Craft Spirits Producers Toast the Launch of the Craft Spirits Caucus on Capitol Hill

As the craft spirits community navigates the most challenging economic environment in its history, nearly 40 independent distillers and industry allies ascended Capitol Hill this week to unveil the newly created Craft Spirits Caucus and garner bi-partisan support for legislative priorities that will broaden market access and provide regulatory relief at a time when these small-business producers need it most.

The bi-partisan Craft Spirits Caucus officially launched this week through U.S. Reps. Hillary Scholten (D-MI) and Jeff Hurd (R-CO), just in time for the American Craft Spirits Association’s (ACSA) Legislative Fly-In in Washington, D.C.

The Caucus will educate Members about the issues with the greatest impact on the craft spirits industry, including:
• Expanding fair market access for craft distillers here at home and abroad.
• Ensuring federal regulations are necessary and recognize the burdens they may place on small distillers.
• Improving shipping options for craft distillers in the U.S.
• Recognizing the value of craft spirits manufacturers in urban and rural areas throughout the U.S.
• Promoting tourism and hospitality.
• Championing bipartisan, commonsense legislation to advance and protect our craft distilling industry.

“We’re thrilled that the Craft Spirits Caucus has launched with Rep. Hurd and Rep. Scholten leading the charge,” said ACSA CEO Margie A.S. Lehrman. “With a new spotlight shining on our value-added agriculture innovations, we are confident that our craft distillers operating in all 50 states will be well represented as we seek to educate and pass legislation important for our small business manufacturers.”

In addition to encouraging members of Congress to join the Craft Spirits Caucus, the top agenda items at ACSA’s Legislative Fly-In on Wednesday included:
• Gaining Congressional Support for the Supporting Independent Producers of Spirits (SIPS) Act, which would provide regulatory relief for the craft spirits industry.
• Enhancing market access by allowing spirits to be shipped through the US Postal Service (USPS) through co-sponsorship of the United States Postal Service Shipping Equity Act (HR 3011; Senate Bill Pending)
• Ensuring TTB has adequate resources and ability to reduce reporting burdens for craft distillers
• Urging support for a tax credit for craft distillers that utilize American agriculture

Attendees also had the opportunity to meet with top leadership at the U.S. Alcohol Tobacco Tax and Trade Bureau (TTB).

TTB administrator Mary Ryan assured craft spirits producers, “We are on your team.” The agency acknowledged that it’s working with a significantly reduced headcount, but says it remains committed to modernizing its processes and ensuring consistency in its approval protocols and feedback it provides to producers. TTB officials also assured attendees that their rulemaking processes involve rigorous discussions on how rules impact the industry, and particularly its small producers.

During their Hill visits, craft spirits producers urged lawmakers to join as co-sponsors. Other guest speakers included Michelle Korsmo, president and CEO of the National Restaurant Association; John Bodnovich, executive director of American Beverage Licensees; and David Jankowski, director of the Agricultural Affairs Office of the U.S. Trade Representative.

ACSA also presented longtime industry ally Senator Ron Wyden (D-OR), who was the driving force behind the Craft Beverage Modernization & Tax Reform Act; and Rep. Dan Newhouse (R-WA), sponsor of the USPS Shipping Equity Act, with the Craft Spirits Champion Award.

About the SIPS Act

The SIPS Act seeks to ensure that craft spirits producers are regulated as small businesses and not in a one-size-fits-all manner. Such an approach often penalizes small businesses for minor clerical oversights and burdens small, independent producers with meeting the same regulatory requirements as billion-dollar, multinational conglomerates. Simplifying tax and compliance reporting for small distillers is one particular area where a change would make sense.

SIPS would authorize, but not require TTB to develop rules and regulations specific to small distillers producing under 100,000 proof gallons per year. The Act also would create a new small business advocate position within TTB to help coordinate the needs of small spirits producers.

Additionally, SIPS would establish an adequate cure period for craft distillers to change their ownership or control structure to reduce the risk of paying higher excise taxes. And, it would allow for larger container formats for low-ABV RTDs, creating more flexibility, for instance, to fill keg-like vessels for draft RTD dispensing.

USPS Shipping Equity Act

Current law prohibits the U.S. Postal Service from delivering beverage alcohol products, while private carriers like FedEx and UPS are allowed to do so. Distillers in rural areas are especially impacted by this, as the nearest UPS or FedEx shipping sites are often located great distances from them. They’re usually a lot closer to their local post offices and being able to use USPS to ship products would alleviate the logistical and financial burdens placed on alcohol producers to travel to their nearest private carrier locations.

Adequate Resources for TTB

Because TTB creates the necessary distillery permits and approves all formulas and labels, it’s critical that Congress votes to adequately fund the agency—especially at a time when there are budget shortfalls, looming threats of government shutdowns, and dramatic staffing cuts at TTB. ACSA members are calling for funding of roughly $157.8 million or more to enable TTB to perform its necessary services.

Tax Credit for Distillers Using American Agriculture

This would be the federal equivalent of a Michigan law that provides an incentive for craft distillers to us state-grown grains and other agricultural products. The U.S. version would offer a similar tax incentive for craft spirits producers (under 100,000 proof gallons) to use U.S.-based agriculture in their spirits.

On the evening prior to the Capitol Hill visits, the event officially kicked off with an ACSA PAC Reception at Cotton & Reed in Washington, D.C.’s Union Market district.

At the Fly-In’s conclusion, members of Congress and their staff joined ACSA and the Kentucky Distillers’ Association for a reception at the House of Representatives’ Rayburn office building. U.S. Reps. Andy Barr (R-KY) and Morgan McGarvey (D-KY) of the House Bourbon Caucus joined attendees in sampling an array of spirits from American craft spirits producers and toasting to the future of the industry.