Craft Beer Boom Creates Pressure to Revamp Laws

By Jim McLaren
For the Oregon Beer Growler

Before you read this, go to the fridge, snatch a bottle of beer as it rattles against the others you’ve stocked up, pry off the cap and pour it into a glass. Now as you watch the smooth, white foam rise to the top think about all the people who have their fingers in your beer.

And I don’t mean brewers.

I mean politicians and bureaucrats. This is not always a bad thing. But we thought you’d like to know who is doing what to make beer making easier and cheaper.

FEDERAL LAWS
Back in June, Oregon U.S. Sen. Ron Wyden did a mash-up of two pieces of proposed tax-cutting legislation. The two came with cute acronyms for longer titles, but what you need to know is BREW came from craft brewers and BEER came from the giants, Anheuser-Busch InBev and MillerCoors. There were differences in the bills and without Wyden’s intervention they might have canceled each other out. As co-chair of the Senate Bipartisan Small Brewers Caucus, Wyden authored The Craft Beverage Modernization and Tax Reform Act of 2015. If it passes it would cut the excise tax from $7 to $3.50 per barrel on the first 60,000 barrels produced by a brewery making 2 million barrels a year or less. The rate would drop from $18 to $16 per barrel for every barrel between 60,001 and 2 million. Every brewer in Oregon would qualify for the tax cut.

Additionally, the Wyden bill helps Big Beer by cutting the top end excise tax rate. It may also open up a loop hole. Big breweries own smaller breweries — think 10 Barrel and Anheuser-Busch. Depending on how the larger company buys the smaller one, it may be able to take advantage of the little guy’s lower tax rate.

The Wyden bill would do some other important things as well, such as exempting common additives that are used in beer from the lengthy Alcohol and Tobacco Tax and Trade Bureau approval process and permitting collaborations between brewers in different states.

Summing it all up, Wyden said in a release, “This legislation takes targeted approaches to update antiquated rules and reduce taxes for growing businesses to ensure that these innovators continue to create high quality jobs for Oregonians.”

Bob Pease, CEO of the Brewers Association — which represents craft brewers -- is optimistic the bill will pass. He thinks the taxes lost will be recovered because “brewers will re-invest their tax savings to grow capacity, which will create more jobs.”

STATE LAWS
Sitting in a booth in Portland’s Raccoon Lodge, Art Larrance is having soup for lunch. Wearing a black T-shirt and shorts, he doesn’t look like the world-beater he’s become during his 30 years as a brewer. His fame these days rides on the sour beers his Cascade Brewing makes. But what he does outside the brewhouse is just as important.

The Oregon legislature has wrapped up business for the year and, we hope, gone out for a beer. Before they did, they passed and Gov. Kate Brown signed Senate Bill 583. It allows a brewer who does all the right paperwork and permit gathering to send beer directly to consumers. Oregon breweries could mail beer to you in or out of state. Additionally, out-of-state brewers could ship directly to Oregon consumers if those states allow such sales.

“What we want to do is get going on Internet sales,” Larrance says. The idea is to give startups a business plan allowing them to reach a broader market than is now possible. It can be hard for a startup brewer to find shelf space in a store or a tap in a pub. But Internet sales “look like a great avenue for small brewers to get their beer around the world,” Larrance predicts.  

While some other states, i.e. California, do not yet allow direct-to-consumer shipping, Larrance is working to change those antiquated laws. “I just want to make sure that when I get out of this business that it’s really left in good hands and we’ve done everything we can to allow entrepreneurs to succeed.”

FINAL SWALLOW
There is still a keg full of post-Prohibition laws crimping growth in the craft industry like a clogged beer line at your favorite pub. There are federal and state tax laws slowing growth, state laws telling us where and how we can buy beer, there are municipal regulations charging ever-increasing fees. Some of these may be necessary, many are not.

The new Oregon Small Brewers Coalition will be looking for ways to change restrictive laws.  They should be able to depend on elected officials like U.S. Rep. Peter DeFazio who said in a news release, “I’m happy to advocate for policies that allow small business owners to flourish, create jobs and continue making great beer. In the end, we all win.”