Building Breweries 30 – Michael Visits Asheville and Talks Tax Reform with Senator Ron Wyden

30 episodes in and feeling fine!

For the milestone 30th episode of the podcast, Michael decided to spend some time in Asheville, North Carolina. It was his first visit to the area, and he was completed stunned by the amount of craft breweries present in Buncombe County. Listen in as he chats with Wicked Weed and Asheville Brewing Company to learn more about the Asheville brewing scene.

After those interviews, he was fortunate enough to catch up with US Senator Ron Wyden (Oregon) to briefly discuss the Craft Beverage Modernization and Tax Reform Act and how it affects breweries nation wide. Can’t listen to the interview quite yet? Read the interview below.

Moeller: I’m now joined by Senator Ron Wyden from Oregon. I wanted to talk to you a little bit today about the Craft Beverage Modernization and Tax Reform Act, a piece of legislation that you introduced back in 2015. Can you just sum it up for us a little bit?

Sen. Ron Wyden: What I can tell you is that at a time when there have been such extraordinary growth in terms of beer and wine and cider and spirits, laws just haven’t kept up with the times, and what a big bipartisan group of us really sought to do is kind of update the law and come up with realistic excised tax proposals for brewers so they can invest more in their businesses and reduce their burdens. And my sense is that there is a growing recognition of just how many jobs are produced. In our state, we have grapes, we have hops, we have manufacturers who make the equipment. This has been a big shot in the arm for us economically.

M: Yeah. I think during my research here I read that more than 40% of what American beer drinkers pay for in a beer goes towards all sorts of different taxes, whether it’s federal, state, local, regular kind of business taxes, consumption and sales taxes, and I think the Beer Institute quipped that that makes taxes the most expensive beer ingredient that there is.

RW: That’s right, and I think that if you look back on it, some of this stuff almost seems to come from prohibition days. We’re not senators supposed to represent speakeasies, we’re supposed to represent our communities, and that’s what you can do with this bill.

M: So, you introduced this bill back in 2015, and you had some co-sponsors on it originally. It’s picking up a lot more now. Who did you first introduce the bill with?

RW: I introduced the bill myself and Senator Blunt joined on from Missouri. We have good bipartisan group in the House. Now it’s just a 52 senate co-sponsor. 287 in the House of Representatives.

M: There’s a lot of collaboration here, and there’s been a few different versions that I read that was going on. For example, I spoke with the Kentucky Distillers Association, and for a while there, they supported all aspects of it except for home distillation, for example, and that was eventually solved. Have you seen any kind of other kind of pushback similar to that?

RW: We really haven’t. I mean, the rules in this area are just ancient, and when you’ve got such a mess of a tax code, alcohol excised tax and regulations struck all sides, to a particularly bizarre case, and the policy, it just hasn’t kept up with the extraordinary growths of our craft beverage industry. A decade ago, there were 1400 breweries in the United States, now there’s 3400, and it’s time to update the tax code to reflect this new reality and make sure that outdated rules don’t stand in the way of Oregon and American jobs.

M: Now, you’ve personally been a part of many different legislative efforts to improve the beverage industry. For example, I think you were involved with the Small Brew Act, now you’re involved with the Craft Beverage Modernization and Tax Reform Act. What inspired you to get involved with these kinds of issues?

RW: What really did it for me was the dramatic changes in the Oregon economy. I was elected June of 1996, and essentially three decades…and this is one of the ones that really came to mind, because of the economic potential.

M: Yeah, absolutely. Now, to actually get into the specifics of the bill itself, or at least some of the specifics, how exactly will they help out the common brewer, maybe the brewpub down the street?

RW: Well, essentially what it does is you’re cutting small brewer rates. We’re creating more revenue for that small brewer who can pile that money back in growing their business. And to the brewer, we’ve simplified beer formula, label approval…it’s this very lengthy approval process – increase collaboration between brewers by removing restrictions on tax re-transfers of beer, repealing unnecessary inventory instructions. But the bottom line is to cut the rates so that the small brewer can put that money back into growing a business and creating more jobs.

M: And they’re pretty significant rates that you’re cutting. I think for the first 60,000 barrels for domestic breweries, it used to be $7 a barrel for tax, but now it’s going down by 50% down to $3.50 per barrel, and that is significant money that they can reinvest.

RW: That’s right. You produce less than two million barrels, your rate goes from $7 to $3.50, provide a $16-rate on the first six million barrels, production above that amount subject to more. But the bottom line is that this ought to trigger a lot of investment and a lot of growth, and that’s what we’re trying to do.

M:That’s exactly right. So, you’re involved with all these different efforts for the beverage industry. Do you have a vision of what you’d like to see the beverage industry be like in about thirty years or so from now?

RW: I do. I mean, I think when you look in particularly our part of the country, the west, you’re going to see a tremendous amount of growth in terms of work creation, people getting outdoors. We introduced another piece of legislation called the RNR bill – the Recreation, Not Red Tape bill. In reality, the day doesn’t end at six o’clock. People go inside, they’ll relax, they’ll enjoy a good dinner, enjoy beer and wine and cider, but I really see, looking down the road, is this being part of an incredibly vital, growing economic sector that will link such matters as recreation and small business and hospitality and the outdoors.

M: You know, I imagine you’re fairly busy and your work days don’t exactly end at six o’clock but when you do get a chance to kind of sit down, relax a little bit for some R&R, what do you like to enjoy? Do you have a favorite beer style or maybe favorite breweries?

RW: We’ve got an old saying that you don’t want to pick out a favorite, because you’ll only kind of tick off some of your friends, but what we’ve always said is, look, the federal agencies in the past haven’t always got it correct. They’ve not kept up with times. I think sometimes federal agencies have had one too many, and so what I want to do is make sure for our hikers, our skiers, all the folks are coming to enjoy a brewpub after the great day outdoors, after day enjoying everything Oregon and our country has to offer.

M:  More than fair. Do you ever personally see the age restriction going down from twenty-one to eighteen to legally consume?

RW: I want think with respect to age criteria. That, of course, involves consultation with public health agencies and others, and right now we’re trying to get this tax bill passed and then we’ll go from there.

M: Senator, thank you so much for taking the time to speak with me a little bit more about this and to shed some light on some details. You know, it got me to reading more about the subject and thinking more about the breweries that are local to me that I can support and try to make them reinvest in their own brewery, which is then reinvested back into the community itself. It’s been very enlightening to me.

A note to listeners:

If you know of a brewery with an interesting origin story or background, or if you are a brewery and think you have a story to share, Michael love to learn more about it! Please reach out to him on Twitter or Facebook.

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