Playing by the Rules: Legal Matters Concerning Craft Breweries in Wisconsin and MinnesotaSep. 15, 2016
Hop Law presented at the Midwest Craft Brewery Conference in August 2016. We discussed a number of legal issues that breweries address regularly. We started out with a discussion of ownership issues, including how to go about seeking and obtaining investments for your brewery and how to set up your corporate entity. Many breweries try raising investment funds by mentioning the investment opportunity on their website or on social media – this is usually unlawful because under most small offerings, “general solicitation” of potential investors is illegal.
We then presented on a number of production issues that breweries face, including complying with the three-tier system. The phrase “three-tier system” gets thrown around a lot, but it doesn’t tell the full story or address the various nuances that come up when considering three-tier limitations. For example, sometimes a fourth tier importer is required to get your beer to market in a certain state. As an another example, if a potentially large investor wants to invest in 10% of your brewery’s offering, what happens if that investor owns a building that leases space to a retail facility? The answer is that it depends on the state, but some states have a problem with this because even though the investor does not have a license in the retail tier, he may have “an interest” in that retail licensee by receiving rent from it, and this could preclude him from investing in your brewery.
We also discussed distribution, including barrel limits on self-distribution, distributing across state lines, tax issues in the sale of your distribution rights, and how we were able to convince a state regulatory body to allow our client from another state to self-distribute in that state.
Finally, we addressed company issues, including trademarks, trade secrets, and employment issues. It was a great conference and we had a great group in attendance. We hope to continue presenting annually at this conference.