Brewing Additional Revenue for Your Farm: How Pennsylvania’s Changing Liquor Laws Open New Market Opportunities for Agricultural Producers

By: Sarah Phillips

Part of running a successful business is knowing when and how to diversify. As the agricultural market becomes more competitive and consumer-driven, farmers are becoming experts on creating niche market opportunities to meet consumer demands.

Over the last several years in Pennsylvania, the liquor laws have become more relaxed. Thanks to the passing of Act 39 by Governor Wolf, farmers have been able to expand their offerings to include farm-fresh, locally produced beer, hard cider, and wine. The new laws allow agricultural producers to not only grow, process, package, and sell their own alcoholic beverages, but they can also do all of this right on their own farms. It is not uncommon to see farms opening their own “tasting rooms” in old barns on the farm property, and now, doing so is a much easier process than obtaining a traditional liquor license.

River Bend Hop Farm and Brewery located in Newport, PA. It opened in 2017 thanks to the passing of Act 39.

getting started

Obtaining the appropriate licenses and permits can be a lengthy process, so it is best to start filing the necessary paperwork right away. A delay in receiving the required approvals could mean a delay in opening your new business, which could severely impact your cash flow and the ultimate success of the business.

Because there are several different types of licenses you can apply for, before you file, you must first decide which license is appropriate for your particular business goals. Each license comes with its own set of requirements and only allows your business to engage in certain activities.

Your first option under the new liquor laws is to apply for a Manufacturing License, known in the business as a “G” license. This license allows you to manufacture wine, beer or hard cider on your premises and sell it to consumers for both on and off-site consumption. The “G” license requires that you have at least ten seats and food available on the premises. A “G” license will also permit you to sell your alcoholic beverage in pints, growlers, and even kegs. For agricultural entrepreneurs who have limited funds, want to start small, or are not interested in managing a huge operation, a “G” license may be the best option to provide supplemental income for the farm.

A second license option for your farm is to apply for a Brew Pub License, which is known as a “GP” license. Keep in mind that your farm would need to apply for both a “G” license and a “GP” license to enjoy the perks and benefits that come with a “GP” license. Under this license, your on-farm tasting room can stay open until 2:00 a.m., but you must have seating and food for at least 30 people. Additionally, under this license, your business must apply to the Pennsylvania Department of Health for a health permit.

It is important to remember that the federal government has its own set of laws that govern the production and sale of alcohol for on-farm operations. Getting the appropriate federal approval is even more complicated and time-consuming, so it is best to start this process right away. You can apply for both federal and state approval at the same time, so there is no need to wait to receive approval from one before applying for the other. For more information on that process, check out this resource.

additional profit-making opportunities

Act 39 also changed existing law to allow farmers and agricultural producers to sell their alcoholic beverages off-site at a farmers market. Like the other types of licenses discussed above, a farmer is required to apply for and receive a special license to sell at a farmers market. There is a filing fee, and you must inform the Pennsylvania Liquor Control Board of the location of the market you want to sell at as well as the hours you expect to be there. In addition to the farmers market license, you should always check with the coordinator of the farmers market you wish to attend because most markets also require proof of insurance and inspection certificates.

Reid’s Winery is just one of many Pennsylvania vendors that attends farmers markets throughout Adams County to sell their locally produced wine and hard cider.

Act 39 provides additional incentives to create your own on-farm tasting room by making it permissible to sell beverages from other local breweries. This allows agricultural entrepreneurs to not only expand their product offerings but increases their ability to collaborate with other local agricultural entrepreneurs.

other important considerations

As an agricultural entrepreneur, expanding your business to offer your own locally produced beer, hard cider or wine can bring in additional revenue that will make your larger farm business more sustainable. Like all new entrepreneurial endeavors, you should always consult your local township’s laws to make sure you do not violate any zoning ordinances. Attending local town council meetings or consulting with a local attorney is advisable to make sure your business is operating in accordance with all applicable permits and licenses. It is also recommended that you consult with your farm insurance agency to make sure you are in compliance (or start complying) with any regulations the agency has about on-farm businesses and customers.

You can stay up to date with Pennsylvania’s changing liquor laws by subscribing to the Pennsylvania Department of Agriculture’s Weekly Roundup Newsletter, which provides timely updates on laws and regulations that can affect agricultural entrepreneurs and their respective businesses.


This post was originally authored February 9, 2020, and can be found here.

Sarah Phillips, at the time of this blog post, is a third-year law student at Penn State’s Dickinson Law. She is from West Amwell, New Jersey and has interests in agricultural, land use and business transactional law. She is currently serving as an Honor Code Representative and a Law Lion Ambassador. Sarah is the Editor-in-Chief of the Dickinson Law Review.

Sources:

Click to access 003462.pdf

Click to access Winery%20and%20Farmers%20Market%20QandA.pdf

Click to access February%202017%20Presentation%20for%20PA%20Producers%20and%20Licensees.pdf

https://www.wesa.fm/post/farmers-markets-get-boozy-thanks-pas-relaxed-liquor-laws#stream/0

http://www.riverbendhopfarmandbrewery.com

https://bit.ly/2OHIgJX

Picture Sources:

https://bit.ly/2H7OCht

https://www.reidsorchardwinery.com

Author: Prof Prince

Professor Samantha Prince is an Associate Professor of Lawyering Skills and Entrepreneurship at Penn State Dickinson Law. She has a Master of Laws in Taxation from Georgetown University Law Center, and was a partner in a regional law firm where she handled transactional matters that ranged from an initial public offering to regular representation of a publicly-traded company. Most of her clients were small to medium sized businesses and entrepreneurs, including start-ups. An expert in entrepreneurship law, she established the Penn State Dickinson Law entrepreneurship program, is an advisor for the Entrepreneurship Law Certificate that is available to students, and is the founder and moderator of the Inside Entrepreneurship Law blog.