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***UPDATED*** Breaking Down the Government Shutdown: What Does it Mean for Craft Brewers?

In Beer News by RyanLeave a Comment

Updated at 11:25 A.M. to reflect the Illinois Liquor Control Commission rules and regulations regarding labeling.

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We’ve read a lot lately about the government shutdown and what agencies it does and does not impact. We’ve also read quite a bit about the shutdown’s impact on craft brewers; particularly with the Alcohol Tax and Trade Bureau and U.S. Small Business Administration shutting down the majority of their operations. Today, we hope to cut through some of the generalities and look at exactly how this shutdown impacts craft brewers.

A bit of background: the Alcohol Tax and Trade Bureau (TTB) is responsible for licensing breweries and approving labels and formulas. The Small Business Administration, or SBA, handles loans for all sorts of businesses — including breweries.

A note posted to the TTB’s website tells the story. They’ll accept: “electronic payments and returns for federal excise taxes and operational reports,” but that’s about it. So no label approvals and no formula approvals. And, yes, for the fans of our monthly beer labels posts that means no update for the foreseeable future. In fact, the TTB’s searchable database is completely offline right now.

The SBA has a similar note on its site: “[T]he information on this website may not be up to date, the transactions submitted via the website may not be processed, and the agency may not be able to respond to inquiries until appropriations are enacted.”

So what can we clearly take away from this? For starters, a brewery waiting for its licensing is going to have to wait longer. And a brewery waiting on a loan, whether it be to get off the ground or to buy more/larger equipment and expand, is also going to have to wait longer. But the delay in approving beer labels and formulas may not mean a halt to any and all new beers, according to Revolution Brewing Owner Josh Deth.

“Not every new beer needs TTB approval unless you label it as a packaged good, so the brewpub can keep making new beers as long as they don’t require formula approval for odd ingredients or process,” said Deth in an email to Guys Drinking Beer.

In fact, according to a ruling issued by the TTB in March of this year, a beer that is not going to be distributed outside of the state it is brewed in does not even need label approval at all.

The Alcohol and Tobacco Tax and Trade Bureau (TTB) has been asked to clarify whether brewers are required to obtain a certificate of label approval for domestically bottled malt beverages that will be sold exclusively in the State in which they were bottled. The regulations implementing the Federal Alcohol Administration Act do not require a brewer to obtain either a certificate of label approval or a certificate of exemption for a domestically bottled malt beverage that will not be shipped or delivered for sale or shipment into another State.


Unfortunately, as John Laffler of Off Color Brewing fame pointed out to us on Twitter, the state of Illinois still requires label approval whether beer is distributed within the state or to other states.

From the Illinois Liquor Control Commission’s rules and regulations regarding labeling:

No manufacturer, nonresident dealer, distributor or importing distributor shall affix any label to any package or container containing alcoholic liquor for sale or delivery in the State of Illinois until such label has been submitted to and approved by the federal government.

The aforesaid regulations shall apply to wine, distilled spirits and malt beverages packaged purely for intrastate commerce within the State of Illinois to the same extent as though intended for interstate or foreign shipment.

Brewpubs can still churn out new beer so long as it doesn’t have any funky ingredients or it isn’t distributed to other bars but this obviously puts a halt to production breweries coming out with new beers.

END UPDATE

We also checked into what formulas require TTB approval before a brewer can move forward. Three styles require a green light from the TTB: Belgian Wit, an Iced Beer and a Malt Beverage Specialty. The latter, the Malt Beverage Specialty, will likely trip up many brewers as it is a rather broad style. According to the TTB’s FAQ on malt beverages any modification to a “malt beverage” would require formula approval.

Whenever you modify a malt beverage and it results in a change in color or taste, a formula is required. For example, barrel-aging, adding fruit or other fermentable material to the wort, adding concentrates or other flavors to a finished malt beverage, using artificial sweeteners, and using artificial colors to a finished malt beverage are all instances when a formula must be submitted.

This is far more helpful than the TTB’s actual definition of a Malt Beverage Specialty which reads: “Generally, any class and/or type of malt beverage that contains or is treated with (other than those recognized in standard brewing practices) flavoring and/or coloring materials and/or nonstandard blending or treating materials or processes.”

Not only will this obviously delay the approval of new beer formulas submitted by brewers but it will likely add to an already exhaustive backlog of requests, according to Lake Effect Brewing Co-Founder Clint Bautz.

“Already the sequester impacted formulas with a 60+ day turnaround to get approval for formulas meaning if I want to do a raspberry beer I’ll have to wait the better part of 2 months for approval and with this shutdown that means indefinite,” said Bautz.

The brewery, on Tuesday, posted a message to Facebook encouraging Congress to get its act together so they can get back to the business of brewing beer.

https://www.facebook.com/lakeeffectbrewingco/posts/523085771103984

About the Author
Ryan

Ryan

A long-time political reporter, Ryan spearheads Guys Drinking Beer's in-depth coverage of beer news and craft beer legislation in Illinois and beyond. When he’s not digging through the annals of state government he’s looking for unique beers to cellar.

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