The Government Shutdown and Its Effect on Beer

By Joe Alton and Brian Kaufenberg

The government has shut down. We go about our daily lives, accepting that Washington is broken and that this ridiculous stalemate, bemoaned by citizens from every political view, could drag on for a while. While not all of us are affected as directly or dramatically as the more than 800,000 government employees on furlough, it turns out there is at least one (relatively) major aspect of your life this gridlock could affect — your beer.

According to The U.S. Alcohol and Tobacco Tax and Trade Bureau’s (TTB) Appropriations Lapse Notice, the government shutdown “will suspend all non-excepted TTB operations, and no personnel will be available to respond to any inquiries, including emails, telephone calls, facsimiles, or other communications” and all but 35 of the TTB’s 618 employees and contractors will be placed on furlough. What does this mean for brewers and other alcohol producers? Turns out, it’s quite the pain in the collective ass. Though most established breweries, wineries, and distilleries’ will not be in jeopardy of closing, they are facing indefinite delays in production as they wait for approval of new product labels, which are quickly piling up in a backlogged queue at the TTB office–the arm of the TTB that handles the “issuance of approvals for new alcoholic beverage labels” will be non-operational as long as the shutdown persists.

Most of the established breweries we talked to didn’t seem too concerned with the TTB shutdown (as long as it doesn’t go on too long, many noted). “We should not be affected by the TTB shutdown.” Said Jim Diley, co-owner of Fulton Brewing Co. “Generally, the TTB will continue to accept tax returns and tax payments.”

The shutdown of the TTB’s non-essential operations weighs heaviest on the most vulnerable folks in the community—new breweries. Severe consequences face those trying to get their brewery, winery, or distillery business plans off the ground as the TTB is unable to issue the mandatory brewer’s notice and distilled spirits permit necessary to begin production.

For those of you excited about Minnesota’s craft distillery momentum, there’s some unfortunate ramifications to note. “The government shutdown will mean a delay in the release of both our gin and spiced rum.” Says Sheri Reese, co-owner of the (hopefully) soon-to-be-open Far North Spirits in Hallock, MN. “The TTB isn’t processing label or formula approvals during the shutdown. So, the gin label and the rum formula, both already submitted, are in limbo land.”

We also asked Shanelle Montana of Du Nord Craft Spirits—another future line of local distillates—what the shutdown meant to them. “As a small mom and pop shop we put our heart, soul, and savings into our business” says Montana, “every day the shut down continues is a day we have to delay our production.” When asked how long the shutdown would have to last before they felt a significant impact Montana responded, “Every day the shutdown continues is a day we are paying rent and other expenses while also sitting idle without being able to produce and sell. There isn’t a set number of days before a significant impact is felt. Every day is significant.”

A sentiment echoed by Dane Breimhorst and Thom Foss of Burning Brothers Brewing Company, Minnesota’s first 100% gluten-free brewery. “Currently, we are waiting for formula and self-distributation approval from the TTB. Both of these are on hold and are not progressing because of the shutdown. Also, we are unable to submit labels for approval (TTB or state) without first having our formula approved. This of course cascades further in the fact that we can’t order cans until the label is approved, so it’s really a snowball affect for us.”

The company is still planning to move forward with taproom and growler sales, which they already have a license for through the city and state, Foss and Breimhorst are quick to note that the “lack of formula approval could still get in the way of that.” Regular Certificate of Label Approval (COLA) applications can take up to two weeks to process, while beers that fall under the TTB’s specialty category must follow the formula application process. Formula applications take considerably longer to process and “in some cases, the agency is issuing notices that it may take up to 75 days to review a formula application.” With innumerable labels stacking up at the TTB office, the process is unlikely to be any shorter even after the shutdown is resolved.

“When you consider the hard costs of rent, utilities, loan payments and the like coupled with the lost revenue from being unable to sell our beer, it adds up to a pretty penny. Contrary to popular belief, not all start-up businesses are rolling in capital,” Foss and Breimhorst added.

The TTB has not responded to our request for comment.

Here are some responses to the TTB’s shutdown from the craft beer community around social media: