For the owners and operators of small distilleries who want to have a say in the laws and regulations that affect their businesses, a prime opportunity is on the immediate horizon.
The American Craft Spirits Association’s annual legislative fly-in returns to Washington, D.C., on September 17 and 18, giving industry members the opportunity to lobby the TTB and lawmakers on key priorities. This year, the association is aiming high, after a few years of COVID, hand sanitizer, and pushback on FDA overreach regarding hand sanitizer.
Given the headwinds craft producers face, the ACSA is drafting a revision to the Federal Alcohol Administration Act of 1934, which was put in place after Prohibition to regulate a variety of trade practices. Broadly speaking, they aim to convince the TTB to more explicitly regulate small distillers differently from larger ones.
“They don’t hold small banks to the same standards as JP Morgan,” says Jordan Cotton, ACSA’s political action committee chairman who is also cofounder of the Cotton & Reed distillery in Washington, D.C. “Why do they hold [small distilleries] to the same standards as Jim Beam? … It’s exciting that what we’re fighting for now isn’t a little around-the-edges thing. It’s a, ‘Hey, can we take a look back at the original statute that set up how this whole federal system is regulated and try to change it to work better for the little guys?’ It’s an exciting bill.”
The trip is scheduled to kick off at TTB headquarters to meet with senior staff there, learn more about the department’s priorities, and push for simpler and faster rulemaking to encourage a more competitive market for craft producers going up against big legacy companies.
“Last year, we had 10 of the top TTB officials all come out and do a panel with us for an hour,” Cotton says. There is value for all parties, he says, in lobbying for changes face-to-face, meeting officials where they are, and seeing in-person that the bureau isn’t a faceless, rulemaking monolith.
“It’s very easy to throw your hands up in the air and go, ‘Oh man, there’s all these crazy rules, all these different layers, the system’s rigged, what are you gonna do?’” he says. “But if you don’t try to change anything, nobody else is going to do it for you.”
Cotton & Reed plans to host an evening reception on September 17 to wind down and share notes between days of lobbying. “It’s definitely a fun, inside look at the way that things happen on the Hill,” Cotton says, “and I can guarantee you can find a good drink in this town.”
The next day is set to focus on Capitol Hill. Jim Hyland, ACSA’s public policy advisor, plans to offer a morning briefing on talking points and how to talk about issues with members of Congress. Then the group is scheduled to meet U.S. Senators and break up into groups for meetings with staffers and members of the Senate and the House of Representatives, to “talk about what we do and what they can help do for us,” Cotton says.
That day in particular, he says, it’s important to have as many bodies as possible. “We’re going to be meeting with a lot of offices and need to have a lot of geography covered. We’re small businesses, we create all these jobs, we have a lot of real problems, and there are a lot of real ways that they could help make our lives easier. It’s a lot better hearing that from our members themselves. It’s hard to talk to the senator from North Dakota if we don’t have anyone from North Dakota there, or to get them to care, even if they know there are distillers in their state or their district.”
Rebecca Harris, chair of ACSA’s governmental affairs committee and cofounder of Catoctin Creek Distilling in Virginia, says the meat of their agenda is to push for an update to 100-year-old laws, and they’d prefer to do that with thousands of distillers rather than handfuls. Part of the goal is to simplify reporting for small distilleries—a segment where many producers sell fewer than 1,000 cases per year.
“If there is a desire by legislators on either the state or local level to have a thriving craft-distillery scene, you have to have a way for craft distillers to get their products to the market,” Harris says. “We need to start saying small distilleries [are] different than big distilleries. The one-size-fits-all school of regulation that the TTB has employed is woefully misaligned to the reality that businesses have.”
Part of what they’re aiming for is simpler requirements, so that the boutique distillery producing 1,000 cases a year isn’t saddled with the same reporting as the world’s largest bourbon manufacturers.
“People should be able to track what they do,” she says. “As long as they’re paying taxes and they have an auditable trail, it should be fine. Having three monthly reports that are all interlinked and complicated, it’s ridiculous.”
ACSA also plans to lobby for some sort of small-business outreach or representation at the TTB. The group also aims to convince the agency to finalize rulemaking on American single-malt whiskey, which appeared to be nearing completion two years ago but now seems to be stuck in limbo.
Another essential part of ACSA’s platform is to make direct-to-consumer shipping widely available. Harris says that DTC shipping is a crucial avenue for small distillers whose routes to market are often restricted when it comes to front-of-house sales and whose options have steadily been reduced by consolidation in the distribution tier. She compares the position of small distilleries to that of small wineries, which have remained viable despite the wine industry’s year-over-year losses in market share.
“The only reason that small wine is still functioning is because they have access to their customers, they can self-distribute, they create clubs,” she says. “We’re basically a bunch of scrappy, small distillers, but we’re looking at the future, and we’re saying, ‘In the landscape that exists today, it’s time to look toward self-distribution, direct-to-consumer for small producers, so we can start getting products to our customers.’”
Together with the push for broader DTC access is a bill—on ACSA’s wish list for a few years—that would allow the U.S. Postal Service to deliver spirits. “The USPS bill—not everyone can get excited about it, but I feel that it’s really tied in with moving forward on direct-to-consumer shipping,” Harris says.
It’s not the easiest time for many small business owners to make time and contribute to an effort like this, and Harris says that ACSA recognizes that. “I understand that people are really beleaguered,” she says. “I get it. I have friends who are struggling right now. They are tapped out. They’re not sure how they can keep growing their business, how they can keep going. And I just tell people that sometimes it’s about getting together and trying to act collectively to make things better because I believe most folks out there, they want us to do well. They want us to survive. They take pride in our products, and they share them with their friends and their family around the country.”
For distillers who can’t make it to D.C., however, she says there are other avenues to help push the conversation forward.
“At the very least, become members of the associations that are doing the work on Capitol Hill,” she says. “Become members of your guild. Show up when you have an opportunity to talk to your political leaders. And if you can’t make the fly-in, you should be making calls to your congressman and your senator, using the same information that we’re going to be sending out. Get them to your distillery. Get them engaged on your issues. Show them what you’re building and tell them where the trouble is, where are your pain points.”
Harris mentions the Craft Beverage Modernization and Tax Reform Act of 2020, which reduced federal excise tax rates for small distillers after a decade of lobbying. She speculates about how quickly things would change if one member of every craft distillery showed up on Capitol Hill to make noise.
“We have 2,700 craft distilleries in this country,” she says. “If we had 2,700 people show up for meetings on the Hill, can you imagine? That would make the press in every state of the union that every distillery … made a trip to Capitol Hill to say that small distilleries need privileges that big distilleries don’t have in order to survive. That kind of commitment to action would make stuff happen a lot faster.
“We can make change,” Harris says. “We can do this in less than 10 years, but we all have to keep showing up, keep telling the same stories, and one at a time start making these things happen.”
Distillers interested in joining the ACSA Legislative Fly-In can find more details on the organization’s website.