As of my writing this the United States government has been shutdown for 16 days. What does this have to do with beer? Considering that the Tax and Trade Bureau (TTB), which regulates and taxes alcohol from a federal level, is currently one of the offices closed by this shutdown it means a whole heaping lot.
The TTB collects taxes from breweries every quarter based on production. This shutdown has come right at the end of the 4th quarter of the year and right when breweries are due to pay these taxes. Well, actually they are due by the 10th of January. Despite this shutdown breweries are still required to submit their quarterly production numbers and that nice check to Uncle Sam. Don’t forget it’s 2019 when filling in the date. These will just not be checked on until things are opened back up. But that’s not really the big deal here, you keep doing what you were doing. The real problem will be in other areas that the TTB oversees, licensing and label approvals.
The TTB are the ones that hand out federal licenses (known as Brewer’s Notices) to breweries saying that you are all good in the eyes of the US government to get your mash tun rakes turning, your yeast fermenting and your kegs filling. The wait times on these Brewer’s Notices has steadily increased over the years as more and more breweries come online. As of November 2018 the average processing time for a Brewer’s Notice, without any issues that need correcting, was at 86 days.
This shutdown is tacking on precious days for aspiring brewers that are itching to start brewing. Rent, water and electricity bills will continue to come in with no ability to make money. Could this put some breweries out of business before even producing a single drop of wort?
Not only does this shutdown impact breweries in planning but it has major ramifications for those that are already in operation when it comes to label approvals.
I have previously written about the guidelines that the TTB puts forth for the labeling of beer. Not every brewery necessarily needs to get label approval as the TTB doesn’t require it if you only sell your beer within the state that you produce it. However for those that sell across state lines or for those in states that require TTB label approval (like Pennsylvania, where I am) this can put a major dent in plans for upcoming seasonal releases.
Do you have a new spring beer coming out in February or March and haven’t submitted a label for approval yet? Not having approval yet means you really can’t go to print on those labels because maybe you have a mistake on there and if you do print them then you are not in compliance with the TTB. This could be disastrous to bigger breweries with multi-state distribution footprints.
Sure you will have plenty of breweries that will just ignore this aspect (they probably have already been ignoring it either willfully or ignorantly) and go to print without approval. Many of these are probably ones that steal other people’s IP to put on labels too. Yup, I went there.
Before the shutdown the average processing time for label approvals was around 10-14 days. As of this writing the average processing time–if the government were to reopen today–is looking at 43 days. So if the government were to reopen today, on a Sunday, the TTB would go back to work tomorrow and you submit a label right then you will be looking at probably late February for approval but that’s no guarantee. It would probably be way later than that. I honestly don’t even know how they are still calculating processing times when no one is actually processing labels.
It should be noted that despite the TTB being shutdown breweries can still access the COLA website portal and submit labels. This will help get you a better spot in line when for when things get rolling again as submissions are worked on in the order that they are received.
With no solid end in sight for this current shutdown the total impact that it could have on the beer industry is still a thing of conjecture. The TTB does have a lot more employees than it did 5 years ago to where a shutdown of this length would have probably led to an earlier retirement for former TTB Label Specialist Battle Martin.