Adam Fredericksen, the owner of Thesis Beer Project, is in a tough spot. He has paperwork to file to get his new brewery up and running in Rochester, Minnesota, but because of the partial federal government shutdown, no one is around to process it.
The federal agency in charge of licensing breweries, wineries, and distilleries, the Alcohol and Tobacco Tax and Trade Bureau (TTB), was among one of the many agencies that have been forced to close during the shutdown.
Which means Fredericksen is in limbo.
“What we’re most worried about in our case is, with our lease, we take ownership of equipment in late February,” he says. Until the shutdown ends, he will be paying thousands of dollars a month in taxes, rent, and utilities, but unable to brew a single drop of beer. “Just a couple months of that is enough to cause some serious problems.”
“Just logistically,” he continues, “not knowing when this is going to get over, what kind of backlog there will be. We don’t know how to bring our staff on board, when should we be hiring staff. Until the shutdown, we had a clear timeline. Our whole game plan is now up in the air. It’s not super scary yet, but it will be if it goes on much longer.”
Start-up breweries aren’t the only companies being affected by the shutdown. Existing breweries, especially ones distributing across state lines, are running into serious problems when it comes to needing the TTB to approve their beer labels.
Take The Brewing Projekt in Eau Claire, which sells a lot of its beer in the Twin Cities, for example: the state of Wisconsin asks that labels comply with federal guidelines, but there is no approval process. But if they want to sell that same beer in Minnesota, the TTB first needs to approve it, and then it must be approved by the state of Minnesota.
“The Cities are the biggest markets outside of our local one,” explains Will Glass, volunteer president of Brewing Projekt. “We had it down to a good system where we could brew a beer and by the time it got packaged, we had a couple days to get it to the state [of Minnesota for state approval after federal].”
Brewing Projekt had six new beers awaiting label approval prior to the partial government shutdown. All of them were intended for the Minnesota market, but will now go to Wisconsin. Selling the beer entirely in Wisconsin is a blow because Glass goes through a wholesaler in his home state, while in Minnesota he self-distributes and stands to make 30 percent more in revenue.
“I’m looking at this like ‘holy shit,’” Glass says. “What are we going to be looking at here when they [the TTB] get back to work? We built a business model on cranking out new stuff.”
Earth Rider Brewery, located just across the Minnesota-Wisconsin border in Superior, Wisconsin, is facing a similar issue.
“That’s the majority of our market, actually, the Minnesota side,” says Earth Rider CEO and founder Tim Nelson. “We probably won’t brew as much if it gets to that point. It’s a bummer.”
MobCraft out of Milwaukee is another example; they had just started entering the Minnesota market prior to the shutdown.
“It has stopped our ability to grow outside of Wisconsin dead in its tracks,” says co-founder and president Henry Schwartz. “So many applications go in each day already; it will be months until the backlog is caught up with.”
Number 12 Cider, classified as a winery, has a label for an off-sale product (product purchased and consumed outside of the taproom) stuck in the approval process. For any cider they make over 7% ABV, the label requires TTB approval.
“A significant part of our business plan is to sell products off-sale at the taproom,” says co-owner Steve Hance. “We’re prevented from selling a significant amount of our products, and that reduces the amount of revenue we generate significantly.”
Licensing and label approvals for Minnesota’s distilleries are also overseen by the TTB. “This issue effects [sic] all Minnesota distilleries as well,” Isanti Spirits wrote on the company’s Facebook page. “The same office approves labels for all alcoholic beverage producers. As I have a few new projects in the works, this puts a major damper on them. It took 10 days to get a label approved before the shutdown. Now we may see months-long back-ups and put projects way off into the future.”
While the government shutdown has impacted the entire alcoholic beverage industry, for many craft beverage producers this is just another in a long list of obstacles that, as small business owners, they face every day.
“[It’s] just another complexity we have to deal with,” Earth Rider’s Nelson says.
Or, as Fredericksen puts it: “It’s not all doom and gloom yet.”