Lagunitas reprises opposition re: Small BREW Act, Lindenbusch says Sam Adams behind it

Posted on April 11, 2013 at 1:07 pm by Adam Nason   

lagunitas brewing logoThis is part one of a two-parter. Part two is now live.

In recent years, small brewers (as members of The Brewers Association [disclosure: a BeerPulse advertiser]) have stepped up lobbying efforts to get legislation passed in Congress that would reduce excise taxes for…you guessed it, small brewers.

Brewers producing over two million barrels per year pay $18/barrel at the federal level for every barrel they produce. Those producing under two million barrels pay $7/barrel on the first 60,000 barrels instead of $18/barrel.

Proposed legislation, dubbed the Small BREW Act, would allow breweries up to six million barrels to get excise tax reduction benefits. That $7/barrel would become $3.50/barrel for the first 60,000 barrels. Barrels 60,001 to 2,000,000 would be taxed at $16/barrel instead of $18/barrel.

The Brewers Association estimates that the legislation would save breweries $60 million+ annually per the link above.

Much that has been written about the legislation has propped up the bill as job-creating and beneficial for all and opposition to the bill has remained relatively quiet.

—

Lagunitas Brewing founder, Tony Magee, may have been the first voice that came out against it a couple years ago. He wrote to fellow brewers at the time that he questioned the wisdom and “even the basic patriotism of pursuing this roll-back.” He noted that while he had received a number of emails from others sharing his opinion, none chose to speak publicly.

A few months later, Bell’s Brewery founder, Larry Bell, joined him, saying he feared that the bill would “tip the competitive playing field in favor of the breweries between 2 and 6 million barrels.”

Then a couple other true-to-definition microbreweries spoke up, saying they, too, didn’t think breweries over two million barrels should be included in legislation aimed to help small breweries.

At least one brewer chimed in to quell the discussion, concerned that such “grandstanding” would “unravel years of hard work.”

And then chatter around the bill more or less died as the legislative session drew to a close. Over 200 co-sponsors backed Senate and House versions of the bill but it didn’t make any progress in the session (beyond those co-sponsors signing on to it).

That was back in 2011.

—

Identical legislation has been re-introduced two years later as the Small BREW Act.

Knowing the background and discussions that took place in 2011, our interest was piqued this week when we read over at A Good Beer Blog that at the Craft Brewers Conference, “there was a closed session at which at least one well placed big-mid-sized Midwest brewer ‘sure made for good entertainment at the voting members session of the CBC- you know, the one the toss the media out for.'”

And elsewhere over the past month, Lagunitas has again established its opposition.

COO, Todd Stevenson, recently gave a detailed explanation as to why the company opposes the deal. And in his trademark way, Magee shared his comments over Twitter two weeks ago.

 

But it was actually Lagunitas’ Ron Lindenbusch, so-called Beer Weasel (or Director of Marketing), whose thoughts on the bill prove most thought-provoking.

—

BeerPulse got a hold of audio this week from a late February episode of the Bottom of the Bottle podcast in which Lindenbusch and Brewmaster / Head Brewer, Jeremy Marshall appeared as guests.

The co-host initially brought up the topic of the Small BREW Act as fodder around which to rally but he was quickly met with surprise…

Lindenbusch begins, “We actually oppose it. There isn’t a brewery in this country that makes decent beer that isn’t doing phenomenally well. And in our economic times, it seems a bit unpatriotic to us to look for a tax reduction.”

Co-host: But what if some of those extra funds could lead to more going to charity?

“We do a lot of [charitable work] and we are still profitable.”

Co-host: But what about the new, small breweries that can’t afford the taxes?

“If new breweries are worried about the $7/barrel tax that they have to pay, just charge an extra $5 keg ($10/barrel) to make up for it. Price-sensitivity is not a big deal in this industry.”

And Lindenbusch didn’t mince words…

“We are in a place where this legislation is designed and written and orchestrated by one brewery and that is Sam Adams. And they are the ones that are going to pocket millions [if it passes]. It sounds really sexy but it’s actually bullshit and there are about four breweries that are really lobbying hard to make this happen.”

He also pointed to the existing tax reduction that small breweries already receive compared to larger counterparts.

At this point, Marshall comes into the conversation saying that this is “like poking a rabid dog,” acknowledging the growing influence of neo-prohibionist groups (think Alcohol Justice).”

Says Marshall, “One thing that you do if you oppose something is you try to tax it out of existence.”

Lindenbusch added, “It sets the stage for a tax increase which will open up every municipality to increase taxes, possibly higher than it was before.”

And from another angle, “Any tax reductions are political suicide for those legislators.”

—

Worth disclosing: when questions were raised back in 2011 around Boston Beer’s involvement in the legislation, BeerPulse (then-Beernews.org) sought comment from the company but it declined, directing questions to the Brewers Association.

This ultimately led to a discussion with Bob Pease at the BA who denied any questionable involvement, a couple other brewers (who didn’t want to go on the record on anything), an economist (to vet the independent Harvard report making claims about new job creation), the actual Harvard economist that wrote the original report and a tax expert (who had nothing to add other than that he didn’t like special interest groups asking for things when the whole system needs to be overhauled). BeerPulse didn’t get anywhere beyond ‘he said, she said’ banter and complicated economics. Taxed with a lack of resources (read: $0 revenue at the time and a staff of one), BeerPulse decided to drop looking into the story any further.

—

Part two shows how tax savings would be divvied up across 2,300+ breweries and the current state of the bill.

email newsletter signup box anonymous tip form

10 thoughts on “Lagunitas reprises opposition re: Small BREW Act, Lindenbusch says Sam Adams behind it”

  1. If Lagunitas wants to give more money to the Feds and pass it on to their customers, they are free to give as much as they want. They don’t have to give less if the bill passes. I don’t see why there is an excise tax on beer. Why not put excise taxes on Coke and Pepsi instead? Why not excise tax on potato chips and other junk food? Tax on beer is just another hidden tax that I pay. I think I already pay too much.

  2. do you really think they will pass the savings onto the consumer Kent? I give credit to Lagunitas’s position when they would stand to benefit financially.

  3. wait, so craft breweries are just like any other business? Lobbying for grants, credit, and tax breaks?

  4. Pingback: How the Small BREW Act stacks up in terms of dollar savings and where the bill sits now | BeerPulse

  5. Those taxes help pay for things like your education so you can get a job and earn money to buy beer, and the roads you use to drive there, and the stoplights to keep you from getting killed, and the purification and allocation of the water used to make the beer. Taxes aren’t bad people. And if you aren’t forced to pay them no “reasonable consumer” would. Public goods are never anything people will willing pay for out of their pocket, and as a result we have taxes. Similarly, as mentioned in the article, a good brewery will be profitable, and people will buy their beer. A tax reduction won’t increase jobs, charitable giving, or allow new entry into the market.

  6. I completely agree with Tony, that the government shouldn’t be in the business of handing out taxpayer money. However, if they are already doing it, I see nothing wrong with breweries taking it–in fact, you’re putting yourself at a disadvantage if you don’t take it (more credit to Lagunitas for still killing it in the market). I wonder if Tony would oppose measures to lower or eliminate excise taxes for the industry as a whole?

  7. If you think excise taxes are so good, why not put excise taxes on all consumer goods? Like other businesses, brewers already pay all the taxes that other businesses have to pay. Then on top of that is the excise tax not paid by most other businesses. Why don’t soft drink companies have to pay excise taxes? If they did, we could reduce the deficite. No one would mind because soft drink taxes would pay for all the wonderful stuff the fed gives to us. In the long run, the consumer pays all of the taxes when he buys a product.

  8. “I don’t see why there is an excise tax on beer.” Look, whether we like it or not, there are such things as “sin taxes.” Ask anyone who smokes cigarettes or puts gas in their car. On the whole, alcohol is a substance of abuse. Part of the reason it is taxed heavily is to deal with the fallout of issues stemming from alcohol abuse, namely health problems and accidents caused by drunk people. Obviously, we in the craft beer realm like to think that we are better than those folks who swill cheap vodka or wild irish rose, but alcohol is alcohol to a lot of people, especially social conservatives who, incidentally, tend to shout the loudest in these conversations. I agree that junk food, fast food, and mass produced sodas, which have all lead to our current diabetes epidemic, should be taxed accordingly. Tony’s point is that there are like 4 breweries that really benefit from this legislation, and that maybe it’s time to consider a brewery like Boston Beer as something bigger than your neighborhood brewpub. Obviously, Jim Koch would love to keep his taxes low so he doesn’t continued to hemorrhage money and see his stock continue to devalue, but I think it’s great that Tony, an avowed libertarian, has no problem paying his fair share of taxes rather than looking for a government handout in the form of tax breaks. The truly small businesses should get the breaks here, not the burgeoning behemoths.

  9. @Chris

    2 corrections: 1) The point about four breweries was actually Ron’s point. 2) If you look at a chart of Boston Beer’s stock over the past 6 months or longer, you’ll see it is up and to the right.

    Thanks!

  10. Pingback: Small BREW Act Proposes Tax Changes For Craft Brewers | Brewtastic

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.