With the holiday season approaching, the spirit of giving is in the air. However, when it comes to some spirits, they may be giving a little too much. Alcohol breweries, distributors and retailers in Massachusetts are now under investigation for payments to access shelf space and bar taps, an illegal practice known as pay-to-play.
Word of the illegal practice came out when the owner of a small craft brewing company announced on Twitter that a couple of Boston bars were asking for compensation to put their beers on tap. Dann Paquette, owner of the small Massachusetts-based brewery, Pretty Things Beer & Ale Project, made his social media announcement last month, reporting the pay-to-play allegation. However, Gordon Wilcox, the owner of one of the bars outed by Pretty Things, said the bar did not stock that particular beer due to it being an inferior product at its cost.
Both federal and Massachusetts state law make this kind of compensation for access illegal, but many in the industry say the practice is not uncommon. The laws came about initially to keep the large national breweries from monopolizing the beer market. The Massachusetts Alcoholic Beverages Control Commission (ABCC) said it would investigate the claims.
State regulators have now launched an investigation into the allegations that distributors, brewers and retailers are in violation of the law by promoting some beers at bars and stores in exchange for payments or gifts. The state has issued subpoenas to retailers, beer distributors and breweries for records to determine if anyone is paying for, or demanding compensation for, access to retail space and bar taps.
Pay-to-play promotions can come in various forms, including payment to retailers to stock specific beers in specific location, or any variety of gifts. This can range from free beer, gift cards, expensive draft system equipment worth upwards of thousands of dollars in "donations."
The Beer Distributors of Massachusetts has said that some of their members have receivedofficial records requests. One company, Idle Hands Craft Ales, said investigators asked general questions about pay-to-play. Co-owner Chris Tkach said his company never paid to have their beer put on tap, but did admit to an incident where an unnamed bar manager in Waltham said there was no room for Idle Hands because a competing beer distributor provided free equipment in exchange for reserving more tap space.
Owner of the Mystic Brewery in Chelsea said he suspects pay-to-play may have been the reason behind some of his beers being pulled out of local bars where the product had been selling well. "We go to a bar and they say, "Oh, our lines are committed. Somebody gave us a draft system and you can't get on here," said Mystic Brewery owner Bryan Greenhagen.
The Treasury Department, which oversees the ABCC, has said they are prepared to take strong measures against any company who violates the state liquor laws, which could include liquor license suspension or revocation. Chief investigator for the state's ABCC, Frederick Mahoney, has not said which companies were currently under investigation, but indicated what they might be looking for. "We're looking at any and all forms of inducements. This is ongoing, and this may not stop here," said Mahoney.