How Does Government Shutdown Affect Utah Brewers?

Government Shutdown

We’re coming up on three weeks since the start of the partial government shutdown. It’s affecting hundreds of thousands of federal workers, closing parks and museums, and impacting airport security.

But it could also cause headaches for brewers — and other alcohol producers — who rely on federal involvement for certain business functions, such as beer label approvals.

Government Shutdown: TTB

The Alcohol and Tobacco Tax and Trade Bureau (TTB) is temporarily closed. That’s the federal agency responsible for approving brewery applications/permits and new beer labels, among other duties.

The Alcohol and Tobacco Tax and Trade Bureau (TTB) posted an "appropriations lapse notice" on its website. The partial government shutdown, which started on Dec. 22, 2018, temporarily closed the TTB.
The Alcohol and Tobacco Tax and Trade Bureau (TTB) posted an “appropriations lapse notice” on its website. The partial government shutdown, which started on Dec. 22, 2018, temporarily closed the TTB.

“It’s sort of a big deal to us,” says Rob Phillips, co-founder of RoHa Brewing Project. “We’re always working on new brands. We’re at a point right now where we’ve got some (new) beers ready to produce.”

But the brewery can’t distribute any new beers without federally approved labels (they’re prerequisites for state approval). And that can’t happen while the TTB is closed.

Immediately prior to the shutdown, Phillips says the TTB label approval time had hovered around 13 days. “I looked (Monday) and they’re up to 43 days for label approval,” he says.

Therefore, if the government reopened tomorrow, it’s a first-come, first-served system and breweries submitting labels now could be looking at at least a month-and-a-half turnaround time.

Timing is Everything

It’s a timing game, for sure. Brewing schedules, packaging lead times, state approvals, and other factors are juggled for each batch of beer.

“I think what we’ll do is just proceed like normal and submit labels (if necessary),” Phillips says. “We’ll keep an eye on when approvals might be coming and when our beer would release. We don’t actually have anything in the queue right now.”

It should only impact new labels. If a beer is already in the market, the brewery doesn’t necessarily need approval to re-print its existing label.

2 Row Brewing dodged a bullet and had its last TTB-queued label approved the day before the shutdown. The brewery, which packages most of its beers, doesn’t anticipate a significant impact if the government reopens in the near term.

“The shutdown doesn’t affect us too much unless it continues for a long time,” says Brian Coleman, 2 Row’s owner, in an email. “We also have our ‘Limited Release’ labels, so we can change up some beers using those. But new, permanent labels will just have to wait.”

For breweries such as Uinta Brewing, whose brand stretches across several states, an extended government shutdown could impact plans that require longer lead times.

“At this time, we don’t have any pending business with the TTB that’s critical (no time-sensitive formula/labels or other applications),” writes Jeremy Ragonese, Uinta’s chief marketing officer, in an email. “That could change shortly, as we do have some innovation coming up for later in the year we will submit soon, and could be impacted by a long delay.”

New Breweries Affected

Existing breweries seeking new formula/label approvals and breweries in the planning stages are two groups affected, according to a VinePair article.

Level Crossing Brewing Co., a new South Salt Lake brewery that’s looking to open in the coming weeks, says it’s finalizing labels for two high-point beers. It expects to add them to the TTB queue by Friday.

“We had an a-ha moment about a week-and-a-half ago that was, oh no,” says Katie Flanagan, business development and sales and marketing manager for Level Crossing. “We’ll get in the queue but who knows what the wait time could be. (The shutdown) could go on for a long time. It’s nerve-racking for sure.”

No matter what happens with its labels, Flanagan says Level Crossing will open as planned with four 4% beers on draft at its taproom.

To add a Utah wrinkle, if breweries don’t get federal approval on labels by the end of March, they might miss the next state-approval window. That could mean new beers might not find their way into state-run liquor stores until much later in the year.

The Enforcer & Tax Collector

The TTB enforces the Federal Alcohol Administration Act, which regulates alcohol advertising and interstate alcohol shipments. It also makes sure bottles or cans contain necessary disclosures, such as alcohol percentage. The TTB approved more than 192,000 labels in 2018, according to a BuzzFeed News article.

Utah, as mentioned above, requires federal approval of labels for alcoholic beverages distributed within the state.

Interestingly, the TTB, as part of the Department of the Treasury, also is responsible for collecting taxes from breweries. But that aspect seems to be remaining business as usual.

“If you are scheduled to pay federal excise taxes,” the Brewers Association writes on its website, “or to file a brewer’s report of operations during the shutdown, you are still required to do so.”

The government closed, at least partially, three times in 2018 (one shutdown was resolved overnight). The current shutdown is due to President Trump’s proposed border wall. If it lasts through Monday, it will be the longest government shutdown in U.S. history, according to The New York Times.

Update 1/15/19

The following are notes we’ve come across since publication of the original article (state law prohibits the discounting of alcohol):

  • T.F. Brewing writes on Instagram that its Delmar Imperial Stout is delayed due to the shutdown.
  • Zion Brewery says it will give 50% off food purchases to federal workers in Washington, Iron, and Kane counties who currently aren’t receiving a paycheck due to the partial government shutdown.
  • Squatters Craft Beers and Wasatch Brewery call the current situation “a crisis,” according to a Jan. 9 Fox 13 News story. Salt Lake Brewing Company, which brews Squatters and Wasatch beers, says it has nine beers brewed and ready to distribute. But it’s waiting on TTB label approval to do so.
  • Uinta Brewing is offering perks for affected government employees. Show your valid U.S. Government-issued ID and receive 20% off all food and a free 32-ounce (unfilled) growler, while supplies last.
  • Roosters Brewing Co. is offering a 20% discount on in-restaurant dining for federal employees with appropriate ID.
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