Policy Issues

The TTB is the primary federal regulator of the alcohol industry. Alcohol wholesalers must have a TTB permit, and these businesses rely on the TTB to provide clarity on regulations to operate legally. The TTB is also responsible for:

• Collecting alcohol excise taxes. In FY 2021, the TTB achieved a return on investment of $375 for every dollar spent on collection activities.
• Enforcing the Federal Alcohol Administration Act and other federal laws that promote fair competition, support state alcohol regulation and prevent tainted alcohol products from reaching consumers.
• Maintaining a level playing field and facilitating a robust and diverse marketplace.

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We Encourage Congress To:

• Support and fully fund the TTB.

CBD and Marijuana Policy

As Congress continues its work, policymakers should draw on the expertise and experience of the alcohol industry and public health leaders when contemplating and addressing needed regulation, revenue and research principles in the marijuana industry. Additionally, since the enactment of the 2018 Farm Bill, there has been considerable confusion in the marketplace about the legality of products containing cannabidiol (CBD) and further federal guidance on this issue is needed. Congress should exercise its authority to provide greater clarity to stakeholders on federal oversight of the marijuana and CBD marketplace.

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We Encourage Congress To:

• Urge the Food and Drug Administration (FDA) to provide stakeholders further guidance on the regulatory pathway forward for CBD. Consider the established and effective regulatory policies of the alcohol industry as a guide when determining regulatory policies for the marijuana industry.

 

Recent Congressional Action on Alcohol Taxes 

In 2020, Congress again codified the differential in federal excise tax rates for beer, wine, cider and liquor. These rates were previously enacted on a temporary basis in 2017 under the bipartisan Craft Beverage Modernization and Tax Reform Act 1. These permanent rates continue a longstanding congressional recognition of differentiation between beer, wine and liquor. Liquor industry efforts to remove these distinctions are inconsistent with current law, as well as public health and policy principles regarding alcohol.

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Liquor and Beer are NOT the same

• Vodka, whiskey, gin and tequila are not the same as beer. The average alcohol by volume (ABV) of liquor (distilled spirits) is approximately 40%, while the average ABV of beer is approximately 5%.
• Congress has recognized the fundamental differences between beer and liquor. For example, the Federal Alcohol Administration Act contains different regulations for liquor versus beer as well as different regulations for breweries and liquor manufacturers. The tax code also has consistently taxed liquor at a higher rate than beer or wine.

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Health Concerns are Inherently Different Between Liquor and Beer

• Differences in taxation reflect the concentration of alcohol in the different products. Due to its higher concentration, liquor can intoxicate more quickly. Counterfeit liquor can be fatal to consumers, as happens in some countries outside the U.S.2
• According to the Centers for Disease Control and Prevention, approximately 2,200 people die each year from extreme alcohol consumption.
• A cocktail served at a bar and a cocktail packaged in a can are both liquor-based and the packaging should not change the federal tax rate.

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The U.S. Beer Industry Contributes More to the Economy

• The U.S. beer industry creates significantly more jobs, contributes more to wages and salaries and has a more significant impact on gross domestic product (GDP) than the liquor industry. Even as liquor’s market share continues to grow, its effective tax rate is significantly reduced by government credits and refunds from rum cover over and drawbacks and MNBP loopholes that currently exist in the tax law.
• Today, there are more than 13,300 permitted breweries in the U.S., helping drive trade and economic activity. The U.S. beer industry supports more than two million good-paying, local jobs and contributes more than $330 billion to our economy. Brewers and beer distributors directly employ nearly 210,000 Americans, and each job in the brewing industry generates another 30 jobs in other industries, including farming, transportation and hospitality. The impact of the beer industry is equivalent to 1.6% of the U.S. GDP.

In 2012, Congress directed the Federal Motor Carrier Safety Administration (FMCSA) to establish new minimum training standards for individuals applying for a Class A or Class B commercial driver’s license (CDL). The new requirements include a prescribed program of both knowledge and behind-the-wheel instruction provided by a training entity listed on FMCSA’s new Training Provider Registry (TPR). Additionally, the new rules incorporate performance-based concepts by requiring driver-trainees to demonstrate driving proficiency and participation in classroom theory training.

To ensure distributors had adequate time to adjust to new driver training regulations, NBWA advocated for a delay in the implementation of the ELDT rule that was originally set to take effect on February 7, 2020. Since the rule establishes new CDL driver training standards, NBWA worked to ensure that implementation of the new regulation minimized stakeholder confusion and offered a smooth transition for those affected. As a result, the new training requirements were delayed for two full years and will now take effect on February 7, 2022.

ELDT Important Information

The Entry-Level Diver Training (ELDT) rules apply to new drivers, in interstate or intrastate commerce, seeking a Class A or Class B CDL, an upgrade to their CDL or hazardous materials, passenger or school bus endorsement for their license for the first time. The requirements do not apply to those holding a valid CDL issued prior to February 7, 2022. Starting on February 7, 2022, entry-level driver applicants must complete a theory (knowledge) and behind-the-wheel (BTW) training program by a training provider listed on FMSCA’s TPR. Potential TPR entities include training schools, educational institutions, motor carriers, owner-operators, individuals and others.

Training providers are required to self-certify that they meet the ELDT standards. It is expected that the TPR will be open for registrants in the summer of 2021. The rule requires states, through their State Driver Licensing Agencies (SDLAs), to verify if a new CDL applicant has completed the ELDT theory and BTW training before allowing the applicant to skills test for their CDL. The new rules do not replace or supersede state-based ELDT requirements that exceed the new federal requirements. Additional state-based requirements must also be met.

The ELDT rule does not require any minimum number of hours for completion of any of the BTW training. The proficiency analysis of the BTW training is based solely on the training instructor’s assessment of the trainee’s performance of the required BTW elements. The rule does not require any minimum number of hours for completion of the theory requirements.

Visit FMCSA Training Provider Registry Site

Permanency and Parity

Reducing the overall tax burden for America’s 3,000 independent beer distributors – with a focus on S corporations (pass-throughs), estate tax, increased business expensing allowances and preservation of LIFO accounting – is an ongoing priority for NBWA and its membership.

NBWA continues to advocate for Main Street businesses to receive tax treatment on par with Wall Street businesses to ensure that:

• Distributors can continue supporting more than 140,000 quality jobs
• Tax policy changes will support small businesses that make significant contributions to local and national economies
  
• Permanent estate tax relief will help family businesses invest in the future

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S Corporations: Tax Permanency and Parity

There are more than 4.5 million S corporations in the U.S., employing one in four private-sector workers. NBWA member companies are largely structured as S corporations, and their business income flows through to the owner’s individual income tax return.

The legislation that Congress passed in 2017 provides temporary improvements to S corporations by allowing a 20% deduction on taxable business income, while also providing significant relief for large corporations by permanently reducing the corporate tax rate from 35% to 21%.

The S corporation provision is structured to allow taxpayers that own businesses with qualifying income – below $157,500 for individuals or $315,000 for joint filers – to be eligible for the full 20% deduction. Beyond these thresholds, specific rules require privately-held businesses to distinguish between business income and individual wage income.

Despite establishing permanent relief for C corporations, the 2017 tax legislation provides reduced tax rates temporarily for S corporations only through 2025.

Will you support efforts to make tax relief for small, privately-held businesses permanent?

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Estate Tax: Making Relief Permanent

NBWA and its multi-generational family businesses have called on Congress for many years to address the burdens of the federal estate tax. The 2017 tax bill builds on prior progress that raised the exemption level to exclude all estates valued below $5 million indexed to inflation, with an exemption of $5.49 million in 2017. The new tax legislation provides further relief by temporarily doubling the exemption thresholds to slightly more than $11 million for individuals and $22 million for married couples through 2025.

Will you support future efforts to provide permanent estate tax relief to help family businesses plan for the future?

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Other Business Taxes

The 2017 tax reform bill included a broad array of provisions to stimulate productivity, including a temporary allowance for full and immediate expensing of qualifying purchases for a period of five years. The bill also maintained a beer distributor’s ability to use LIFO accounting. NBWA has been an advocate for expanded business expensing provisions and LIFO accounting preservation for many years.

• NBWA urges Congress to maintain LIFO and make the expensing provision permanent.

What are Beer Franchise Laws?

The 21st Amendment to the U.S. Constitution gives states the primary responsibility to regulate alcohol. State franchise laws are a key component of state alcohol regulations; they address the relationship between beer suppliers and distributors. Beer franchise laws provide balance and guidance for brewers and beer distributors.

Beer Franchise Laws Support:
1) Consumer Choice – Product Diversity

2) Brewer Access – Distributor Independence

3) Public Safeguards – Responsible Sales

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Who Benefits?

The consumer benefits because franchise laws support an independent system that generates tremendous choice in the market.

The brewer benefits because they gain access to equipment and personnel provided by independent distributors, who deliver and sell beer to retailers across the country. Small brewers especially benefit because distributors are able to act independently and carry all brands.

The public benefits because franchise laws support the system that regulates and safeguards a unique product..

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Consumer Choice: Product Diversity

Consumers see new products in their marketplace. Beer franchise laws encourage distributors to make the investments necessary to expand distribution of new craft brands and allow new brewers with new products to enter the market through independent distribution.

Consumers have selection. American consumers access a wide selection of beer brands through an open distribution network, unlike industries where the distribution network is closed. According to the Nielsen Company, there is more selection of alcohol than any other consumer product.

Franchise laws promote consumer choice. Beer franchise laws prohibit brewers from terminating distributors for taking on new brands. Beer franchise laws inhibit forced consolidation and termination without cause. Combined with three-tier requirements, franchise laws prohibit vertical integration of the brewing, distribution and retail tiers, preventing monopolies.

Multiemployer Pension Plans 

Many beer distributors participate in multiemployer defined benefit pension plans and have met their contribution responsibilities dutifully. However, a number of these plans remain underfunded. These outstanding liabilities threaten the solvency of participating businesses and the retirement security of millions of plan beneficiaries. The 2021 American Rescue Plan Act included a Special Financial Assistance Program for Financially Troubled Multiemployer Plans. Although the program addresses the financial needs for some of the most troubled
plans, it does not address needed systematic reforms.

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We Encourage Congress To:

• Address withdrawal and partial withdrawal liability.
• Enact funding rules to allow trustees to address problems before they happen. Update notice and disclosure rules to ensure that both employers and employees understand the financial health
  of these plans.

America’s 3,000 licensed, independent beer and beverage distributors and their more than 140,000 employees are citizens in the communities in which their businesses operate. They understand that alcohol is not like other consumer goods and can have consequences if abused or consumed illegally by underaged individuals. That is why beer distributors take steps to ensure the safe and legal sale of alcohol and fight efforts to weaken regulations that exist to provide a safe and orderly marketplace. They participate in a wide variety of programs to promote responsible consumption and to eliminate drunk driving, alcohol abuse and the underage purchase and consumption of alcohol. 

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In addition, NBWA supports legislation to protect public health and safety with regard to alcohol, including the Sober Truth on Preventing (STOP) Underage Drinking Act   

See the below resources available to distributors to help promote responsible alcohol consumption: 

• America’s Beer Distributors: Promoting Responsibility in Our Communities
• NBWA is a member of the Techniques for Effective Alcohol Management (TEAMS) Coalition
• U.S. Health and Human Services Substance Abuse and Mental Health Services Administration (SAMHSA)

Federal Preemption: Maintain State Authority to Regulate Alcohol

The 21st Amendment gives states primary authority to regulate alcohol within their borders and meet local priorities – the needs in Utah may be very different than in neighboring Nevada. States are able to appropriately balance the demands of the marketplace with consumer protection, revenue collection and public safety concerns. Legislative proposals such as shipping alcohol through the mail fail to recognize each state’s constitutional authority to establish and enforce its own alcohol laws while ensuring responsible alcohol oversight and delivery.

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We Encourage Congress to:

• Support the current three-tier system of alcohol regulation that protects the American public.
• Oppose H.R.3287/S.1663, the United States Postal Service Shipping Equity Act.

Alcohol is regulated differently because it is not the same as other consumer products. The three-tier system has been serving the American public for decades, helping to create and maintain a competitive, safe and efficient marketplace benefitting consumers.

Download the Issue Sheet

Quality Jobs and State Revenue

Collectively, the alcohol industry contributes nearly $40 billion in annual tax revenue to state and local governments from sales and excise taxes on beverage
alcohol. The three-tier system ensures that appropriate taxes are collected, all while supporting well-paying jobs — the beer distribution industry alone supports more than 140,000 quality jobs in communities across the country

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Consumer Choice

Unlike many consumer goods with vertically integrated supply chains, alcohol beverage diversity has never been greater. Consumers benefit by having a variety of choices from the largest international brands to the smallest local brews and everything in between all on the same store shelf, menu and bar tap.

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Regulatory Accountability and Consumer Protection

The three-tier system maintains a chain of custody from producer or importer to independent distributor to licensed retailer. This ensures product integrity and
helps keep alcohol away from minors. This time-tested, transparent and accountable regulatory system helps ensure compliance with and implementation of local laws and the collection of revenue.

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Access to Market and Competition

Distributors play a vital role within the three-tier system, providing efficient access to market for ALL beer brands to ALL licensed retailers, promoting competition and
access to thousands of brands, while ensuring consistent product availability and choice for consumers. As a senior administration official recently said, “While [alcohol markets] are not perfect, they do give us a sign of how the U.S. economy can be. For example, beer brewing has gone from an industry which consolidated all the way down to 89 breweries in the United States, where there’s now over 6,0002 breweries operating in the U.S., and they are regional, they’re competitive, they’re innovative.

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We Encourage Congress To:

• Cosponsor H.R. 7105, the STOP Underage Drinking Act. This important legislation recognizes that alcohol is different than other consumer products and is best regulated by the states, consistent with the 21st Amendment. It also highlights the health and safety concerns related to underage drinking and provides funding for states to help address these problems. It was enacted in 2006 and was last reauthorized in 2016.

Despite providing competitive wages, benefits and long-term career opportunities, beer distributors are facing significant labor shortages from workers who load trucks to commercial driver’s license (CDL) drivers who safely deliver beer. It is important that Congress take steps to help address labor shortages, supply chain challenges and transportation costs.

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Labor Shortages and Supply Chain Challenges

Businesses across the country continue to struggle to recruit and retain workers as well as deal with continued challenges to the supply chain. The Bureau of Labor Statistics reported almost 100,000 more job openings in the wholesale trade sector in January of 2022 compared to January of 2021.

These unfilled jobs continue to put pressure on wages and inflation. As the country continues to return to normal, Congress should take steps to help address these challenges facing businesses.

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Transportation Costs

Transportation costs, including fuel and fleet, are skyrocketing. This puts major pressure on small businesses. Congress should support policies that allow businesses to recognize greater transportation efficiencies and reduce costs.

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CDL Drivers and The DRIVE Safe Act, H.R. 1745/S. 659

Beer distributors employ CDL drivers who deliver thousands of popular brands of beer to licensed retailers throughout local communities and return to the warehouse at the end of the day. The shortage of CDL drivers was a concern before the pandemic and continues to cause significant disruptions. Normal attrition and expansion of home delivery providers, combined with an aging CDL-driver workforce have contributed to a smaller pool of available delivery drivers. The bipartisan DRIVE Safe Act, H.R. 1745/S. 659, would create an apprentice program that would allow CDL holders between the ages of 18 and 21 to drive interstate and help grow the CDL-driver workforce

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We Encourage Congress to:

• Take steps to address the nationwide labor shortage and challenges in the supply chain, including apprenticeships, community college and trade school initiatives. Support policies that address rising transportation costs and allow businesses to recognize greater transportation efficiencies and reduce costs.
  
• Cosponsor the DRIVE Safe Act, H.R. 1745/S. 659, and support meaningful efforts to increase the pool of eligible CDL drivers.