Could Regulations Stunt Your Growth?

As any fully operational brewery knows, there can be a million hoops to jump through in terms of regulations — both federal, state and local. Most recently, Padraic O’Neil, the owner of O’Neil and Sons Brewing Co. in Port Lavaca, Texas, discovered that simply getting within regulations can sometimes be the hardest part.

“Please remember that when planning and executing this brewery/business, it was simply my wife and I,” explained O’Neil. “We couldn’t afford to pay a lawyer to cut through the red tape for us. We basically asked around, getting help from basically one brewery, Texas Big Beer, from Buna, Texas.”

In retrospect, O’Neil’s first thought is that many of the hardships they’ve faced could have been prevented by hiring a lawyer, but the couple was working on a very limited budget that consisted of O’Neil’s retirement from working for the same company for 20 years.

“We had to make due with what we had, and felt spending money on better equipment and brewing supplies — grain, hops, etc. — was the most important,” said O’Neil.

In the long line of regulations, O’Neil found out quickly that bars were set a little high. Of course their first encounter was with the Alcohol and Tobacco Tax and Trade Bureau (TTB), which took about nine months to get completed and receive his brewers notice. From there O’Neil rented a small shop in town, as he needed a business address, and had to create diagrams and layouts of the facility for TTB.

What O’Neil discovered next was that Texas had two separate licenses. “A brewers permit — anything above 5% ABW, not ABV — and a manufacturer’s license, anything below 5% ABW,” said O’Neil. “We went with the brewers permit, obviously. We had to fill out the appropriate paperwork, the TABC needs and provide a letter of approval from my landlord, cause I rent my space.”

The location of the brewery then had to tape a TABC sign to the front of the building for 90 days and mail out letters to residents within 300 feet to allow anyone in the community that would like to challenge the business time to do so. The next step might be foreign to a lot of northern states, but O’Neil had to go through a situation where his city wasn’t classified as “Wet”. This meant that he would have to approach the City Council to have them approve his area to be “wet” so that he could sell beer. This took two council meetings, but luckily went through without a hitch. The following day, O’Neil sent the signed document from the council to TABC, which sped through in about five weeks.

O’Neil and Sons Brewing Co. then proceeded to have labels approved and beer sent to a lab to have it approved for the label. “Unfortunately, we realized after opening that we could not sell beer to go, only on premises and our customers wanted to take their beer home,” explained O’Neil. “Our brewery is not air conditioned and it’s pretty damn hot in South Texas during the summer.”

However, O’Neil and Sons had exhausted the vast majority of their budget between when the process started in 2013 until they opened in 2015. They’ve started a kickstarter campaign to try and begin the regulation process over again. “We’ll have to start the entire TABC process over again when we re-apply, and there are no reimbursements, so we will lose all the money we used for the first round of permits, and redo every bit of paperwork,” explained O’Neil.

O’Neil admits that they basically screwed up purchasing the wrong TABC license. “It keeps us from being able to sell beer to go, which is a big deal to our patrons,” he explained. “We will continue to do the best we can with what we have. If the kickstarter works, we start on the approval phase within 45 days. If not, it will certainly stunt our growth for the time being and we’ll have to save up to change the licenses.”

The process is never over for O’Neil and Sons Brewing Co. “I have five documents that have to be filed monthly and several more to be filed quarterly, and I’m the only employee,” he said. “I just learned of some more documents that I was supposed to be filing to the state controller because I’m a alcohol distributor — that one was a shock. I already file self-distribution reports with the TABC. I guess they can’t coordinate.”

Owning his own company, like many Americans, has been a long-time dream for O’Neil. “For the longest time I wanted to open a brewery in my hometown in my dad’s honor,” said O’Neil. “It’s not about making money for us. Heck, we’re not going to. Just paying for rent, electricity, supplies, permits and taxes, it’s virtually impossible. My wife and I enjoy brewing together, it’s a fun time. We enjoy making beer — excuse me, ale — that we like drinking. We like to share it with folks from our community. It’s a treat to have a local brewery in a town this small (12,248 in the 2010 census), it’s even better that it’s ours!”

 

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