How Local and Federal Laws Impact Michigan’s Beer Industry

The effect of politics on consumers and brewers

Last December, craft brewers in Michigan and across the country got an early Christmas present when Congress passed the Craft Beverage Modernization and Tax Reform Act.

The act lowers the federal excise tax from $7 to $3.50 a barrel on the first 60,000 barrels for brewers producing less than 2 million barrels annually. Mid-sized breweries get their tax reduced from $18 down to $16 a barrel on the first 6 million barrels. The bill maintains an $18 rate for those who produce over 6 million barrels.

That’s good news for local brewpubs and Michigan brewers distributing through your favorite retailers. According to the Michigan Brewers Guild, the savings will allow Michigan’s nearly 300 small brewers to “reinvest in their businesses, expand their operations, and hire more workers,” to keep up with demand.

Apparently, it’s been a long battle. Bringing tax relief to small brewers has been a political objective for the national Brewers Association for almost 10 years. But beer and politics go back a bit further, considering the first national excise tax on beer was during the Civil War!

Of course, the biggest impact on the industry was Prohibition. According to National Geographic’s Atlas of Beer, the United States had more than 1,300 breweries in 1915. After Prohibition, that number dwindled, and even once Prohibition was repealed in 1933, it took time to recover. The book reports that by the 1970s, there were under 90 breweries, most of them “large conglomerates flooding the market with light beer and pale lager.”

All that began to change in 1978, when President Jimmy Carter signed H.R. 1337, which legalized homebrewing and gave smaller brewpubs and microbreweries the ability to increase production. But it took a while to get where we are today.

In 1992, Detroit’s Traffic Jam & Snug was Michigan’s first officially designated brewpub. Some 20 years ago, the Michigan Brewers Guild was formed in a Saginaw dive bar with a mere 30 member breweries.

Fast forward to 2018 and the number of breweries, microbreweries, and brewpubs in the state is pushing 300. And today, a separate Protect Michigan Craft Beer “PAC” supports legislators that support Michigan’s craft beer industry.

Michigan craft beer fans have benefited from changes to state regulations over the years, including legislation that allows the promotion of beer in social media, the ability for some retailers to fill growlers, and the recent repeal of a law requiring keg buyers to sign a receipt and pay a $30 keg deposit.

What’s on the legislative horizon in Michigan? There’s currently a bill that seeks to rename the Department of Agriculture and Rural Development’s Grape and Wine Industry Council to the Michigan Craft Beverage Council. The goal is for the council to broaden its scope from promoting wine and wine grape-growing industries to include the promotion of local hops, barley, beer, and spirits.

That’s good news for the economy, too. The Michigan Brewers Guild estimates that the brewing industry “conservatively contributes more than $144 million in wages with a total economic contribution of more than $600 million.” It goes beyond the breweries since more brewers use locally sourced ingredients like barley, wheat, fruit, and hops.

And that’s another good reason to raise a glass to Michigan’s craft brewers.

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