DelBene, brewers tap into bipartisan Craft Beverage Modernization and Tax Reform Act

Congresswoman Suzan DelBene joked that she was in a brewery, but everyone was drinking coffee. After all, it was near 11 a.m. on Aug. 15.

With Postdoc Brewing Company co-owner Debbie Chambers leading the way, DelBene toured the Redmond hop-spot before gathering with a group of craft brewery owners to discuss the bipartisan Craft Beverage Modernization and Tax Reform Act (H.R. 747), which is aimed at lowering the federal excise tax for small brewers so they can tap into expansion and hire more employees, according to a press release.

DelBene (WA-01) said that she believes Washington has the best beer in the country and is impressed with the wealth of breweries dotting the landscape. That includes the Chainline Brewing Company in Kirkland, whose husband-and-wife owners Scott and Michelle Holm attended the roundtable.

“We’re fighting for space. It’s a friendly environment, but it’s still very competitive,” said Rich Nesheim, owner of Triplehorn Brewing Company of Woodinville. “It’s not easy, we’re not in this to get rich.”

Nesheim questioned whether change is on the way.

DelBene, who serves on the House Ways and Means Committee that has jurisdiction over tax policy, said that change isn’t going to happen unless the Legislature delves into the issue and tries to figure things out.

“One of the big things we can do is build bipartisan legislation,” she said early in the roundtable, and added later, “Transparency will be hugely important. One step along the way.”

If the bill passes, it would lower the federal excise tax to $3.50 per barrel on the first 60,000 barrels for domestic brewers producing fewer than 2 million barrels annually; reduce the federal excise tax to $16 per barrel on the first 6 million barrels for all other brewers; maintain the excise tax at the current $18 per barrel rate on barrels exceeding 6 million.

The tax on small/medium brewers is currently $7/barrel. The four breweries represented at the roundtable fit into this category, producing a combined 5,000 barrels of brew per year. Triplehorn tops the barrel numbers with 2,000, followed by Postdoc with 1,500, Chainline Brewing Company with 1,000 and Hi-Fi Brewing with 500. The foursome — from Redmond, Kirkland and Woodinville — has a total of 36-plus combined employees.

“We have a huge impact on larger businesses,” Nesheim said of the smaller breweries’ success.

Chainline’s Scott Holm said the proposed bill would help the bottom line at their Kirkland location. He added that simplification of the tax scenario would help business flow easier.

Over at Redmond’s Hi-Fi Brewing, owner John Carothers said passage of the bill would allow him to add an additional salesperson.

“One guy can hustle a lot of beer,” he said.

As Postdoc grows and becomes more competitive, Chambers said it would be beneficial to pay employees a higher wage and expand into the wholesale market.

DelBene and the brewers also touched upon licensing issues with different companies that arise when they play music on their soundsystems. DelBene said the Legislature is discussing forming a single database with songs that can be played and thus make licensing payments easier.

The brewers said the discussion with DelBene was valuable, and the congresswoman noted that meetings with small and large businesses are key to understanding the implications changes have on the owners and their families.

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