Problems with State grant for beer promotion led to headaches, layoffs for awardees
At first, things were going smoothly.
Filmmaker Nate Kresge said he was receiving grants through a little-known state program to promote Pennsylvania’s beer industry. The money went toward a documentary and, later, a series called Poured in PA that showcased everyone from local brewmasters to the local artists who created the labels on beer cans.
But Kresge soon ran into an unexpected obstacle: the Pennsylvania Liquor Control Board.
The board, which administers the beer grant program, balked at paying out the money, he said.
Kresge’s small media company had fronted the project’s expenses and relied on timely reimbursements. He eventually had to hire two law firms to get the money he was owed.
“When we started, it was a fun project to highlight an incredible industry in the state,” said Kresge. “But it became incredibly stressful. It is very intimidating to be up against a government agency when you are a team of five people.”
Kresge wasn’t the only one.
An analysis by Spotlight PA of the beer grant program showed that since its 2016 inception, nearly a fifth of the total dollars awarded were never paid out by the liquor control board. In many cases, the agency reimbursed people tens of thousands of dollars less than the grant total they were originally awarded.
Multiple grant awardees told Spotlight PA their biggest problem was the liquor control board’s strict, inflexible benchmarks for allocating money under the program. They also said that because awardees must front project money and then seek reimbursement, the program was difficult for smaller businesses to use, particularly if they have no guarantee of full repayment.
Complaints about the program became so frequent that this summer, with little fanfare, Gov. Josh Shapiro signed a bill cutting the liquor control board out of the process of administering the program. The Department of Agriculture will now almost exclusively run it.
The governor’s office did not respond to questions about why it signed off on the change. Earlier this year, state Rep. Dan Deasy (D., Allegheny) also introduced a bill to cut out the liquor control board from the decision-making process. Deasy did not return multiple calls.
The liquor control board also did not comment on the reason the program’s administration was changed, but a spokesperson acknowledged it has rejected reimbursements.
Elizabeth Brassell, the liquor control board’s communications and policy director, said that is because the grants are awarded through a competitive bidding process, meaning the people who receive them effectively sign contracts with specific parameters for how and when they will receive the grant money.
“Our ultimate goal is to treat all grantees fairly, and have a consistent approach,” said Brassell, adding that the liquor board ultimately supported shifting the grant program to state agriculture officials.
The grant program to promote Pennsylvania’s beer industry was created in 2016 as part of a larger, much-heralded liquor modernization bill signed by former Democratic Gov. Tom Wolf.
Under the program, the Department of Agriculture reviewed the applications for beer grants and made recommendations to the liquor control board. The board would then approve or reject them and was responsible for paying out the money.
In all, Act 39 authorized the liquor control board to approve up to $1 million in grants annually, but the agency could also allocate any money left over from the previous year.
According to records obtained through a public records request, the liquor board approved 74 grants between 2017 and 2023 totaling just over $5 million for various projects. Only $4.1 million of that was paid out, the records show.
The projects ranged from traditional marketing campaigns to scientific and research initiatives aimed at exploring new techniques to produce the compounds that contribute certain flavors (like grapefruit or passionfruit) to beer. Among the organizations that were awarded the 74 grants were tourism nonprofits, hop farms, and research universities.
Penn State’s College of Agricultural Sciences, for instance, was approved for 11 separate grants over a four-year period starting in 2019.
One of them, in 2019, was for $98,702 to improve the “agricultural value chain for the craft fermented beverage industry.” Of that amount, the liquor control board paid out $65,833, the records show.
Also in 2019, the college was awarded a $33,532 grant to provide education and outreach in Pennsylvania for growing malting barley, a crop used in beer production. The board paid just $11,610 of that.
Yet another grant in 2019 was for the college’s project to educate hops growers on promoting Pennsylvania’s microbrew industry. Of the $35,175 award, the college received $18,625.
A spokesperson for the College of Agricultural Sciences declined to be interviewed, referring questions to state officials.
Adam Kubala, treasurer for the Pittsburgh chapter of the Master Brewers Association of the Americas (MBAA), said it became apparent over time that the liquor control board and the Department of Agriculture were at odds over their vision for the program.
Neither Brassell nor a spokesperson for the agriculture department would comment on whether there were disagreements.
Kubala, whose association was awarded grants for two separate projects, said it was hard for smaller organizations like his to front expenses and then hope to get reimbursed. The second time the MBAA was offered a grant, he said, it ended up forgoing the entire $71,138 award — the organization simply did not have the dollars to spend upfront.
And as the beer grant program grew, Kubala said, it felt like the liquor control board kept refining its rules and timeline for reimbursement.
“It seemed like there was more nickel and diming,” he said. “Most of us don’t have time to chase down individuals, and chase down government officials.”
“This program is broken”
Mark Brault owns Deer Creek Malthouse in the Philadelphia suburbs. He launched the business in 2012 because he saw a need to produce malt ingredients using locally owned grain.
He applied for and has been awarded a total of three grants through the state’s beer grant program. In his first two, he said he “experienced some challenges,” but was reimbursed for the full grant amount.
But last year, he was awarded a $149,950 grant to promote Pennsylvania beer, the farmers who grow the grain, and maltsters involved in its production.
Since then, he said, it has been a nightmare.
The grant was slated to be paid out to Deer Creek between January and the start of this year. But in the time since it was awarded, the liquor control board has paid Brault only about $40,000, according to the agency’s records. Brault said the board has dug in its heels and refused to pay any more.
He said the board rejected multiple expenses he submitted for the project, saying they did not meet the program’s guidelines. When he tried to correct problems, he said he felt like the agency kept changing the rules.
“This program is broken,” Brault said, referring to the liquor board’s role in the process.
Brault has hired lawyers to try to recoup more money but has not been successful. He has also called anyone willing to listen to try and recoup the remaining money, from lawmakers to the agriculture department to the governor’s office.
“This has put tremendous strain on our business,” he said. “I’ve had to lay some people off.”
Brassell, the board’s spokesperson, said it does not comment on specific grants.
Speaking broadly, she said expenses were usually denied for one of five reasons, including when people asked for advance payment (the liquor control board can only provide reimbursement for actual expenses); when expenses were incurred outside the contractual time frame of the grant agreement; and when expenses in certain spending categories, such as personnel or travel, exceeded what had originally budgeted.
It is little solace to people like Brault and Kresge.
Though Kresge, unlike Brault, eventually received the full amount of both grants he was awarded, he turned down a third one that was approved for his company.
No sooner had he declined the grant in 2022 that he heard the liquor control board had secretly launched an internal audit on how his company had used past grant dollars. Again, he had to hire accountants.
Nothing came of it — at least, Kresge said he hasn’t heard from the agency in almost a year. But he can’t shake the feeling that it was personal.
It felt, he said, “like a witch hunt.”
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