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Brewery bill signing

From left: Erik Somerfield of the Montana Farmers Union, Rep. Adam Hertz, Governor Steve Bullock, Rep. Ellie Hill-Smith and Bayern owner Jurgen Knoller.

It’s not often that politicians from both sides of the political aisle sit down and have a beer together, but that’s exactly what happened Monday afternoon at Bayern Brewing in Missoula.

Gov. Steve Bullock and state Rep. Ellie Hill-Smith (D-Missoula) were joined by Rep. Adam Hertz (R-Missoula) and many local brewery owners for a ceremonial signing of House Bill 541 that will raise the production cap on Montana’s microbreweries from 10,000 barrels annually to 60,000 barrels while still allowing them to sell beer in on-premises taprooms.

Hill-Smith and Hertz worked together to co-sponsor the bill, which was supported by the Montana Brewers Association, the Montana Farmers Union and the Montana Beer and Wine Distributors Association, among others.

“Economic growth and innovation are unlimited when we allow free markets to thrive,” said Hertz, primary sponsor of HB 541. “I’m thrilled to be a part of this bi-partisan regulatory reform that will position Montana’s craft brewing industry to be a bigger player in the regional market and create hundreds of new jobs.”

“Montana is beer country and Missoula is the heart of beer country,” said Hill-Smith. “Rep. Hertz and I may come from different political parties but we both saw the need to do this for our community and the state as a whole. I’m pleased that Democrats and Republicans came together during the session to do what’s right for Montana craft brewers, barley farmers and craft beer lovers.”

According to a 2016 report by the Bureau of Business and Economic Research at the University of Montana, the craft brewing industry in the state contributed $103.2 million to the economy in 2015 while employing 702 people and creating a total of 1,044 jobs. There are now 68 breweries in the state.

The longstanding production cap of 10,000 barrels was part of a tenuous compromise with the Montana Tavern Association. Breweries were able to surpass that cap, but if they did, they were then “penalized with the loss of taproom sales,” as Matt Leow, the executive director of the Montana Brewers Association, termed it.

There are several breweries in Missoula that were significantly hampered by the production limit. Big Sky Brewing, the largest brewery in the state, long ago surpassed the limit and has had to give away nearly $4 million worth of free beer over the past 10 years in its taproom since they aren’t allowed to sell pints on site.

Kettlehouse Brewing Co., which recently built a new facility in Bonner that will produce 20,000 barrels a year, will now be able to build a tasting room on site if the owner chooses to do so. And because Bayern Brewery depends on taproom sales at its popular location on Montana Street, they had to throttle back their production every year to make sure they didn’t produce more than 10,000 barrels, even though customers were demanding it.

“This bill removes a barrier that has hindered our growth and limited our ability to meet demand for our beer in Montana and beyond,” said Jürgen Knöller, owner of Bayern Brewing. “After waiting for this legislation for nearly two decades, we’re excited that this day has finally arrived.”

Knöller said that Bayern’s production grew steadily for 27 years but plateaued around 9,900 barrels for the past three years. He had to turn down lucrative contracts in Colorado and Washington because of the old law. As the owner of the oldest brewery in the state, Knöller was all smiles Monday.

“It took 19 years to get that bill to this point,” he said. “I started to have my doubts whether I would see it happening before I retire someday and yes, it did and so we are excited about it.”

Erik Somerfield, a representative from the Montana Farmers Union, said the bill would boost demand and therefore production of agricultural products like barley and malt. A representative from the Montana Beer and Wine Distributors Association said it would boost economic production and put more Montana beer on store shelves in the region.

“Even more than taps and great beers, our breweries employ our fellow Montanans, buy products from our farmers, and help grow Main Street Montana,” said Bullock. “This legislation is a good thing for the industry and for our economy, as well as for Montana craft beer lovers like myself.”

Hill-Smith said the bill will also help small businesses in rural communities, such as Philipsburg Brewing Co., which recently built a new canning facility.

The new law will take effect on Oct. 1. According to the MBA, Montana breweries are expected to produce over 200,000 barrels this year, more than double the amount brewed in 2010.

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