The 25-day partial government shutdown is having some impressively bad side effects — farmers unable to access their federal loans, our national parks getting literally trashed and Delta just announced it would lose $25 million this month alone because of the ripple effects. In the craft brewing industry, aspects of the business are regulated and many breweries have had to put their plans on hold as the federal government fights over a giant wall. The big headlines have been about the inability to get new beer labels and formulas approved because the Alcohol and Tobacco Tax and Trade Bureau (TTB) is closed. But that’s not even the worst of it.
I’ve been trying to point this out to reporters – but they seem to like the label angle most for some reason. The people who have the potential to get the most screwed are those who are already paying rent, have ordered tanks, etc., but are in limbo on their permit.
— Bart Watson (@BrewersStats) January 11, 2019
You’re about to open a brewery, expand your operations or maybe open a second location, but you’re stuck waiting on the government permitting approval process. During the shutdown, the TTB will not approve process permits, and when it starts back up we’ve heard the backlog could be months-long. During the shutdown period, brewers do have access to the TTB’s eGovernment applications, including Permits Online, Formulas Online and COLAs Online, but submissions will not be reviewed or approved until appropriations are enacted.
In other great news: Information on the website may not even be up to date (as you’ll see in our last quote), and the TTB will not be able to respond to questions or comments submitted via the website until appropriations are enacted. Awesome.
How many breweries is this effecting?
“I think it’s hard to know definitively how much it will affect openings until we know how long the shutdown is going to last,” explained Bart Watson, the Tweeter above and economist for the Brewers Association. “We’ve seen ~1,000 openings each of the last few years, so until I see something change, that would be my prediction for 2019. It varies how far along people are in the process when they get their permit, but if the shutdown drags on, I’d definitely expect to start seeing it in the numbers later in the year.”
Here’s a few examples from the around the internet.
From Iowa’s The Gazette:
[It]’s frustrating for Betsy Duffy, who has been working to open Gezellig Brewing Company in Newton [Iowa] for about two years. She said she submitted “as built” building plans of the brewery in November. Those plans reflect any changes made during construction and must be approved by the bureau. While she has been told approval of the plans normally takes six months, that process is now on hold.
From the Wall Street Journal:
Fair Isle Brewing worries that further delays could undermine plans to open a brewery in Seattle this summer. The startup applied for a federal license to brew beer in September, which it hoped to have in hand when its lease went into effect in December, but that process is on hold. Without federal approval, Fair Isle can’t take next steps, such as applying for state permits.
From the Associated Press article floating around the web:
A new Baton Rouge brewer was days away from getting his licensing through the federal tax and trade bureau when the shutdown began Dec. 22. Now, he’s paying about $10,000 per month for employees, space and equipment that can’t be used until his permit arrives.
An established New Orleans brewer will be delayed in opening a second location, awaiting action from three federal agencies affected by the shutdown: the tax and trade bureau for a permit, the Small Business Administration for a loan and the IRS for an employer tax identification number.
These are just three examples of the hundreds of potential brewers living in limbo. How many breweries are in planning right now?
“I generally go with ~2,500 breweries in planning at the moment,” Watson told us. “It’s actually a question that relates to this story. My typical method is to take the TTB permit number and subtract our active number. But, because the shutdown is going up, the TTB isn’t updating the permitted number, so it’s harder to estimate at the moment.”