Beleaguered craft brewers raise a glass to tax relief

In addition to authorizing another round of Paycheck Protection Program funding, the latest federal stimulus package that was signed into law in late December included some sweet relief for local craft breweries and distilleries that have been hit hard by Covid-19 restrictions. 

The good news came in the form of a permanent extension of the Craft Beverage Modernization and Tax Reform Act (CBMTRA), which had been set to expire at the end of 2020. The measure cuts in half the amount of federal excise tax — from $7 to $3.50 per barrel — that breweries must pay if they produce less than 60,000 barrels of beer annually. 

For Mike Harting, owner and CEO of 3 Daughters Brewing in St. Petersburg, the renewal of CBMTRA is the culmination of a three-year effort to fight what he and his peers viewed as excessive taxation. 

“We’ve been working on this for quite some time,” he said. “It’s a welcome win for the industry.” 

According to Harting, 3 Daughters Brewing paid $52,000 in federal excise taxes in 2020. Without CBMTRA, the number would have doubled for 2021. 

“We pay excise taxes both at a federal level and at state level,” Harting said, adding that state excise tax is $14 per barrel. “It’s a lot of money.” 

Breweries that produce more than 60,000 barrels annually pay $18 per barrel in federal excise tax — a figure that hasn’t changed. But Harting said the big beer makers haven’t faced the same financial challenges as small craft breweries, which rely on in-person sales at their facilities and not just wholesale distribution to bars, restaurants and grocery stores. Covid-19 shutdown orders and capacity restrictions were devastating, he said, and even though such restrictions have been lifted, 3 Daughters’ revenue is still down by double digits. 

“The only restrictions we have left are mask-related,” he said, adding that he still feels some “trepidation” about 2021. 

“It’s all going to be determined by the public, by consumers’ comfort with going out and dining in. Our thinking is the same as everyone else’s — are we going to close down again? Is there going to be a need to take more draconian measures? A lot of small businesses made it — that entrepreneurial spirit got us through — but I think a second round of [restrictions] would be devastating.” 

Harting has been a vocal advocate for his industry during the Covid-19 crisis — and a critic of the initial shutdown orders that he says caused 3 Daughters’ sales to plummet by nearly 90 percent. He was part of a group of local bar and brewery owners who met in September with Gov. Ron DeSantis at Webb’s City Cellar by Green Bench Brewery in St. Petersburg. 

The timing of CBMTRA, he said, was “very fortuitous … we’re going to make it.” The tax relief also provides a glimmer of hope after one of the toughest years a small business owner could face. 

“We’re going to make it,” he said, “and that’s the only part that matters. I talk about that all the time with our team. We don’t need to make money; we just need to be here.”