§ 5-01-14 — Microbrew pubs - Licensing - Taxes

1. A microbrew pub shall obtain a brewer license and a retailer license as required under
this title. A microbrew pub may manufacture on the licensed premises, store, transport,
sell to wholesale malt beverage licensees, and export no more than ten thousand
barrels of malt beverages annually; sell malt beverages manufactured on the licensed
premises; sell alcoholic beverages regardless of source to consumers for consumption
on the microbrew pub's licensed premises; and sell or direct ship malt beverages
manufactured on the licensed premises to an individual in this state for consumption in
accordance with section 5-01-16. A microbrew pub may not engage in any wholesaling
activities. Except as provided in subsection 3, all sales and delivery of malt beverages
to any other retail licensed premises may be made only through a wholesale malt
beverage licensee. Beer manufactured on the licensed premises and sold by a
microbrew pub directly to the consumer for consumption on or off the premises is
subject to the taxes imposed pursuant to section 5-03-07, in addition to any other
taxes imposed on brewers and retailers. A microbrew pub is required to file a monthly
sales report with the tax commissioner by the fifteenth day of the month following the
month in which the sales are made. The report must be prepared and submitted in a
form and manner as prescribed by the tax commissioner. A microbrew pub is not
precluded from retailing beer it purchases from a wholesaler. Complimentary samples
of beer may not be in an amount exceeding sixteen ounces [.47 liter] per patron. A
licensee may sell beer to any person for off-premises consumption if sold in a
brewery-sealed container and the total amount sold to each person does not exceed

five and sixteen-hundredths gallons [19.53 liters] per day. This section may not be
superseded under chapters 11-09.1 and 40-05.1.
2. The tax commissioner may issue a special event permit for not more than forty events
per calendar year to a microbrew licensee allowing the licensee, subject to local
ordinance, to give free samples of beer manufactured by the licensee, sell beer
manufactured by the glass or in closed containers, or dispense beer manufactured by
the licensee, at off-premises events.
3. A microbrew pub may transfer beer in bulk, as defined by section 5-01-01,
manufactured by the microbrew pub to an affiliated microbrew pub licensee. For
purposes of this subsection, "affiliated microbrew pub licensee" means a microbrew
pub of which at least an eighty-five percent interest is owned by the microbrew pub
measured annually and:
a. The microbrew pub does not own more than three affiliated microbrew pub
licensees;
b. The microbrew pub licensee receiving the beer in bulk has produced no less than
five thousand gallons [18927.06 liters] of beer on the premises in the preceding
calendar year. For the purpose of calculating the production requirements, the
production must be prorated based on the number of days beer was produced;
c. The beer in bulk transferred in any calendar year constitutes no more than fifty
percent of the beer being produced by the microbrew pub licensee receiving the
beer; and
d. For purposes of determining whether the ten thousand barrel production limit
under subsection 1 is being exceeded, the beer being transferred is credited to
the microbrew pub that manufactured the beer.
4. A contractee brewer may contract with a contractor brewer to produce beer for the
contractee brewer to the extent allowed by federal law under the following conditions:
a. The contractee brewer and the contractor brewer must be licensed and owned
separately;
b. The contractee brewer must have a proper license issued under this section and
maintain a physical brewing presence in the state;
c. Beer brewed for a contractee brewer counts toward the contractee brewer's
annual barrels produced, and the beer does not count toward the contractor
brewer's annual barrels produced;
d. The contractee brewer retains ownership of the product; and
e. Each brewer is separately and distinctly responsible for compliance with this
chapter.