Kerry Bill to Decrease Excise Tax for Breweries

13 May

Senate Bill 3339, introduced yesterday in the Senate by John Kerry, would decrease excise taxes for about 1,500 small breweries.  The bill is similar to one introduced in the House in December, and would cut the excise tax from $7 to $3.50 on small breweries first 60,000 barrels.  It would also decrease the tax from $18 to $16 on all subsequent barrels up to 2 million.

A small brewery is defined as one that produces no more than 6 million barrels of beer per year.  San Diego, a haven for quality microbreweries, would be greatly benefitted if this bill is passed.  It would also be valuable for those that enjoy drinking craft beers, who should see the decrease in excise taxes reflected in their beer prices.

Regarding the bill, Senator Kerry stated, “Small and independent brewers are vital small businesses,” and that “relieving their tax burden will keep them hiring and expanding”.

A study of the potential impact of the bill shows it to be advantageous and efficient.  The bill is expected to create 2,700 new jobs in the beer industry in its first year, and around 375 new jobs in each year after that.  The increased income and payroll taxes collected from these jobs would offset the loss in government revenue, and cost the government only $10.6 million in the first year of the bill being implemented.  At the same time, the bill would increase economic activity by $115 million in the first year, which when calculated out means that for every dollar lost in government revenue, overall economic activity would increase by nearly $11.  The bill is a huge win-win situation if the research is true.

This bill will likely be passed, as it is one of the few bills of late to have bipartisan co-sponsorship and support in both the House and Senate.  There should be more smart and cost-effective bills like this that increase economic activity and build jobs with minimal cost to the government.  Brewers and beer enthusiasts should be ecstatic about this proposed change in beer tax rates.  Legislators should look into introducing an analogous bill for the wine industry that could spur similar growth.

Image credit to Ahmet Guler /

Conjunctive Labeling: Fair or Foul?

11 May










Image credit to Matt Banks /

House Bill Threatens Local Wineries and Microbreweries

10 May
A recently introduced bill in the House of Representatives may limit the choice of consumers in purchasing wine and beer from small wineries and microbreweries. The Comprehensive Alcohol Regulatory Effectiveness Act (“CARE”), would effectively allow State legislators to strictly enforce the three-tier-system which mandates that alcohol sales must flow from producer to distributor to retailer.

37 states, including California, have enacted rules that allow direct to customer sales of alcoholic beverages. These rules benefit small wineries and microbreweries, and in turn wine and beer enthusiasts, by allowing sales to be made directly to the consumer. Currently, a handful of major distributors control a bulk of the sale of wines in the U.S., and these big distributors make it difficult and prohibitively expensive for smaller operations to get their wines and beers to retailers, favoring larger wine entities. If forced to go through distributors, these small ventures will either have to pay the high expenses of a distributorship (costs which would be passed on to the consumers), or be forced to take the financial hit of decreased overall sales, which could be crippling.

It is important for small wineries and microbreweries to be able to sell directly to customers, otherwise these operations may cease to exist. The proposed bill could have a largely negative impact in San Diego, where the microbrew industry is akin to the wine industry in Napa.

Further, the diverse array of local wineries in Temecula and San Diego could similarly be pushed into a corner.

The purpose of the bill, introduced by Rep. Bill Delahunt (D-Mass), is to protect the states right to regulate alcohol sales practices. Their legal argument is based in the belief that the 21st Amendment, ratified in 1933 to repeal the Prohibition era and put alcohol regulation in the hands of states themselves, creates a higher standard for courts to scrutinize state laws which may have discriminatory effects on alcohol producers out-of-state.

The bill, if passed, would effectively overrule a Supreme Court decision in 2005 which held the Commerce Clause of the Constitution prevented state legislatures from enacting laws which allowed in-state wineries to sell directly to consumers but did not afford the same ability to out-of-state wineries. CARE creates a high burden of proof for out-of-state winemakers and a strong presumption in favor of the state laws that would make it nearly impossible to invalidate discriminatory state laws. Its passing would allow states to give beneficial treatment to in-state wineries and breweries, at the behest of out-of-state ones. This would by far have the biggest impact on California, which is home to around 90% of the American wine growth and countless breweries, by potentially limiting exportation to other states.

The law also benefits wholesalers and distributors interests in keeping themselves as middlemen between producers and consumers or retailers. The National Beer Wholesalers Association and the Wine and Spirits Wholesalers of America are the strongest supporters of this bill. It is probably no coincidence that Rep. Delahunt received one of his largest campaign contributions in 2008 from the National Beer Wholesalers Association. The wholesalers true interest is solidifying their position between manufacturers and retailers in the alcohol sales chain, to prevent beer manufacturers from selling directly to retailers, as is done with Wal-Mart and Costco. As a side effect though, it could cripple many small wineries and microbreweries that sell a majority of their products directly to consumers or retailers.

This bill could also adversely impact future creative endeavors in the wine industry. With the rise of the internet and globalization, it is logical and more practical to allow winemakers and microbreweries to sell directly to customers without having to clear an unnecessary and overly expensive hurdle. The law could also stagnate innovative and forward-thinking ways of selling wine, such as’s recent sale of futures of a vintage Bordeaux to high-end luxury wine customers. Sales on the periphery of the three-tier-system such as this may cease to exist.

Wine and beer consumers should not fret though, this bill has an uphill climb. Speaker of the House Nancy Pelosi herself owns a small vineyard and will likely side against the bill. Further, a new Facebook group of over 10,000 people and counting is battling this legislation, in addition to many other websites against the bill. In the interest of protecting free trade in the alcohol industry, carrying on the rich culture that independent wineries and microbreweries provide, and preventing a lobbyist driven attempt to line the pockets of alcohol distributors, hopefully this bill will never pass.

Image credit to Graeme Weatherston /

New Wine Law Blog!

10 May

Welcome to my blog!  I will be updating this blog with pertinent legal issues affecting the wine and microbrewery industry, along with some posts on wine culture in general.  I am a 3rd year law student and am currently working in the wine law practice of Higgs, Fletcher & Mack, a prestigious San Diego law firm.  I have also interned in the past for Constellation Brands U.S., the largest wine producer in the world.