Kang Haggerty News
In the May 12, 2025 edition of The Legal Intelligencer, Aaron Peskin writes, “Where Do I Have to Go to Get a Decent Beer? —State of Taprooms in Pa. and NJ in 2025.”
It is fair to say that the craft beer boom of the 2010s is largely over. The year 2024 saw the first decline in the overall number of craft breweries nationwide since 2005. There are a lot of factors that have led to this decline, including the rise of hard seltzers, RTD (ready to drink) cocktails, and even the rise of recreational cannabis. With all of that said, Pennsylvania has both recently either passed new laws or reinterpreted existing ones to be friendlier to those in the business of brewing beer.
In 2016, Gov. Tom Wolf signed into law Act 166, which revolutionized the business of G-license holders. Once this law came into effect, G-license holders gained much of the rights that were previously held only by GP-license holders without any major drawbacks. Since then, Pennsylvania G-license holders can:
- Operate taprooms on the licenses premises so long as they have 10 seats and offer snack foods (chips and pretzels) for sale along with the beer. Pennsylvania breweries are also permitted to operate full kitchens should they wish to do so.
- Obtain expo permits that allow them to sell beer at festivals by glass, growler, bottle, or package not to exceed 192 fluid ounces in a single transaction. The permit is $30 per day and cannot be used for more than 30 consecutive days and is limited to 100 days per year.
- Sell at farmer’s markets by growler, bottle, or package not to exceed 192 fluid ounces in a single transaction. The permit is $250 per year and can be used at multiple farmers markets.
- Sell Pennsylvania beer brewed by other manufacturers as well as Pennsylvania limited wines and limited distillery products. In other words, Pennsylvania breweries are allowed to sell cocktails so long as the use Pennsylvania liquor.
- Operate up to two storage facilities per license. But these are not ordinary warehouses. Pennsylvania law permits breweries to operate these facilities as taprooms in exactly the same manner as its principal licenses premises. In other words, a Pennsylvania brewery can sell beer as well as Pennsylvania limited win and limited spirits in these storage facilities. This development has been a boon to many breweries that have been able to expand their reach and find new sales outlets for their products.
- Self-distribute their products. Pennsylvania beer distribution laws are heavily weighted in favor of distributors. In fact, beer distribution contracts can only be terminated by brewers “for cause.” This is a relic of the 1960s and 1970s when the extremely limited number of breweries in the United States meant that the termination of a distribution contract by one brewery could be a death sentence for a distributor. But regardless of the wisdom these laws, Pennsylvania allows breweries to enter the market outside of their own taproom without the need to enter into a contract with a distributor. While a distributor may be useful as a brewery grows, this right of self-distribution allows new breweries to explore the market without getting locked into any deal that they cannot walk away from.
The impact of Act 166 effectively rendered the GP (brewpub) license largely obsolete because the rights given to Pennsylvania brewers were largely the same as those previously enjoyed only by brewpubs. GP license holders still retain a few advantages over G license holders. GP licenses are allowed to be open both earlier in the day and later in the day than G license holders. They may also purchase catering permits for off-premises catering events for five hours per day and up to 52 hours per year, but that advantage has been mitigated by the expo permits available to breweries. And there are also significant disadvantages—GP license holders cannot self-distribute and require seating for 30 as opposed to 10 for breweries.
It likely makes far more sense for someone looking to start a brewery in Pennsylvania to apply for a G license as opposed to a GP license. Here are a few more factors to consider:
- You can also apply for license “couplets.” These couplets can be for manufacturing other forms of alcoholic beverages (wine or spirits) or for holding a retail or eatery license. The latter carry significant advantages in hours that you are allowed to sell your products and what you are allowed to sell, but bear in mind that you’ll have to purchase that license on the open market.
- There are a lot of “brewers” out there using the G license as a backdoor to effectively open a bar without paying for the far more expensive R license, which usually sell for around $300,000. This is extremely risky as you are expected as a G license holder to have your own product constitute at least 50% of your alcohol sales. If you are brewing a miniscule amount and then mostly selling other people’s beer, wine, and spirits, you run the risk of being found in violation of Pennsylvania liquor law.
- There is a growing trend among brewers to farm out kitchen operations to a contractor. This is permissible under Pennsylvania law as these kitchen operators would be considered “managers” under Pennsylvania law, but there are some problems with this arrangement. Pennsylvania law does not permit a license holder to sub-lease licensed premises, but Pennsylvania permits management agreements for all liquor license holders, including manufacturers. However, there are additional restrictions upon G and GP license holders. For example, while R license holders can sign an agreement with the manager where the manager will be paid a percentage of the establishment’s revenue, G license holders are not allowed to come to such an agreement. Rather, G license holders can only agree to pay a flat fee to the manager. So brewers should be very careful in mapping out what the expected revenue is for their business or they may end overpaying the manager of their kitchen operations.
- Additionally, Pennsylvania law requires that the license holder maintain total control over the operations of the licensed premises, so this agreement cannot work like a lease guaranteeing the manager a certain period of time in the premises. Instead, it operates more like an at-will employment agreement where the license holder can terminate the relationship at any time. This actually works in the license holder’s favor, but anyone looking to enter into a kitchen management agreement should make this clear to the potential manager so as to avoid future litigation should the relationship not work as hoped.
Ultimately, there are certainly challenges ahead for craft brewers, but Pennsylvania offers quite a few opportunities to start and grow your business.
Aaron Peskin is senior counsel at Kang Haggerty, where he focuses on complex commercial and employment litigation. Additionally, Peskin has a niche practice representing start-up breweries and has helped several award-winning breweries in the Philadelphia area with all facets of law, from incorporation and operating agreements to commercial leases to trademarks and licensing. Contact him at apeskin@kanghaggerty.com.
Reprinted with permission from the May 12, 2025 edition of “The Legal Intelligencer” © 2025 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com.