Tester introduces bill to assist craft beverage industry

Democratic U.S. Sen. Jon Tester is sponsoring a new bill that would cut taxes and streamline regulations for smaller breweries and distilleries.

The Craft Beverage Modernization and Tax Reform Act would reduce taxes for craft breweries and distillers around the country, and a few Whitefish business owners say the change would benefit their operations.

The bill, introduced in Congress in January, cuts in half the excise taxes for small breweries on their first 60,000 barrels of annual production and lowers the tax by $2 for every barrel produced up to two million barrels.

The bill would also cut distillers’ excise tax from $13.40 to $2.70 per gallon for the first 100,000 gallons produced.

“Congress must cut taxes for Montana brewers and distillers so they can continue to grow and hire more folks in every corner of our state,” Tester said in a prepared release. “These small businesses use Montana grain to make world-class beer and booze, and by cutting regulations and reducing taxes these made-in-Montana businesses can continue to support our state’s economy.”

Marcus Duffey, general manager of Great Northern Brewing Company, said the change would have saved his brewery about $25,000 in taxes last year.

“For us, that’s significant dollars,” Duffey said. “That’s a lot of money we could otherwise be investing in infrastructure, equipment, additional employees or benefits for existing employees. It’s real dollars that we would see immediately.”

Lauren Oscilowski, owner of Spotted Bear Spirits, echoed that sentiment, saying money saved in tax cuts means the ability to try new things.

“Which I see as the opportunity to hire a sales representative or bring new products to market on the research and development side, hire a part-time person for the tasting room,” she said. “It enables our growth.”

The bill would also look to simplify the label approval process, which as of now involves submitting a label through an online portal, going into a nationwide queue to wait for approval and working with Alcohol and Tobacco Tax and Trade Bureau agents to finalize the label. The process can take between 10 and 30 days, Oscilowski explained, depending on the time of year.

The bill would dedicate $5 million to the TTB to better fund and expedite the label approving process.

“It can be a somewhat tedious process,” Oscilowski said. “Summer obviously is a busy season for tourism and vacations and barbecues and liquor sales, so people are trying to get new products to market. It feels like the spring every year is this crunch time.”

According to the Montana Brewers Association, there are over 50 small breweries across Montana, employing more than 1,000 employees to produce over four million gallons of beer annually. Montana breweries purchase more than three million pounds of malt grain from Montana farmers and contribute more than $100 million annually to the state’s economy each year.

“Montana’s craft brewing industry is an important economic driver for our state, responsible for more than 1,000 jobs and more than $100 million in economic output annually, but small brewers face greater economic challenges and lack the economies of scale that benefit our well-established multinational competitors,” Matt Leow, executive director of the Montana Brewers Association, said in a prepared release. “This legislation provides much needed relief for Montana’s small, locally owned breweries, helping our industry to continue growing, creating jobs and providing economic benefits across Montana. The Montana Brewers Association thanks Sen. Tester for his leadership and for his steadfast support for Montana’s craft brewers.”

Duffey said he spoke with Tester and Republican Sen. Steve Daines a few weeks ago at their Washington offices and got two different views on the bill.

While Tester is optimistic about lowering costs for breweries and distilleries, Daines said the legislation would hopefully be worked into a comprehensive tax reform plan in the future, which is currently taking a backseat to healthcare reform in Washington, according to Duffey.

However, Duffey said he’s happy to see the conversation started.

“I’m hoping to see this thing move, because it’s been a conversation piece among the Montana Brewers Association for several years now,” he said. “The question in my mind has always been, ‘OK, when is this going to get some legs?’ Perhaps some things are breaking up in Washington a little bit that may have this thing see the light of day.”