Alternating Proprietorship is Legal; Craft Brew Production Limit Raised

UPDATED JUNE 9, 2017:  Governor Brian Sandoval has signed Senate Bill 431, raising production limits on Nevada’s craft brewers, and allowing wineries to operate as alternating proprietors, a business arrangement where up to four wineries can exist in a single location.

The winery provision was a late amendment sought by the Nevada Wine Coalition and local vintners.

POSTED May 17, 2017: A Senate committee in the Nevada legislature passed an amendment today authorizing up to four wineries to operate under one roof, a business structure known as alternating proprietorship. The bill paves the way for a stalled winery venture to open on Reno’s 4th Street corridor. The amendment made its way into a contentious beer bill that raises the annual production limit for craft breweries to 40,000 barrels.

Assembly Bill 431 cleared the Assembly on April 25, and generated a tussle at a subsequent Senate committee hearing when national beer brands objected to additional provisions designed to prevent them from inhibiting craft beer sales with perverse incentives to distributors. Craft brewers in Nevada would nearly triple their annual production from a current limit of 15,000 barrels to 40,000, with no more than 5,000 to be sold to customers in their tap rooms. Small brewers will also be allowed to supply their product to special events, such as farmers markets, if a licensed retailer sells the beverage.

Assuming full Senate approval, it’s a big win for small wineries, said Randi Thompson, Executive Director of the Nevada Wine Coalition.

“This will make it easier for folks to share costs and start a business,” Thompson said.

If it passes on the Senate floor, AB 431 will return to the Assembly for concurrence on the amendment. Las Vegas Assemblywoman Irene Bustamante Adams sponsored AB 431. Senator James Settelmeyer added his name after working for months with the craft brewers on a separate proposal to increase production. The language addressing wineries was added by Senator Julia Ratti, who represents the district that includes 4th Street in Reno.