Craft Beverage Modernization and Tax Reform Act

Press release:

Continuing his advocacy for New York’s craft beverage industry, today U.S. Senator Charles E. Schumer announced the inclusion of the Craft Beverage Modernization and Tax Reform Act (CBMTRA) in the FY2020 end-of-year omnibus legislation.

It will permanently reduce excise taxes for brewers, vintners, cider makers, and distillers and remove regulatory barriers to help New York’s craft beverage industry stay afloat.

Schumer explained that the legislation will provide critical economic relief for craft beverage alcohol producers across the state, many of whom have seen a significant decline in revenue and are struggling to remain open as a result of the ongoing economic crisis, especially those whose sales are mainly on premise.

“Craft beverage producers throughout New York not only brew, bottle, and distill great products, but they also attract visitors and pour hundreds of jobs into their local communities,” Senator Schumer said. “By making permanent the reduced tax rates for New York producers and removing regulatory barrier to accelerate growth, we can help local brewers, vintners, cider makers, and distillers make it through this economic crisis.”

Schumer added, “I have always said that New York’s breweries, wineries, and distilleries are the crown jewel of so many of our communities, with many of them bringing the added benefit of growing and reinvesting in their local economies. So by putting more money back into the hands of these businesses and making sure they are not choked off by bureaucratic red tape, we can ensure our craft beverage producers can tap into their full potential and make a full recovery from this downturn.”

There are an estimated 462 breweries, 450 wineries, 186 distilleries and 72 cideries across the state, supporting tens of thousands of New York jobs and contributing billions of dollars to the state’s economy:

• According to the Brewers Association, the craft beer industry has created approximately 29,000 full-time jobs in the state, with an annual economic impact of $4.9 billion.
• The New York Wine and Grape Foundation’s 2019 Economic Impact Study reveals that New York’s wine and grape industry directly created 71,950 jobs and contributes $6.65 billion in direct economic impact.
• According to the Distilled Spirits Council of the United States, New York’s distilled spirits industry supports 93,860 jobs and contributes $8.3 billion to the state’s GDP.

Brewers, vintners, cider makers, and distillers across New York celebrated the inclusion of the CBMTRA.

Sam Filler, executive director of the New York Wine & Grape Foundation, said, “The New York grape and wine industry applauds Senator Schumer’s steadfast advocacy for the industry in Washington, D.C., by making CBMTRA permanent, which will ensure that the industry continues to grow and positively impact New York’s economy.”

Paul Leone, executive director New York State Brewers Association, said, “For five years we’ve been trying to make the Craft Beverage Modernization and Tax Reform Act permanent, and for all of those five years Senator Schumer has been right there with us leading the charge to make this a reality. With everything going on in the world, he never forgot about the craft beverage community in New York State and thanks to his efforts, along with strong bipartisan congressional support, brewers in this state will continue to save money on their federal excise taxes to help them through this pandemic and beyond.”

“Thanks to Senator Schumer and his staff for working hard to build bipartisan support for this critical legislation that prevents a costly tax increase to all brewers and beer importers,” said Mary Beth Popp, vice president of corporate communications, FIFCO USA, parent company of Labatt USA and Genesee Brewing. “This legislation recognizes the significant impact our industry makes, providing millions of jobs while also contributing to the U.S. economy.”

“This is a huge help to small breweries like Ithaca Beer,” said Dan Mitchell, founder of Ithaca Beer Company Inc. “It allows us to take the savings we see from TTB taxes and put them back into the business to help us grow. Specifically, it allows us to hire more people, and address some other financial challenges we see as a small Craft Brewer."

Jason Barrett, president and master distiller Black Button Distilling in Rochester, said, “Words cannot fully express what making CBMTRA means to my team and I. The ability to not only keep our staff working, invest in our community and follow our passion has been secured by this action. When we came to Senator Schumer a few weeks ago we were just hoping for a one year reprieve.

"I never would have imagined we would have the ability to actually make long term plans for our business and sincerely thank Senator Schumer for pushing to make this happen. Thousands of New York state families will sleep a little easier now knowing their jobs will still be there in 2021.”

Kim Wagner, owner Stoutridge Vineyard and Distillery in Marlboro, said, “Small, family businesses are the backbone of the economy. The uncertainty over the last few years regarding the CBMTRA has significantly impacted our ability to grow our business. Because we age our products for multiple years, we had to manage production and cashflow to ensure that if the CBMTRA expired we would be able to make our excise tax payments when our products were ready for sale.

"Having the CBMTRA made permanent gives us the predictability we need to increase production and optimize investment in our business. Senator Schumer’s leadership and the strong support of the New York Congressional delegation was critical to making this happen. There are over one thousand craft beverage businesses in New York State and each of us, our staffs and our communities will benefit from this legislation.”

Elizabeth Ryan, farmer and owner, Breezy Hill Orchard and Hudson Valley Farmhouse Cider in Staatsburg, said "The Craft Beverage Modernization Act has been a critical instrument for supporting the expansion of the Craft Beverage industry. The growth of domestic craft beverages has been an economic engine for farms and local economies, stimulating investment and job creation.

"I have been producing hard cider in the Hudson Valley since 1996. There have been many hurdles to overcome on the regulatory and taxation front. Particularly now as craft producers face challenges both financial and operational due to the COVID pandemic, the permanent extension of the CBMA will significantly help craft producers expand and thrive instead of contracting and struggling. On behalf of farmers, apple growers, we thank Senator Schumer for his continued commitment, vision and hard work."

Schumer joined Senator Wyden (D-OR) and colleagues on both sides of the aisle to support the CBMTRA. Specifically, the Craft Beverage Modernization and Tax Reform Act:

• For beer, it reduces the rate for small brewers (making no more than 2 million barrels annually ) to $3.50 per barrel on the first 60,000 barrels, and $16 per barrel on the remaining ones. Large brewers and beer importers can benefit from a reduced excise tax rate of $16 per barrel, reduced from $18 per barrel, on the first 6 million barrels. It also allows for the transfer of beer in bond between two breweries, regardless of who owns such facility.
• For wine, it establishes a new tiered tax credit system for wine produced in the United States or imported: $1 for the first 30,000 wine gallons, $0.90 for the next 100,000 wine gallons, and $0.535 for the next 620,000 wine gallons. Hard cider is taxed as wine, subject to lower rates and a reduced credit amount.
• For distilled spirits, it makes permanent the reduced rate of $2.70 per proof gallon for the first 100,000 proof gallons of distilled spirits produced or imported annually, and a rate of $13.34 per proof gallon for the next 22,130,000 proof gallons of distilled spirits.