Want to Open a Microbrewery in Traverse City?

“A calamity every step of the way.” “Complete trial by fire.” “A Kafka-esque labyrinth of bureaucracy.”

That's how owners of four new breweries in the Grand Traverse region wryly describe the process of opening a brewing operation in Northern Michigan. Thanks to explosive growth in the craft beer industry, an ever-increasing number of entrepreneurs are trying their hands at running breweries or taprooms, lured by a seemingly glamorous industry that offers a lively way to make both money and a professional mark in the community.

But according to Pete Kirkwood, owner of the newly opened Workshop Brewing Company in the Warehouse District in downtown TC, an interest in – or a knowledge of – making beer is just the first in a long list of qualifications a potential brewery owner needs to cut it in the Michigan marketplace.

“It's a complicated, bureaucratic enterprise to undertake,” says Kirkwood. “Starting any small business is intensely complex, but there's a whole other level of uncertainty with breweries...and many more variables involved.”

Kirkwood, Jeff Brooks at Bravo Zulu Brewing, Mike Rizik at Beggars Brewery and Nate Crane and Tina Schuett at Rare Bird Brewery & Taproom have all become intimately acquainted with those variables as the latest in a tide of brewers toiling toward Traverse City launches.

Kirkwood opened his doors this week; Rizik and Brooks both plan to open in September, while Crane and Schuett are targeting a late fall launch.

Each of the brewers had their original planned open dates pushed back significantly, and each have a hair-raising cautionary tale at the root of their delay. Chief among the challenges cited is a byzantine maze of regulations brewers must navigate at every level of government – township, city, county, state and federal – before they can receive the requisite permits and licenses to operate.

Because the United States is set up as a three-tier alcohol distribution system, producers, distributors and retailers of alcohol are kept strictly separate from one another. An individual holding a license in one of these tiers is prohibited from holding a license in another. As both Kirkwood and Brooks learned the hard way, that law can be interpreted in such a way that if your brewery is leasing space in a building owned by someone who happens to own a retail or distribution license – even if in another city, and even if unrelated to your enterprise – your own application for a production license can be denied.

“The state gave me four options,” says Brooks, who had already invested hundreds of thousands of dollars in opening Bravo Zulu on US-31 in Acme when his production application was denied because his landlord held an alcohol retail license downstate.

“I could change the law, I could buy the building, the owner could put the building in someone else's name – or I could move.”
Brooks ultimately chose to move, setting up operations in the former Mercedes-Benz dealership near M-72 in Acme, where he is currently preparing for his upcoming opening.

Kirkwood at Workship ran into a similar issue because of the alcohol permits carried by neighboring restaurant Xylo. Though he wouldn't discuss specifics, he said he was able to “reach a solution with the state” to eventually open Workshop.

Equipment and funding also pose significant challenges for breweries. “There's a six-month or more back-up right now on tanks,” says Rizik, who's in the final stages of preparing for production at Beggars Brewery near Chums Corners. “Everybody wants to open a brewery...and the manufacturers are completely bogged down.”

Brooks warns potential brewers to “take what you think it'll cost to open a brewery and add 50 percent,” while Kirkwood agrees it takes a “surprisingly huge amount of money to make it in this business.” Crane describes “having the rug pulled out” from under him when the private funding deal for Rare Bird fell apart recently just as he and Schuett were ready to begin construction.

All of the brewing entrepreneurs agree that, despite the obstacles involved in opening a brewery, their enthusiasm for their companies and the beer business remains unabated. But they also unanimously detail a dire need for regulation reform in the industry, as well as the creation of a step-by-step guide to walk upstart brewers through the licensing process, and cautioned would-be entrepreneurs to think long and hard before embarking on such a venture.

“It starts with a great idea, but from there every step in the process is a complete disaster,” says Brooks, with a laugh. “I would give someone every warning under the sun not to do this...but then, I'd also understand if they went ahead and did it anyway.”