A bill introduced in the state Legislature would change how beer festivals operate in Michigan.

Under House Bill 5347, festival goers would no longer need to exchange a token or ticket for a pour of an alcoholic beverage.

Currently, festival operators must charge attendees a token value for beer that is above the cost that the group paid for it in order to comply with Michigan law, which prohibits the sale of alcohol at below cost.

The move would significantly free up resources for groups that sponsor beer festivals.

David Ringler, vice president of the Michigan Brewers Guild and founder of Cedar Springs Brewing Co., said the Guild spends about $10,000 annually to purchase and sort tokens for its series of beer festivals.

“The biggest thing for the Guild itself is the expense,” Ringler said. “As long as we’ve been doing this, we have a good proven record of responsibility.”

The bill would consider beer dispensed at a festival to be a sample just like what any brewery offers in its own taproom for free.

Currently, for example, a $55 ticket to the Michigan Brewers Guild’s Winter Beer Fest, which will be held this Saturday at Fifth Third Ballpark in Comstock Park, includes 15 drink tokens, each of which is redeemable for a 3-ounce pour. The Guild also sells additional tokens at a cost of 50 cents apiece.

Ringler said a new issue with the token system arose in recent years when breweries started offering expensive bottle-conditioned beers at the festivals that required the Guild to charge as many as five tokens to comply with the law, which “just takes away the marketing aspect” of pouring beer at the event.

That was true for Comstock Park-based Speciation Artisan Ales LLC, a brewer of specialty wild and spontaneously fermented beers. Co-founder Mitch Ermatinger says existing law and the token system put Speciation at a disadvantage.

“Requiring people to use tokens is bad for everyone. It creates an unfair playing field for breweries that make ‘premium’ beer versus more standard offerings because we have to ‘charge’ consumers extra tokens,” Ermatinger told MiBiz. “Consumers think the premium breweries are being greedy but the reality is that the brewers don’t benefit financially from the token system at all. We don’t ‘turn them in’ to make money.

“We do festivals all over the world, and the only fest location that requires tokens is Michigan.”

While acknowledging that overconsumption can be a concern regardless of whether tokens are involved or not, Ermatinger said requiring tokens can lead to patrons guzzling beer they don’t like instead of just dumping it out. For example, the Great American Beer Festival, held annually in Denver, offers unlimited pours and provides discard buckets at each station.

“A $1 little token is not going to sway people to drink less,” he said. “If anything people will drink less because they won’t feel pressure to drink every ounce they paid for.”

EASING BURDENS

The bill that would change the token system is tie-barred to a multi-bill package of legislation that would affect Michigan brewers, including by raising the cap for self-distribution from 1,000 barrels to 2,000 barrels, changing tax payments from monthly to quarterly, and removing a requirement to register beer that a producer sells at its own taproom or at a beer festival.

The latter change would remove “a huge burden for a lot of our members,” Ringler said, noting it would particularly benefit licensed brewpubs which are not able to distribute beer anyway.

“There’s no reason to have to register that beer when the product doesn’t leave your four walls,” he said.

The Michigan Brewers Guild and the Michigan Beer and Wine Wholesalers Association testified in support of the bill package, which is also backed by the Mackinac Center for Public Policy.

Multinational brewing conglomerate Anheuser-Busch and The Wine Institute, an advocacy group for California’s wineries, indicated opposition to several of the bills that deal with business relationships between beer and wine producers and wholesalers.

The bill package has passed the House and will now be considered by the state Senate.

NEW LICENSE CATEGORY

Meanwhile, a separate bill passed unanimously by the state Senate in January would create a new class of license for limited production manufacturers. The bill would allow a limited production manufacturer to buy finished beer from another Michigan or out-of-state producer, complete some part of the manufacturing process, and then sell the product via a distributor or ship it out of state.

State Sen. Jon Bumstead, R-Newaygo, introduced Senate Bill 711 after a La Colombe Torrefaction Inc. plant in Norton Shores received a short-term exemption to transfer finished beer from Wisconsin-based City Brewing Co. to use in producing an alcoholic coffee product. The company then sells the product to conglomerate MillerCoors, which handles marketing the beverage and selling it to distributors outside of Michigan.

“With the pending change in state law, La Colombe is already looking at ways to expand their operations in West Michigan over locations in other states,” Bumstead said in a statement at the end of January. “We need to keep Michigan moving forward and create an environment for businesses to call home. This legislation gets government out of the way and will benefit companies across the state.”

The bill currently is before the state House Committee on Regulatory Reform. La Colombe’s exemption from the Michigan Liquor Control Commission to transfer in finished beer runs through April.

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EDITOR’S NOTE: This story has been updated from its original version.