The Portland City Council on Monday will consider delaying implementation of a new manufacturer’s license fee for breweries, distilleries and wineries after brewery owners complained about being blindsided by the proposal, which was part of the city’s budget.

The manufacturing license for breweries, wineries and distilleries was quietly slipped into the city budget that took effect on July 1. That license came with an annual fee of $2,000 a year for businesses that manufacture 50,000 gallons or more of alcohol a year and $250 for those producing less than that.

The fee, projected to bring in over $26,000 in new revenue, was never highlighted to the City Council, other than being included on a standard list of fee increases routinely approved as part of the budget process. And it was never vetted or debated by the council, which approved it.

The emergency request to delay implementation is being made by City Councilor Kimberly Cook, whose district includes several breweries in the Riverton neighborhood. She, too, was unaware of the new fee until contacted by brewery owners.

“I don’t recall any discussion of that at the full council at least and certainly from what I’m hearing from small-business owners, they were completely unaware of these new fees,” Cook said Friday. “This to me is the kind of issue that deserves a more thorough and thoughtful discussion on the council about what the purpose of the fee is and whether it’s necessary.”

Affected businesses were informed of the new fee in a letter from the city dated June 28.

When a letter from the city of Portland showed up in the mailbox at Foundation Brewing Co., co-owner Tina Bonney said she opened it immediately, because such letters are unusual.

Bonney stood there for a few minutes, puzzling over the contents: pages of information that needed to be filled out for the brewery to get a new manufacturer’s license and a short letter saying that a fee of $2,000 for larger breweries and $250 for smaller ones would need to be paid by Aug. 30.

“It was really shocking and confusing to get and kind of disappointing,” Bonney said, noting that the city has worked collaboratively with the brewers in the past.

Cook will ask councilors to delay the implementation of the license and fee for at least a year, so it can be examined by the council’s Economic Development Committee.

Cook said that state law requires new fees to be tied to a particular service. And so far, she has yet to see any justification for the new fee or whether it was trying to address any specific problem.

“I really have a lot of questions about that,” Cook said. “For me, as a policymaker, that’s a fundamental question.”

Over the years, the city has struggled to regulate and nurture the growth of the craft beer industry.

The city created a new tasting room license two years ago, after a state law change allowed breweries to begin selling samples of their product. That change increased profits and led to rapid growth of breweries throughout the state. And it’s not uncommon for breweries to have food trucks parked nearby.

But some traditional bar and restaurant owners have expressed concerns that breweries have an unfair competitive advantage in terms of regulations and fees.

Both Cook and Bonney noted how the process leading up to the new manufacturer’s fee differed from the city’s efforts to create the tasting room license, at a cost of $525, for breweries several years ago.

Prior to adopting the tasting room license, city staff took a more collaborative approach, meeting with brewery owners to get feedback about the proposed regulations before they were presented and ultimately adopted by the council.

“We also owe it to the businesses in Portland to understand why there was a difference in approach,” Cook said. 

Licensing and Housing Safety Manager Jessica Hanscombe said in an email that it’s not standard practice for the city to notify businesses of fee increases or new license classifications. And the city routinely matches its licenses with the state’s, she said.

Hanscombe pointed to a series of incidents she said could have been avoided by having a manufacturer’s license, including a brewery that opened in an area not zoned for that use and a winery that opened in a space that first needed a change-of-use permit.

The City Council’s Finance Committee met on May 9 to discuss the permitting and inspections budget. But councilors were never told about the new license or fee and subsequently did not discuss it.

The proposal was included on two council agendas under various fee increases with subsequent ordinance language. But it was never discussed by the full council, which spent most of its time debating proposed reductions in the social services budget and the fate of a fire engine on Munjoy Hill.

Hanscombe proposed the new fee in a March 12 memo to Keri Ouellette, the interim director of permitting and inspections. But she doesn’t say in the one-page memo why the new fee is needed. She only notes that the state fees are $50 for a small brewery and $1,000 for a larger brewery, less than half of the city’s proposed fee.

“We would need to do inspections of the manufacturing side with Code, Health Inspectors and the Fire Department,” Hanscombe wrote.

In an Aug 7 memo to councilors, Hanscombe said that “we created the fees based on staff time to license and inspect the businesses.”

Several other brewery owners, including Austin Street Brewery, which has two breweries in Portland, questioned the rationale for the new license in emails to city councilors.

“I’m not writing to complain about the fees associated with this ordinance,” co-founder Will Fisher wrote. “I’m writing because this ordinance materialized suddenly and without warning during the busiest time of year for our industry. It is fundamentally flawed, arbitrary, inequitable, and unsubstantiated.”

Others in emails to councilors questioned why alcohol manufacturers are being targeted.

“The fee seems to single out and target just a handful of businesses,” Definitive Brewing Co. founder and CEO Michael Rankin said in an email. “The fee is not imposed on milk producers, chicken processors, or coffee roasters, all of which have many of the same manufacturing procedures as breweries. What new services and resources will be implemented as a result of this fee?”

In response to a voicemail seeking an interview about the new fee, Mayor Ethan Strimling, who serves on the Finance Committee and has advocated for fee increases in the past, said in a text message he supports Cook’s request.

“This fee should be put on hold and be reviewed by EDC,” Strimling said.

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