last name.
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