“Re-capping” the Threat of the Craft Beer Tax Increase

[This post is provided by Chris Tarnstrom - Treasurer, Flying Bike Cooperative Brewery]

Washington’s craft beer industry recently defeated efforts to double the taxes on small breweries. The greatest success occurred on April 23^rd, when the Finance Committee passed an amended bill HR 2038 excluding an increase in craft beer taxes. The Finance Committee’s adjusted bill was adopted by the house on the following day. The Craft Beer Industry in

Washington, lead by Washington Brewer’s Guild president Heather McClung (Schooner EXACT), and other Industry leaders acted quickly and effectively - and for good reason – our ability to compete and grow was being threatened.

During the campaign Washington’s Craft Beer industry unified. Brewers, owners, employees, and members of the broader beer-supporting industry worked together more closely than ever in the past. Flying Bike

Co-operative mobilized to contribute our own efforts to defeat the tax, the story of which we share here.

It was a dark and stormy night – in Olympia…

Threat of the Craft Beer Tax began unfolding on March 28, with a budget proposal by Governor Jay Inslee. Concurrently, Flying Bike Co-operative was pursuing membership in the Washington Brewer’s Guild, a move advised to us by multiple industry advisers. The board approved the expense in March, and the application was being submitted. Governor Inslee’s proposal was generating an uproar in the Washington Craft Beer community, because it suggested we raise craft beer excise taxes by $0.50 / gallon to ~$0.654 / gallon (about a 325% increase! – to compare, Oregon’s excise taxes are $0.08 / gallon). As the “buzz” grew about the possible tax, several Board members were registering their access to the Brewer’s Guild message board.

On April 10^th the real move struck – a proposal from the Finance Committee, the House committee with the power to introduce tax legislation, stated their intention to introduce a bill that would raise Craft Beer Excise tax from ~$0.154 to ~$0.304 / gallon, effectively doubling excise taxes. Though this proposal amounted to a smaller increase than Gov. Inslee’s, it would still threatened a damaging blow to Washington’s Craft Beer industry. The word was that the Finance Committee would seek to act quickly, so we had limited time to act if we were to avoid this tax. As many of you witnessed, each day new statements were made by Washington’s Craft Beer industry leaders, the best collection of which can be referenced in the Washington Beer Blog.

Recent work on the Flying Bike business plan had assessed how excise taxes impact our profitability.  It was clear that brewing entrepreneurs, like ourselves, would face a much tougher uphill climb towards a successful business model. Producing a pint could cost 6% to 12% more. Discussions by industry professionals estimated the consumer could experience an increased per-pint cost of up to $0.50 for Washington craft beer, while the prices for out-of-state beer could remain untouched.

The board became convinced this was a cause that mattered to our member-owners, as well as the whole Craft Beer industry. We decided to act quickly – and through our greatest asset - members. The voice of our membership had the potential to help sway legislators – including several key Finance Committee members – and we launched the letter-writing campaign. This campaign would involve communicating to membership, as well as reaching out in-person to the beer-loving public, where we could speak directly with patrons at breweries and pubs. Access to the Brewer’s Guild message board permitted Flying Bike to align the letter-writing campaign with strategies the Brewer’s Guild deemed potentially most effective.

Letter-Writing Campaign Timeline – Wednesday, April 10^th through Tuesday, April 23^rd:

• With the Finance Committee proposal announced on Wednesday (4/10), board members performed independent research on the issue and discussed our findings on Thursday (4/11).
• By Friday (4/12) we had created two binders containing key information: the proposal, statements by industry leaders, articles, maps of key legislative districts, and legislator contact information.
• Friday evening (4/12) we had a table setup at Peddler Brewing, sharing information and developing a by-district email list so we could email people information and a suggested wording for letters.  We developed a by-district list of 44 email contacts interested in writing letters.
• By Saturday evening (4/13) we had printed Draft letters, which had been proofed by the Flying Bike Board of Directors, as well as Brewer’s Guild contacts.
• Saturday afternoon / evening (4/13) we setup at Chuck’s Hop Shop, signing 21 people on our by-district email list, and distributed ~20 hot-off-the-presses letters to patrons.
• On Sunday (4/14) a Flying Bike blog was published, encouraging members and other readers to communicate directly to their legislator. The post included a suggested letter template.
• On Monday (4/15) an email was sent to membership informing them of the Board’s decision to undertake a letter-writing campaign against the tax, and directing people to the blog post.
• Monday evening (4/15) at Elysian Brewing in Capital Hill, 53 letters to representatives were signed and addressed, and later mailed by board members.  Another 8 people were sent home with draft letters.
• Over the next days (4/16 – 4/18), 17 letters were signed and addressed by patrons at Urban Family Brewing and Third Place Books Pub and placed in the mail. Additional letters were left with owners, bartenders, and patrons, at 8 craft beer pubs. Over 80 patrons we met in pubs were emailed electronic versions of letters they could submit them and/or proliferate them to contacts.
• On Friday (4/19), Treasurer Chris Tarnstrom submitted a public comment to the Finance Committee’s hearing on proposed bill HR 2038 and attended the Rally to Defend Washington Beer at the State Capital Building in Olympia.
• On Saturday (4/20), 80 letters were signed, and addressed by patrons at Beveridge Place Pub and placed in the mail.

By Tuesday, April 23, legislators had received the 150 letters mailed directly by the team, plus numerous uncounted letters, emails, and phone calls by members,friends, email contacts, and pub patrons we met along the way.

On that Tuesday (4/23) the Finance Committee held their final meeting addressing proposed bill HB 2038, and passed a version omitting the increase on craft beer taxes. The effort to defeat this proposed tax increase, championed by both the Governor and the Chair of the Finance Committee, brought together the Washington Craft Beer industry. We at Flying Bike Co-operative contributed but one facet of the many lobbying efforts mobilized to oppose the tax. Still, we were glad to advocate both for our membership, as well as the Washington Craft Beer industry, and to have met and worked with our many great people in the craft beer community through the process. We believe our greatest strength is our members, and we deeply thank all who responded to our blog post and email by contacting your legislators. Please raise a toast to a job well done.

In conclusion, if you do have the time, there is one more task which could be done on this campaign which would help our efforts in the future.  In the wake of such a political lobbying effort, many trying words are communicated to legislators and their staff persons, who are people too.  Please check how your Representatives voted, either in the Finance Committee (passed 8-5 along party lines), or on the House Floor, and if they voted in support of Washington Craft Beer, send them a thank you note. You can find your representatives here.

To repeat our motto during the letter-writing campaign:

“Do not underestimate the democratic power of pubs!”