LAKE PLACID — Craft breweries could see a 50 percent cut in federal excise tax if a bipartisan bill wins federal approval.
Legislation pending in Congress would drop the $7 tax per barrel of beer made by small breweries to $3.50 for the first 60,000 barrels.
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Senate Bill S.917 is known as the Small Brewer Reinvestment and Expanding Workforce Act of 2013, or Small BREW Act.
It is related to legislation introduced to Congress in 2011, the BEER (Brewers Employment and Excise Relief) Act, which applies to larger brewing companies producing more than 6 million barrels per year.
Not all breweries make that much beer however.
At Lake Placid Pub & Brewery, owner and founder Chris Ericson has championed this line of legislation for some time.
His company produces about 1,500 barrels of award-winning beer at the company’s headquarters on Mirror Lake. The beer maker crafts another 6,000 barrels with a contract brewery in Utica.
“The Small BREW Act will cut the tax in half for the majority of craft brewers in the United States,” Ericson told the Press-Republican as local elected officials waited for federal lawmakers to arrive for a tour Friday morning.
Currently, Lake Placid facilities pay about $43,000 in federal excise tax for the beer they make, he said.
“That would be a $4,000 to $16,000 savings,” Ericson said. “It is very significant.”
As U.S. Sen. Charles Schumer (D-New York) and Congressman Bill Owens (D-Plattsburgh) walked past giant barrels of fermenting beer and stacks of malt-filled sacks and hops, they talked with Ericson about the process.
Schumer said that, beyond Ericson’s small-business success, the craftsmanship in every bottle also attracts attention to the Adirondack region and touts Lake Placid.
Ericson started making beer in 1996. His Ubu Ale and several other Lake Placid Pub & Brewery craft beers have won both national and international acclaim.
Friday, he told the federal lawmakers that the brewery has made 80 kinds of beer over the past 17 years.
“It’s kind of surreal,” Ericson said in discussing the proposed new legislation with Schumer and Owens. “I got a brew kit for college graduation, now I’m standing here on the deck with a senator and a congressman.”
The Lake Placid businessman said he would put the tax savings back into the business. And for his company, $4,000 in tax cuts would be about the cost of a new brew tank.
“That would allow one more brew time per week,” Ericson said, which would then add to his workforce.
The Lake Placid Pub and Brewery expanded brewing capacity by 60 percent and added 20 jobs in the past year.
Schumer said this type of federal tax cut is critical to allowing small businesses to grow.
“And the craft-brew industry is one of the fastest-growing industries in New York. This is one of the great ones, right here in Lake Placid.”
The senator reported that New York is now among the top five craft-beer-making states in the United States, and farms are beginning to grow hops to support the industry.
Harvard University predicts the Small BREW Act would generate $153 million per year in economic growth in the brew industry in its first year nationwide, Schumer said, and some $865 million additional growth through the first five years.
When introduced to the Senate on May 9 this year, remarks with the bill indicate “the small brewer threshold and tax rate were established in 1976 and have never been updated. Since then, the annual production of the largest U.S. brewery has increased from 45 million barrels to 105 million barrels,” according to the Congressional Record.
Owens co-sponsored the House version of the bill (H.R. 494) with Rep. Jim Gerlach, a Republican from Pennsylvania.
With bipartisan support in the Senate as well, both he and Schumer believe this version of the measure has a shot at becoming law.
It will likely move through both houses as part of a larger piece of legislation, Schumer said, once Congress gets back to work later this fall.
If adopted in the coming session, the Small BREW Act could become law as early as next year.
“We’d like to see that if we could,” the senator said.
Ericson, who is also former chairman of the Regional Office of Sustainable Tourism (ROOST), said 132 craft breweries currently operate in New York state.
ROOST President and CEO Jim McKenna lifted a capped bottle of Ubu Ale and called attention to the Lake Placid Pub & Brewery label, emblazoned with a red Adirondack chair.
“There are 12 million of these bottles out in the marketplace,” he said. “It all reinforces what the senator alluded to — they all identify the Adirondacks.”
The Small BREW Act would also cut federal excise taxes by $2 per barrel for larger brewers after 1,940,000 barrels are produced.
Any brewery making fewer than 6 million barrels of beer per year would be eligible.
Schumer Press Secretary Meredith Kelley elaborated on the difference between Small BREW Act and the still-pending BEER Act.
“The Small BREW Act of 2013 is very similar to the old BEER Act you may have heard of in the past, which has not yet passed,” Kelley explained via email.
“But it’s not the same as the current BEER Act, which gives an excise tax break to big producers as well as small/craft producers. Our bill only gives (excise tax breaks) to small/craft brewers.”
It is currently in the Senate Committee on Finance and in the House Committee on Ways and Means.
In a brief sweep by plane across the North Country on Friday, Schumer also visited cheesemaker McCadam Farms in Franklin County to relay his ongoing fight to defend and increase upstate cheese production.
“In recent trade negotiations, the European Union has been trying to claim cheese names based on geographic locations, in the same way that the EU has argued that champagne can only be sold as ‘champagne’ if produced in the Champagne region of France,” Schumer said in a news release.
“Among the labels sought by EU are: muenster, feta, parmesan, fontina, gorgonzola and others,” the senator explained.
“If the EU succeeds in claiming those names, New York producers will no longer be able to export cheeses with their current names. They would have to export the cheese under a different name — which would significantly devalue the product — or forego the sales entirely.”
Schumer said the EU is negotiating with many Latin American and Asian nations, “and any agreement on labeling could prevent U.S. exporters from selling to those countries using the ‘trademarked’ names.”
He also announced his support for a Cornell University grant to help dairy farmers learn how to make cheese.
“The grant would allow small dairy farmers in the region to receive training from Cornell experts on cheese production and aging, with the intent of selling that product at Wegman’s franchise supermarkets ... based in the Finger Lakes region,” Schumer said.
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