January 23, 2019

Warner & Kaine Press Trump Administration on Shutdown Effect for Craft Brewers

~ Virginia is home to more than 200 licensed breweries & industry contributes more than $9.3 billion to Virginia’s economy ~  

~ As a result of shutdown, Treasury Dept. isn’t approving labeling changes, new recipes, or permits for brewers and distillers ~

WASHINGTON – U.S. Sens. Mark R. Warner and Tim Kaine (both D-VA) today wrote to Treasury Secretary Steven Mnuchin to inquire about the impact of the government shutdown on craft breweries in Virginia. The shutdown has halted operations at the federal agency that regulates alcohol production and distribution, the Alcohol and Tobacco Tax and Trade Bureau (TTB), part of the U.S. Department of the Treasury. As a result, craft brewers across Virginia have been unable to secure approvals for labeling changes, new recipes, or operating permits.

“According to various reports, thousands of applications for alcohol labels have been put on hold. The craft beer industry depends on innovation to drive growth, and the shutdown has and will prevent craft breweries from introducing new beers to the market. It is hard enough for these craft brewers to operate a business, and the shuttering of TTB is yet another example of how the Administration’s shutdown is making it harder for American business owners,” the Senators wrote.

The Senators requested that the Department provide answers about how many craft brewery requests for TTB action are currently pending as a result of the shutdown, and what plans are for reducing and resolving the backlog.

The beer industry employs more than 28,000 people in Virginia, and contributes more $9.3 billion annually to Virginia’s economy. Virginia is home to 206 licensed breweries, a growth rate of more than 450 percent since 2012, making craft beer an important economic driver for the Commonwealth.

“Breweries in Virginia operate in a supply chain, and the shutdown’s impacts on breweries will resonate up and down the supply chain, negatively impacting the farmers, suppliers, and customers. The shutdown will limit business owners’ investment, hiring, and growth. Virginia is not alone in benefiting from this industry; craft brewing contributes $76.2 billion and more than 500,000 jobs to the U.S. economy,” the Senators told Mnuchin.

In the letter, Warner and Kaine raised the example of Port City Brewing Company in Alexandria, whose founder Bill Butcher wrote to the Senators earlier this month to say, “We work hard to get ahead of our business and this shutdown wrecks our plans.  If we can’t get our new labels approved in a timely manner, it affects our entire operation, and damages our revenue stream, which relies on new beers in the market... We have spent the closing months of 2018 planning our business out for 2019. This shutdown has made all of this planning work futile.”

Later today at 3:30 PM, Sen. Warner will visit Port City Brewing to hear directly from Butcher about the economic impact of President Trump’s shutdown, and meet with federal workers.

Likewise, Sen. Kaine this morning visited Old Ox Brewery in Ashburn, Va. for a roundtable discussion with small businesses about the impact of the shutdown.

A copy of today’s letter is available here, and the text appears below.

The Honorable Steven Mnuchin

Secretary

U.S. Department of the Treasury

1500 Pennsylvania Ave. NW 20220

Dear Secretary Mnuchin:

We write to raise concerns with the impact the government shutdown is having on Virginia’s craft brewers. As a result of the funding lapse, The Alcohol & Tobacco Tax & Trade Bureau (TTB) has ceased its review and approval of labeling changes, new recipes, or permits for brewers and distillers. According to various reports, thousands of applications for alcohol labels have been put on hold. The craft beer industry depends on innovation to drive growth, and the shutdown has and will prevent craft breweries from introducing new beers to the market. It is hard enough for these craft brewers to operate a business, and the shuttering of TTB is yet another example of how the Administration’s shutdown is making it harder for American business owners.

Virginia has seen a surge of economic activity resulting from the growth of craft brewing. According to the Brewers Association, Virginia ranks 13th in the country for the most craft breweries, with well over 100 new breweries opening in the Commonwealth since 2011. Virginia is home to 206 licensed breweries, with the craft beer industry contributing more than $9 billion annually to the Commonwealth’s economy and employing over 28,000 people in production, distribution, and retail. This includes the new Southwest Virginia Mountain Brew Trail, which boasts more than 18 unique breweries and was a product of years of planning by small businesses and local stakeholders.

We have heard from many breweries, large and small, about the negative impacts the lapse in funding has had on their business. For example, Port City Brewing Company in Alexandria wrote to us about how they spent the closing months of last year mapping out their business plan for 2019, only to have the government shutdown “wreck” months of planning. They are unable to introduce new beers and are awaiting a Small Business Administration loan for new bottling equipment. Port City Brewing Company is one of many breweries that have had their operations damaged by the government shutdown.

Breweries in Virginia operate in a supply chain, and the shutdown’s impacts on breweries will resonate up and down the supply chain, negatively impacting the farmers, suppliers, and customers. The shutdown will limit business owners’ investment, hiring, and growth. Virginia is not alone in benefiting from this industry; craft brewing contributes $76.2 billion and more than 500,000 jobs to the U.S. economy.

Please let us know how many craft brewery requests for TTB action are pending and your plans to resolve the backlog.  We call on the Administration to end the shutdown and put TTB employees back to work.

Thank you for your attention to this matter.

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