Can an Idaho craft brewery with a brew-pub license sell its beer directly to other restaurants and stores without also getting a wholesaler's license?

Plain-English summary

Most states regulate alcohol through a three-tiered system: brewers make beer, wholesalers distribute it, and retailers sell it to consumers. The same business cannot fill multiple roles. In 1987 the Idaho legislature carved out a small-brewer exception in Idaho Code § 23-1003, adding subsections (d) and (e) for brewers producing fewer than 30,000 barrels a year. Those brewers could obtain either a "brewer's retail beer license" or a "brewer's pub license" and could "sell at retail" at their brewery and at one remote retail location. The amendments also said any such brewer "selling beer at retail or selling to a retailer" did not need a wholesaler's license.

The Director of the Idaho Department of Law Enforcement asked whether that exemption truly let a brew-pub-licensed brewer sell to other retail outlets, or whether the brewer still needed a wholesaler's license to do that.

The AG concluded the exemption applied. The 1987 amendments distinguished between "selling at retail" (capped at the brewery and one remote location) and "selling to a retailer" (not so capped). The retail-location limit only governed direct retail sales. Sales to other retailers were permitted, with the only carry-over obligation being to pay the wholesale taxes Idaho Code § 23-1008 required on all beer products produced and sold. The legislative history confirmed the intent: small breweries were to "brew, distribute and retail" without being bound by the strict three-tier restrictions.

The catch was that the legislature had not amended Idaho Code § 23-1055(d), which made it unlawful for retailers to buy beer for resale "except from a dealer or wholesaler licensed in this state." Read literally, a retailer who bought from a brew-pub licensee was committing a violation. The AG concluded that section 23-1055(d) had been repealed by implication to the extent it conflicted with sections 23-1003(d) and (e). Repeals by implication are disfavored in Idaho, but the Jordan v. Pearce test was met: the two provisions could not be intended to operate at once, so the later one prevailed in the area of conflict.

Currency note

This opinion was issued in 1988. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Idaho's beer regulatory regime in 1988 was structured as a classic three-tier system. Idaho Code § 23-1003(a) required any brewer, dealer, or wholesaler to obtain a separate license from the Department of Law Enforcement before manufacturing, importing, or selling beer in Idaho. Each tier was distinct, and a participant in one was generally barred from operating in another.

Chapter 22 of the 1987 Session Laws added subsections (d) and (e) to section 23-1003, creating two new license types available only to Idaho-licensed brewers producing fewer than 30,000 barrels per year. The "brewer's retail beer license" allowed the brewer to retail its own products at the licensed brewery or at one remote retail location, or both. The "brewer's pub license" was broader: a holder could "sell at retail the products of any brewery by the individual bottle, can or glass" at the licensed brewery, at one remote retail location, or both. (The "any brewery" language was a meaningful difference between the two licenses.)

Both subsections distinguished between "selling beer at retail" and "selling to a retailer." The retail-location limit ("at his licensed premise or one (1) remote retail location, or both") attached only to retail sale. The separate phrase about not needing to be "licensed as a wholesaler" applied to both retail sales and sales to retailers. The textual structure cleanly produced the AG's reading.

The legislative history reinforced that reading. Representative Phil Childers told the House Commerce, Industry and Tourism Committee in early 1987 that the legislation "would do away with the occupational restriction of the strict 3-tiered system" and "allow small local breweries to brew, distribute and retail their product, up to 30,000 barrels per year."

The unaltered Idaho Code § 23-1055(d) provided that "for any retailer licensed in this state to purchase beer for resale except from a dealer or wholesaler licensed in this state" was unlawful. As written, a retailer that bought from a brew-pub licensee was violating the statute. The AG applied the standard repeal-by-implication test. Jordan v. Pearce requires inconsistency such that "the legislature could not have intended the two statutes to be contemporaneously operative." Paullus v. Liedkie added that the implied repeal extends only as far as the conflict goes. The AG concluded that the conflict was real and that section 23-1055(d) was repealed by implication, but only "to the extent of any conflict between the two."

Common questions

What was the small-brewer threshold?

Brewers producing fewer than 30,000 barrels per year and licensed in Idaho could obtain either a brewer's retail beer license or a brewer's pub license under § 23-1003(d) or (e).

Could a brew-pub licensee sell beer to other restaurants and bottle shops in 1988?

The AG concluded yes. The 1987 amendments allowed sales to retailers without requiring a wholesaler's license. The only condition was that the brewer pay the wholesale taxes due under Idaho Code § 23-1008.

Why did the AG have to talk about repeal by implication?

Because the legislature added the small-brewer exception to § 23-1003 but never amended § 23-1055(d), which on its face prohibited retailers from buying beer except from licensed dealers or wholesalers. The two provisions conflicted, and the AG concluded the later one (the small-brewer exception) prevailed within the area of conflict.

Was the implied repeal total?

No. As the Idaho Supreme Court said in Paullus v. Liedkie, an implied repeal "only to the extent of any conflict between the two." Section 23-1055(d) continued to operate where it did not conflict with § 23-1003(d) and (e), meaning retailers still had to buy from licensed dealers or wholesalers in transactions outside the brew-pub small-brewer carve-out.

What was the difference between the two new license types?

Section 23-1003(d) (the brewer's retail beer license) allowed retail sale of "the products of his brewery." Section 23-1003(e) (the brewer's pub license) was broader, allowing retail sale of "the products of any brewery by the individual bottle, can or glass." Both allowed sales at the brewery and at one remote retail location, and both exempted the holder from needing a wholesaler's license.

Citations

Idaho statutes: Idaho Code § 23-1003; Idaho Code § 23-1055; 1987 Sess. Laws, ch. 22.

Idaho cases: Doe v. Durtschi, 110 Idaho 466, 716 P.2d 1238 (1986); Umphrey v. Sprinkel, 106 Idaho 700, 682 P.2d 1247 (1983); Paullus v. Liedkie, 92 Idaho 323, 442 P.2d 733 (1968); Jordan v. Pearce, 91 Idaho 687, 429 P.2d 419 (1967); St. Benedict's Hospital v. County of Twin Falls, 107 Idaho 143, 686 P.2d 88 (Ct. App. 1984).

Source

• Landing page: https://www.ag.idaho.gov/office-resources/opinions/
• Original PDF: https://ag.idaho.gov/content/uploads/2018/04/OP88-08.pdf

Original opinion text

STATE OF IDAHO
OFFICE OF THE ATTORNEY GENERAL
JIM JONES
ATTORNEY GENERAL

BOISE 83720

TELEPHONE
(208) 334-2400

ATTORNEY GENERAL OPINION NO. 88-8

TO: Mack W. Richardson, Jr., Director
Department of Law Enforcement
6050 Corporal Lane
Boise, Idaho 83704

Per Request for Attorney General's Opinion

QUESTION PRESENTED:

Does Idaho Code § 23-1003 exempt the holder of a brew pub license from the requirement to have a wholesaler's license when the licensee sells beer to other retail outlets in addition to retailing at the brewery and at one remote location?

CONCLUSION:

Yes. Idaho Code § 23-1003 allows an Idaho licensed brewer who produces fewer than 30,000 barrels of beer annually to obtain a "brewer's retail beer license" or a "brewer's pub license." While the two licenses differ in the types of beer products allowed to be sold by a licensee, both licenses permit the licensee to "sell at retail" at his own brewery and at one remote location, while further permitting the licensee to "sell to retailers" without having to be licensed as a wholesaler.

Although the legislature failed to amend the Idaho Code § 23-1055(d) requirement that retailers purchase beer for resale only from licensed dealers or distributors, it is our opinion that an Idaho court would find this requirement repealed by implication to the extent it conflicts with § 23-1003(d) and (e) and the exemption granted to small breweries from other requirements of a wholesaler's license.

ANALYSIS:

I. Construction of Idaho Code § 23-1003.

In interpreting the provisions of § 23-1003, we are guided by the basic rule of statutory construction that we give effect to the legislature's intent. Umphrey v. Sprinkel, 682 P.2d 1247, 106 Idaho 700 (1983). In determining the application of a statute, the initial determination is whether its meaning is clear or ambiguous. If it is clear, one reads the statute literally, neither adding nor taking away anything by statutory construction. Only if it is ambiguous must one go outside the language of the statute itself to ascertain and effectuate the legislative intent. St. Benedict's Hospital v. County of Twin Falls, 107 Idaho 143, 148, 686 P.2d 88, 93 (Ct. App. 1984).

Idaho Code § 23-1003 establishes a three-tiered system requiring brewers, dealers and wholesalers of beer to obtain licenses from the Director of the Idaho Department of Law Enforcement. Section 23-1003(a) provides:

Before any brewer shall manufacture, or any dealer or wholesaler import or sell, beer within the state of Idaho he shall apply to the director for a license so to do. . . .

In 1987, the legislature amended § 23-1003 by creating two new types of licenses available only to Idaho licensed brewers who produce fewer than 30,000 barrels of beer annually. 1987 Sess. Laws, ch. 22, added subsections (d) and (e) to provide as follows:

(d) Any brewer licensed within the state of Idaho who produces fewer than thirty thousand (30,000) barrels of beer annually, upon payment of a retailer's annual license fee, may be issued a brewer's retail beer license for the retail sale of the products of his brewery at his licensed premise or one (1) remote retail location, or both. Any brewer selling beer at retail or selling to a retailer must pay the taxes required in section 23-1008, Idaho Code, but need not be licensed as a wholesaler. [Codification errors led to the misspelling of the word "his" twice in subsection (d) in the Idaho Code 1988 Supplement. This opinion adheres to the correct spelling found in the Session Law.]

(e) Any brewer licensed within the state of Idaho who produces fewer than thirty thousand (30,000) barrels of beer annually, may be issued a brewer's pub license. Upon payment of a retailer's annual license fee, and subject to the fees in sections 23-1015 and 23-1016, Idaho Code, a brewer may, at his licensed brewery, at one (1) remote retail location, or both, sell at retail the products of any brewery by the individual bottle, can or glass. Any brewer selling beer at retail or selling to a retailer must pay the taxes required in section 23-1008, Idaho Code, on the products of his brewery, but need not be licensed as a wholesaler.

Both subsections distinguish "selling beer at retail" from "selling beer to a retailer." This distinction is significant, because in each subsection, the sentence which limits places of sale to the licensee's brewery, or one remote location, or both, applies only to "retail sale" (in subsection (d)) or, equivalently, to "sell at retail" (in subsection (e)).

Thus, from the clear wording of the 1987 amendments, it appears that § 23-1003(d) and (e) place limitations only upon direct retail sales by the brewer, prescribing the types of beer products that a brewer can directly sell at retail and defining where such direct retail sales can take place. These subsections do not place limitations upon the licensee's ability to sell to retailers. They only require that the brewer pay wholesale taxes on all the beer products produced and sold, whether directly at retail or to retailers. Both subsections expressly relieve the brewer of the requirement of obtaining a wholesaler's license.

The legislative history of § 23-1003(d) and (e) supports our interpretation that these subsections exempt brew pub license holders from the requirement of obtaining a wholesaler's license as a precondition to selling brew to retailers. State Representative Phil Childers explained his understanding of this issue to the House Commerce, Industry and Tourism Committee:

Representative Childers told the Committee that this legislation would do away with the occupational restriction of the strict 3-tiered system. It would allow small local breweries to brew, distribute and retail their product, up to 30,000 barrels per year. Lifting this restriction could provide a boost to Idaho's economy, and they would meet all local and state health, safety and tax requirements. (Emphasis added.)

House Commerce, Industry and Tourism Committee Minutes, February 3, 1987. See also, the January 27, 1987, minutes from the same committee:

Representative Childers said that this legislation would make allowances for the strict 3-tiered system that prevents a brewer from being a distributor or retailer. (Emphasis added.)

The legislative history of § 23-1003(d) and (e) thus indicates that the legislature intended to allow small breweries to "brew, distribute and retail" without having to obtain the usual wholesaler or retailer licenses or be bound by the restrictions of the three-tiered system that accompany those licenses. Reading the language of § 23-1003(d) and (e) to require small brewers to apply for a wholesaler's license before distributing beer to retailers would be contrary to the clear statutory language and to the express legislative intent.

II. Conflict With Idaho Code § 23-1055.

A problem is presented by the fact that when the legislature enacted the legislation creating the brewer's retail beer license and brewer's pub license, it did not amend § 23-1055(d), which provides that it shall be unlawful:

for any retailer licensed in this state to purchase beer for resale except from a dealer or wholesaler licensed in this state.

As § 23-1055(d) is written, a retailer who purchases beer from a brewer retail beer licensee or a brewer pub licensee pursuant to § 23-1003(d) or (e) violates § 23-1055(d) if the licensee has not also obtained a wholesaler's license.

The apparent conflict between § 23-1003(d) and (e) and § 23-1055(d) gives rise to the principle of repeal by implication, described by the Idaho Supreme Court in Jordan v. Pearce, 91 Idaho 687, 691, 429 P.2d 419, 423 (1967):

"Repeals by implication are not favored; but if inconsistency is found to exist between the earlier and the later enactments, such that the legislature could not have intended the two statutes to be contemporaneously operative, it will be implied that the legislature intended to repeal the earlier enactment." (Citations omitted.)

See also, Doe v. Durtschi, 110 Idaho 466, 716 P.2d 1238 (1986). Repeal by implication need not result in repeal of the entire earlier enactment. As the Idaho Supreme Court held in Paullus v. Liedkie, 92 Idaho 323, 326, 442 P.2d 733, 736 (1968), "a later enactment will impliedly repeal an earlier one only to the extent of any conflict between the two."

Despite the fact that repeals by implication are disfavored by Idaho courts, it is our opinion that a court would find § 23-1003(d) and (e) to be irreconcilable with § 23-1055(d) and deem § 23-1055(d) repealed by implication to the extent that the two statutes conflict. The language of § 23-1003(d) and (e) and the legislative history of those subsections indicate that the legislature intended to allow small breweries to obtain special permits for limited direct retail sale and unlimited distribution through sales to retailers, without having to obtain a wholesaler's license and without having to be bound by the wholesale license restrictions of the three-tiered system applicable to large breweries.

AUTHORITIES CONSIDERED:

Idaho Statutes:
Idaho Code § 23-1003.
Idaho Code § 23-1055.

Session Laws:
1987 Sess. Laws, ch. 22, p. 29.

Idaho Cases:
Doe v. Durtschi, 110 Idaho 466, 716 P.2d 1238 (1986).
Umphrey v. Sprinkel, 106 Idaho 700, 682 P.2d 1247 (1983).
Paullus v. Liedkie, 92 Idaho 323, 442 P.2d 733 (1968).
Jordan v. Pearce, 91 Idaho 687, 429 P.2d 419 (1967).
St. Benedict's Hospital v. County of Twin Falls, 107 Idaho 143, 686 P.2d 88 (Ct. App. 1984).

DATED this 12th day of December, 1988.

JIM JONES
Attorney General
State of Idaho

Analysis by:
ERIC E. NELSON
Deputy Attorney General

cc: Idaho Supreme Court
Supreme Court Library
Idaho State Library