Tripe-1-Three, of which Otherside Brewing is a part,
would be affected by the current situation

Breweries in Western Australia (WA) and South Australia (SA) may struggle to apply for crowdfunding initiatives due to licensing rules in both states.

According to Birchal, a crowdfunding platform, the liquor licensing regimes of South Australia and Western Australia are currently incompatible with the CSF regime, which could restrict the benefits the Australian craft beer industry might enjoy.

“Whether the CSF regime should be extended to proprietary companies was the subject of considerable debate over the several years of consultation on Australia’s CSF regime,” a statement from Birchal explains. “Ultimately, the Government decided that proprietary companies should be permitted to use the CSF regime, subject to additional transparency and governance measures for proprietary companies with CSF shareholders.

“This fundamental change to the regulatory framework for capital raising in Australia has an apparent unintended consequence of disturbing other regulatory regimes. The principle that proprietary companies are small and closely held is a relevant assumption on which several regulatory regimes in Australia rely. The most pertinent example being the liquor licensing regimes of the Australian States and Territories.”

Since legislation was passed to make crowdfunding possible, several breweries have gone down this route, including Black Hops, Endeavourand Dainton.

Without reform, Birchal believes that craft brewers and other businesses licensed under the liquor licensing regimes of South Australia and Western Australia will be unable to use the CSF regime as proprietary companies.

“Because Western Australian and South Australian liquor laws deem all shareholders in a licensee that is a proprietary company to occupy a ‘position of authority’, a range of obligations under the Western Australian and South Australian legislation are presently unworkable for licensees operating under a proprietary structure, that become widely held after a CSF offer.

“Another significant issue identified with the South Australian and Western Australian liquor licensing regimes relates to the potential liability that shareholders of a CSF company (as deemed associates of a licensee) may be subject to as a result of investing in a CSF company.”

While Beer & Brewer has not been contacted by SA or WA brewers actively seeking capital through crowdfunding, the potential barrier is still something of a concern.

“Equity crowdfunding is an appealing way to raise money and we have certainly considered it as an option,” Al Taylor, CEO, Triple-1-Three, the brewing and hospitality group behind Otherside Brewing, told Beer & Brewer. “But at this stage it isn’t the right option for us.  At present, we are fortunate to have a group of very engaged, highly supportive investors that are very much on the journey with us.

“What’s perhaps more of an issue for us, is that our business is broader than brewing. In addition to Otherside, we have other brands and business that we want to develop and can see that equity crowdfunding could be worth pursuing to support those.  

“However, licensing impediments that would apply to one aspect of our business make it a non-viable option for the business more generally. It just adds another layer of challenge for us to compete nationally which is not ideal.”

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