For Real Change, Beer Advocates Turn to the States

Across the country, states are advocating for crisp, thirst-quenching laws.

Samples of Lagunitas Brewing Company beers sit on a tray during a brewery tour at Lagunitas Brewing Company on February 21, 2014 in Petaluma, California.
National Journal
Emma Roller
March 12, 2014, 11:36 a.m.

State law­makers are look­ing to spur busi­ness wherever they can, but one in­dustry hopes to change loc­al pal­ates as well as loc­al eco­nom­ies: brew­er­ies.

While they haven’t had much luck in Wash­ing­ton, beer ad­voc­ates are hav­ing more suc­cess at the state level. Last year, Alabama be­came the last state to leg­al­ize home brew­ing. A bill wend­ing its way through the state Le­gis­lature this week would al­low lar­ger Alabama brew­ers to open res­taur­ants at their brew­er­ies. The only hitch: No brew­ery in Alabama is big enough to qual­i­fy for the law.

Alabama is work­ing to change that. The state is now try­ing to lure high-pro­file brew­er­ies from out of state, like Stone Brew­ing in Cali­for­nia. In 2012, Alabama ranked 49th in brew­er­ies per cap­ita. But with re­cent laws like the Alabama Brew­ery Mod­ern­iz­a­tion Act, which al­lows craft brew­ers to sell their wares where they’re brewed, Alabama is hop­ing to raise its pro­file as a des­tin­a­tion for brew­ers and beer afi­cion­ados alike.

Still, com­pared with oth­er booze, the beer in­dustry is strug­gling to keep its brand re­cog­ni­tion. Un­like years ago, more people today say they prefer drink­ing wine or li­quor in­stead of beer. Des­pite the re­l­at­ive de­cline of beer’s pop­ular­ity, there has been an ex­plo­sion of craft brew­er­ies around the coun­try — in 2012, the craft-brew­ing in­dustry saw 15 per­cent growth. Lar­ger main­stream products like Blue Moon and Pabst Blue Rib­bon are en­joy­ing rap­id growth. There are al­most 2,000 craft brew­er­ies in the U.S. There’s even a con­gres­sion­al Small Brew­ers Caucus.

And the beer in­dustry has eco­nom­ic ripple ef­fects. Ac­cord­ing to the Beer In­sti­tute, the in­dustry em­ploys roughly 2 mil­lion Amer­ic­ans, dir­ectly and in­dir­ectly, for a com­bined $79 bil­lion in wages and be­ne­fits.

Beer ad­voc­ates have been fight­ing for years to de­crease the fed­er­al ex­cise tax on beer. In 1991, the fed­er­al beer tax was doubled from $9.00 to $18.00 per bar­rel as part of an ef­fort to bal­ance the fed­er­al budget. Taxes were also raised on se­lect lux­ury goods, but were even­tu­ally re­pealed or phased out. Now, beer ad­voc­ates want to roll back the fed­er­al beer tax to pre-1991 levels, ar­guing that it would cor­rect for years of over­tax­ing and bring back lost jobs.

Beer-in­dustry lob­by­ists ar­gue that the beer tax is un­fair, since it un­duly bur­dens the lower- and middle-in­come work­ers who prefer a cheap, cold brewski over a glass of single-malt whisky. “The tax on beer is thus one of the most dis­crim­in­at­ory of all taxes in the fed­er­al and states’ tax codes,” ac­cord­ing to the Beer In­sti­tute.

And Alabama isn’t the only state wrest­ling to ex­pand beer busi­ness and the eco­nom­ic be­ne­fits that come with it:

“¢ Min­nesota beer act­iv­ists are agit­at­ing to re­in­state Sunday sales.

“¢ New Hamp­shire law­makers may re­verse a state ban on ad­vert­ising al­co­hol on bill­boards, and could even vote to al­low res­taur­ants to sell beer to go.

“¢ Con­necti­c­ut may do away with ex­cise taxes on beer, wine, and li­quor, as the state has been los­ing busi­ness across the bor­der to Rhode Is­land, which has lower al­co­hol taxes.

“¢ An In­di­ana law­suit is chal­len­ging the state’s ban on selling re­fri­ger­ated beer in gas sta­tions, gro­cer­ies, and phar­ma­cies, though the law is un­likely to be over­turned.

Still, the fed­er­al beer tax isn’t likely to de­crease any time soon, as Na­tion­al Journ­al‘s Sarah Mimms wrote last month:

The Con­gres­sion­al Budget Of­fice has ar­gued in fa­vor of rais­ing the ex­cise tax, not­ing that the costs of al­co­hol­ism and al­co­hol-re­lated in­cid­ents far ex­ceed the rev­en­ue brought in by taxes on beer, wine, and spir­its. “When ad­jus­ted for in­fla­tion, cur­rent ex­cise-tax rates on al­co­hol are far lower than his­tor­ic levels,” CBO ar­gues. “In the 1950s, ex­cise taxes ac­coun­ted for nearly half of the pretax price of al­co­hol; they now ac­count for between 10 and 20 per­cent of the pretax price.”

While beer ad­voc­ates may be fight­ing a quix­ot­ic battle, law­makers should re­cog­nize the eco­nom­ic good the craft brew­ing in­dustry can bring to their states — or just shut up and drink.

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