To elevate and advocate for the community of craft spirits producers.
From the Desk of Margie A.S. Lehrman,
Chief Executive Officer
There is a certain power when many people join together to make their voices heard. That power was on display this month as hundreds of distillers, and suppliers supportive of our industry, passionately fought for the future of craft distilling.
Last week I joined 200 of America’s craft spirits producers and industry allies for the American Craft Spirits Association and Distilled Spirits Council Public Policy Conference in Washington, D.C., where we urged lawmakers to permanently extend Federal Excise Tax (FET) relief to craft distillers. Together, we walked the halls of Congress, urging representatives and senators to sign on as co-sponsors of bills that would continue tax relief on the first 100,000 proof gallons. As the current tax relief is set to expire in December, our presence was crucial to the fight. If you were unable to attend, there is still time to make YOUR voice heard. Please call your elected officials and ask them to co-sponsor these bills (S.362 and H.R.1175). You can read more about the conference below, and you can watch a video of distillers discussing the impact of FET relief here.
This month we also celebrated the work of American whiskey makers by announcing the medalists in the 2019 Heartland Whiskey Competition. Congratulations to all those who medaled, including those who won Best of State awards, and thanks to the state corn marketing associations who sponsored the event.
Also in this newsletter, a recent change in state legislation is opening the door for distilleries to offer cocktails in Maryland. Plus, we have a conversation with one of our new board members from Catoctin Creek Distilling located in Virginia.
Thank you for joining us in the fight to elevate our community of craft spirits producers.
Craft Distillers Climb Capitol Hill
Permanence. That was the buzzword that echoed through the halls of Congress recently as 200 of America’s craft spirits producers and industry allies collectively traversed hundreds of miles through the network of House of Representatives office buildings, urging lawmakers to support and sign on as co-sponsors of the House version of the bill that would permanently extend Federal Excise Tax (FET) relief.
It was the second full day of Congressional meetings during the American Craft Spirits Association (ACSA) and Distilled Spirits Council of the United States (DISCUS) Public Policy Conference, the major focus of which was rallying support on Capitol Hill for H.R.1175. The bill is the 2019 update of the 2017 Craft Beverage Modernization and Tax Reform Act (CBMTRA), which reduced the FET on distillers to $2.70 from $13.50 per gallon on the first 100,000 proof gallons and enables small spirits producers to enjoy tax parity with breweries and wineries. The original law is set to expire on December 31, 2019.
“This is the very first time since Prohibition that distilled spirits have enjoyed any kind of tax relief,” ACSA CEO Margie A.S. Lehrman told Congressional staffers. “Without it these businesses could disappear.”
The House-focused Hill climb followed a day of meetings with members of the U.S. Senate, focusing on passage of the Senate’s version of CBMTRA, S.362.
ACSA President Chris Montana, owner of Du Nord Craft Spirits in Minneapolis, said both days of Congressional meetings were highly productive. “The reception’s been great and [lawmakers] are supportive of our bills and what we’re trying to do,” Montana said. “I think people really get it. The challenge is that even though we have this bipartisan bill, it still has this process, it still has to make it through the ‘sausage making.’”
The Senate version of the new FET reduction bill, S.362, sponsored once again by Sen. Ron Wyden (D-OR) and Sen. Roy Blunt (R-MO), currently has 67 co-sponsors. The House bill, HR 1175, sponsored by Rep. Ron Kind (D-WI) and Rep. Mike Kelly (R-PA), has 266 co-sponsors. The 2017 version had more than 300 co-sponsors—a number that ACSA and DISCUS hope to exceed.
“I’m optimistic,” Montana said. “I think we can get up to the same kind of support we had last Congress, even better.”
On the first day of meetings, craft distiller attendees were heartened to hear from a number of the federal legislators who are helping them.
“I want you to be able to enjoy the intent of what my original law was—that being permanent,” Sen. Wyden told the group.
The temporary nature of the law that did pass in 2017 created a lot of uncertainty, Wyden said.
“[Legislators] slapped an expiration date on it,” he said, “and that has meant all of you don’t have the certainty and predictability you need and the whole point of the law I wrote was to take you off all of those rollercoasters.”
Wyden said the key to the law’s future is building a coalition among stakeholders who can find common ground “and keep pushing.”
“Political change is rarely top-down, it’s bottom-up, so there are, like, 34 people who need small businesses from their state to come to meet with them,” Wyden advised. “And you don’t call them names, [you say] ‘we came to show you what the economic ripples are going to be if you sign on to be a part of it.’”
Senator Rob Portman [R-OH] was instrumental in getting the 2017 version included with that year’s Tax Cut and Jobs Act at the eleventh hour and he reaffirmed his support at the Conference.
“Just keep expressing the urgency of it, the impact if it doesn’t get extended,” Portman told attendees. “Encourage members [of Congress] not to kick the can down the road. Let’s get it done now.”
The advocacy effort, Portman added, does not end when small distillers leave Washington. Every producer, he said, should be in touch with their senators and representatives and should invite the legislators to their distilleries.
“The truth of the matter is, if we’re going to be able to see the craft spirits business grow and continue to employ people and do everything you guys do to make the world a better place—and I mean that—we need to fight to get this bill passed,” said Sen. Jon Tester (D-MT). “Going out and talking to your reps is very important and making sure you get a commitment from them on this issue is really important.
CBMTRA has been about more than a tax cut, as it also represents the first time craft spirits have achieved some level of parity with wine and beer on the federal tax level. If the FET reduction is allowed to expire, that parity goes away and small distillers go back to paying exactly what large producers pay. Craft breweries and small wineries would return to their previously tiered tax structure, where those producers already were paying a lower rate than their much larger beer and wine-making counterparts. That’s a key point that craft spirits producers addressed with federal lawmakers today.
“It’s helpful to remind people that the spirits industry had no reduced rate for small producers until 2017, whereas beer got something in the ‘70s and wine got a tax credit in the ‘90s,” said ACSA Public Policy Adviser Jim Hyland of the Pennsylvania Avenue Group. “We use the term parity, and that’s seemed to have resonated with a lot of folks…What we say is we just want parity with beer and wine, a permanent, lower rate for craft spirits producers.”
Last month a bill emerged from the House Ways and Means Committee that proposed a one-year-extension on the FET cut.
On the second day of meetings, craft spirits producers shared their stories with Representatives and Congressional staff, detailing how passage of the 2017 CBMTRA—which went into effect on January 1, 2018—has been essential in helping them grow their businesses. Distillers explained how they were able to re-invest in their companies by upgrading equipment and hiring necessary staff.
Maureen Reed, corporate marketing manager at KO Distilling in Manassas, Virginia, was one of those hires. She was among her commonwealth’s delegation on Capitol Hill.
“Representing Virginia distillers in D.C. this week has been an honor and we are so grateful for the support that our Representatives have shown for the Craft Beverage Modernization and Tax Reform Act,” Reed said. “FET reform gives distillers more parity with the rest of the alcohol industry and has allowed KO Distilling to invest in a new still and a new rickhouse, continue to support Virginia agriculture and tourism and even hire four new employees—myself included.”
The benefits of FET relief extend well beyond the distillers themselves. It translates to growth potential for the broader spirits ecosystem, including ingredient growers and suppliers (grain, fruit, etc.), equipment manufacturers, business solutions providers and other trading partners.
“We are a small company and two years ago we had six employees, now we have nine,” said Randall Buxbaum, national sales manager of distillery software supplier Whiskey Systems. “We actually have seen an uptick in 2018 and 2019—we’re up healthy double digits.”
Before the FET reduction, Buxbaum noted, tech solutions like Whiskey Systems would have been a difficult investment for many spirits producers to justify. The tax cut, he said, has enabled distillers to bring more efficiency to their operations with such systems.
In today’s political climate, bipartisan support is rare, which makes the journey of CBMTRA all the more remarkable. Public Policy Conference attendees started the second day of the gathering with a stark reminder of just how polarized Washington has become, courtesy of guest speaker Carl Hulse, chief Washington correspondent for The New York Times and author of “Confirmation Bias: Inside Washington’s War Over the Supreme Court, from Scalia’s Death to Justice Kavanaugh.”
But there’s scarcely been a more hopeful sign of across-the-aisle cooperation than at the reception that officially closed the Public Policy Conference. Congressional staffers from both sides put aside their partisan differences for the evening to sample some of the finest products the country’s small distillers have to offer. American craft spirits just may be the common ground everyone’s been seeking.
The American Craft Spirits Association (ACSA) recently announced the winners of the 2019 Heartland Whiskey Competition, which was open to craft whiskeys from all 50 states that incorporate corn in their mash bill (the mix of grains used to make whiskey). In this second, biannual blind judging event, whiskeys from 13 “Heartland” states also competed for Best of Show and Best of State, and all entries competed in their select whiskey sub-categories.
The competition, which was generously sponsored by state corn marketing associations, took place June 4 at CH Distillery in Chicago, Illinois. ACSA facilitated the judging process with Board of Directors President Chris Montana, owner of Du Nord Craft Spirits, in Minneapolis, Minnesota, who served as the Judging Director. Judges were selected by ACSA for their knowledge and experience specific to craft spirits.
Middle West Spirits from Columbus, Ohio captured Best of Show for its OYO Sherry-Finished Bourbon, which also earned the top score in the Bourbon category. The Ohio Corn Marketing Program will present Middle West Spirits with its award later this month.
“We are deeply appreciative of the state corn marketing associations for their investment and continued commitment to help craft spirits producers promote and grow their products,” stated Margie A.S. Lehrman, CEO of ACSA.
Straight: 100% Straight Bourbon Whiskey, Grand Traverse Distillery
(Note: For purposes of this competition, all whiskey sub-categories required entries to include some amount of corn as an ingredient.)
The 2019 competition saw significant growth in the number of participating states and entries with tougher competition for medals. Only five whiskeys were awarded a gold medal, while 40 received silver, and 22 bronze. “Several of the craft distilleries are also working farms that use the grain they grow to make their spirits so they are deeply committed to their product,” stated Don Duvall, Chairman of the Illinois Corn Marketing Board. “On behalf of all the participating corn associations I want to express our great respect and admiration as well as our continued support. While this is a challenging year for farming, we are pleased to see an important customer group grow and prosper.”
The Best of State trophies were awarded to those whiskeys with the highest score in its respective state from all categories. Best of State awards were limited to 13 Heartland states, including: Colorado, Illinois, Indiana, Kentucky, Ohio, Wisconsin, Michigan, Iowa, Kansas, Wisconsin, Missouri, North Dakota and Texas.
2019 Heartland Whiskey Competition Best of State
Colorado: A.D Law’s Four Grain Straight Bourbon , Law’s Whiskey House
The scoring of whiskeys, with judges hand-selected from the Chicago spirits community, was based on a 100-point system with 10 main categories of consideration: Appearance (10 points), Aroma Intensity (10 points), Aroma Complexity (10 points), Palate Concentration (10 points), Palate Complexity (10 points), Body (10 points), Alcohol (10 points), Texture (10 points), Finish (10 points), and Pour for a Peer (10 points). Whiskeys were then assigned a medal based on the average score determined by the following benchmarks: 70-79 = Bronze; 80-89 = Silver; 90-100 = Gold. Best of State was awarded to the whiskey with the top score among all judged whiskeys from that state. The top scoring whiskeys were judged a final time in consideration of Best in Show distinction.
Help TTB Improve its Formula Guidance
The Alcohol and Tobacco Tax and Trade Bureau (TTB) is currently conducting an online activity that will help improve its existing formula guidance page.
TTB invites you to participate in this simple activity that will help determine the best way to organize the information it provides on alcohol beverage formulas so you can find it more easily online.
What would I do? In this activity, you will see a picture of TTB’s draft beverage formula guidance page, and you will be asked where you would expect to find certain information on that page. There are no right or wrong answers! TTB just wants to know where people expect to find certain information so it can organize accordingly.
Who should participate? Anyone who files (or soon plans to file) beverage formula applications. TTB is interested in getting feedback from all kinds of formula filers—wineries, distilleries, breweries, importers; micro businesses to international conglomerates.
Tales of the Cocktail in New Orleans remains one of the world’s most spirited gatherings. In the photo above, Elayne Duff, CEO of consultancy Duff on the Rocks, moderates a panel on apple brandy, featuring Jillian Vose (NYC cocktail bar Dead Rabbit), Hervé Pellerin (France’s Calvados Christian Drouin), ACSA Board Member Dan Farber (Osocalis Distillery, California) and Lisa Laird Dunn (Laird & Co., New Jersey)
Coming in August: Craft Spirits Magazine
Do you have exciting stories to share about your distillery? We’re on the lookout for news for future issues of Craft Spirits Magazine.
Answer the 2019 Craft Spirits Data Project Survey Today
There is still time to respond to the Craft Spirits Data Project survey. We urge you to participate to help us provide a comprehensive report on the economics of the industry. The Craft Spirits Data Project, which ACSA conducts in conjunction with Park Street and the IWSR , provides the industry’s most detailed picture of the size, scope, growth trajectory and economic contributions of the craft distilling industry. This information will be critical as we continue our fight to keep the reduction in the Federal Excise Tax. We encourage you to follow this link and spend a few minutes answering the survey.
Complimentary Webinar: Sobering Truth: A Drunk Driving Fatality Case Study
Our industry is often synonymous with fun and celebration (in moderation). But events in your distillery can lead to the most serious of consequences. This complimentary webinar is a case study of one distillery’s experience after a fatal drunk driving accident resulted in a wrongful death claim. Learn what the process looked like, the outcome, what the distillery had in place to protect themselves, and the changes the distillery made to be better prepared.
When: Wednesday, Aug. 7, 2019, 3 p.m.-4 p.m. EDT
Where: Online Webinar
Who: Brian DeFoe (Lane Powell) and Courtney McKee (Headframe Spirits & Headframe Spirits Manufacturing)
ACSA’s 2019 Safety Series: Sponsored by Industrial Safety and Training Services
Have you looked for OSHA courses, only to wish they were specific to distilling?
We get it: OSHA training is tough enough without having to wonder if you’re receiving the most pertinent information to meet your needs. That is why ACSA has partnered with ISTS to bring you an OSHA 10 Certification Course specific to distilleries.
What else is in it for you? Well, after this course, you will:
Recognize and Prevent Health and Safety Hazards in Your DSP
Evaluate Your Facility Through the Eyes of an OSHA Inspector
Have Hands-on Auditing Practice in an Actual Distillery
Receive an OSHA 10 Card From Eastern Kentucky University
Take Home the Knowledge to Ensure a Safe Workplace and Prevent Hefty Fines for OSHA Violations