What Is a Brewer’s License, and What Can a Texas Brewery Sell On-Site Versus Only Through Distribution?

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A Texas brewery’s default route to market is a distributor. The Brewer’s License (BW) authorizes brewing and sales to distributors; selling directly to the public at the brewery is a capped exception. A brewery whose total production across all of its premises stays at or below 225,000 barrels a year may sell beer made at that brewery to customers there, by the glass and to go, with to-go purchases limited to 288 fluid ounces per customer per day and all direct sales at that brewery limited to 5,000 barrels a year. Everything else reaches bars, restaurants, and stores through a licensed distributor, unless the brewery also holds a separate self-distribution license.

What the license itself authorizes

Section 62.01 of the Alcoholic Beverage Code lets a brewer’s license holder:

  • brew malt beverages and sell them in Texas to holders of general and branch distributor’s licenses, and to qualified buyers outside the state;
  • dispense malt beverages for consumption on the premises;
  • bottle, can, and pack beer for resale in Texas;
  • conduct samplings, including tastings, at a retailer’s premises; and
  • enter into alternating brewery proprietorship or contract brewing arrangements.

The taproom and self-distribution are both exceptions with numeric limits.

The taproom: what can be sold on-site

Section 62.122 sets the taproom rules, and each limit does different work.

  • Who qualifies. The brewery’s annual production of malt beverages at all premises it owns directly or indirectly, including through affiliates or subsidiaries, must not exceed 225,000 barrels.
  • What can be sold. Only malt beverages produced on that brewer’s premises under the license. Guest beers are not part of this authority.
  • By the glass. Sales to customers for responsible consumption on the brewery’s premises.
  • To go. Sales for off-premises consumption, limited to 288 fluid ounces per customer per calendar day. That is the equivalent of twenty-four 12-ounce cans.
  • Total cap. All sales to customers under this section at the same premises may not exceed 5,000 barrels a year, counting glasses and to-go purchases together.

A narrow exception in Section 62.122(c) lets certain breweries that were already selling on-site on February 1, 2017, and whose production at the brewery stays at or below 175,000 barrels, keep selling for on-premises consumption after crossing the 225,000-barrel line. The exception comes with added conditions, including buying the beer they sell on-site from a licensed distributor and filing a territorial agreement with TABC.

Everything else: the distribution tier

Beer a brewery sells anywhere other than its own taproom goes through the distribution tier by default. The brewer sells to general and branch distributors (Section 62.01), and those distributors sell to retailers. A bar that wants a brewery’s beer on tap buys it from the distributor, not from the brewery, unless the brewery holds a self-distribution license.

Self-distribution: selling to retailers directly

A brewery can add a Brewer’s Self-Distribution License (SD) under Chapter 62A of the Code. Section 62A.02 sets two limits:

  • the brewery’s annual production across all premises it owns directly or indirectly, including affiliates and subsidiaries, must not exceed 125,000 barrels; and
  • total self-distributed sales may not exceed 40,000 barrels a year across those premises.

Within those limits, the brewery may sell to the same buyers a general distributor may sell to, including retailers, and it takes on the same requirements a distributor has for those sales. Section 62A.04 requires a monthly report of sales to retailers, due by the 15th day of the following month.

The channels side by side

Channel Buyer Limit Code section
Taproom, by the glass customers on the premises production at or below 225,000 barrels; 5,000 barrels a year of direct sales 62.122(a), (b)
Taproom, to go customers on the premises 288 fluid ounces per customer per day, within the 5,000 barrels 62.122(a-1)
Distributor general and branch distributors no volume cap in Chapter 62 62.01(a)(1)
Self-distribution (SD) retailers and other distributor customers production at or below 125,000 barrels; 40,000 barrels a year 62A.02

Three breweries, three sets of channels (hypothetical)

The channels open to a brewery depend on its total annual production across all premises it owns directly or indirectly:

Annual production Taproom sales Self-distribution (with an SD license) Distributors
3,000 barrels open, up to 5,000 barrels of direct sales at that brewery, so its whole output could in principle go through the taproom open, up to 40,000 barrels open
150,000 barrels open, still capped at 5,000 barrels at that brewery closed, production is above 125,000 barrels open
250,000 barrels closed, unless the brewery fits the narrow 2017 exception closed open

A business plan that leans on taproom revenue should be built against the 5,000-barrel cap and the 288-ounce to-go limit, not against capacity, and a brewery nearing either production threshold should model the channels it loses when it crosses it.

This article is general information about Texas alcoholic beverage law, not legal advice, and reading it does not create an attorney-client relationship. Statutes and TABC rules change; confirm current requirements with the Texas Alcoholic Beverage Commission, the relevant city or county, or a licensed Texas attorney before acting.

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