Shutdown or Shut Out: Colorado’s Craft Producers feel the effects of the government shutdown

The TTB website on Thursday, October 3

The TTB website on Thursday, October 3

We try to stay out of politics here at Denver off the Wagon, though we do dip our toes into certain issues that affect booze. You’re not supposed to talk about politics, money, or religion on a first date. Or while drinking.

Or something like that.

I won’t get into who’s to blame and who should do what regarding the recent and ongoing government shutdown. I’ve got opinions— let’s drink some whiskey and I’ll be sure to pour them (the opinions, not the whiskey) all over you.

But what I will get into is how the current government shutdown affects the beer in your hand, or the prevention of that beer getting to your hand. Hundreds of thousands of government employees are out of work, and millions of Americans are adversely affected by the shutdown. While we all could use a few more beers, this shutdown affects business, and it affects business owners.

New breweries can’t open.

For a brewery to open, it must receive approval for their Brewer’s Notice from the Alcohol and Tobacco Tax and Trade Bureau, affectionately known as the TTB. The TTB is basically the Bureau of Alcohol, Tobacco, and Firearms (BATF) arm of the IRS. Acronyms galore!

At the time of shutdown, the TTB had 483 active employees. They are maintaining a staff of 35 to continue critical operations, such as continuing criminal law enforcement and undercover operations. But non-critical tasks, such as the processing of permits and certificates of label approval, are on hold.

It takes about 65 days for the TTB to review and approve a Brewer’s Notice. That’s when things are running smoothly and there’s no back and forth or changes to the application. Breweries that get to this step of the process are incredibly close to opening. It’s a race between the Federal approval and local alcohol and occupancy permitting. Depending on what city and state a brewery plans to open, they can apply for all things at once, or they have to wait for TTB approval before moving forward.

Take brewery-in-planning Former Future for example. According to co-founder Sarah Howat, they’re indefinitely stuck in limbo:

Unfortunately for us here at Former Future, we are nearly 100% dependent on the TTB at this point.  We were most likely days from receiving approval for our TTB license, and were planning on immediately working on city and state.  However, since the TTB will not be processing any new licenses at this time, we are stuck.

If everything else goes to plan, the government reopens soon, and the TTB quickly attacks their backlog of applications, Former Future could be open in six weeks. However, if the shutdown lasts too much longer, the fledgling brewery will remain in planning, despite local permits and all the money and time spent on building out the space. Former Future will continue their build-out, continue depleting funds from their reserves, and continue to hope that the government reopens soon. Otherwise, Sarah and James Howat’s dream of opening a brewery will be paused, and their status of small business owners will change to two more people looking for full time work.

Atom Brewing in Erie, Colorado, a brewery that’s been in planning for the better part of a year, was about to hit the “submit” button this week on their Brewer’s Notice application. While they still have plenty of construction and other permits to work on, co-owner and Head Brewer Jeff Porn is worried about some longer lasting issues. “[The shutdown] prevents us from getting contracts for things like hops, malt, etc.,” says Porn. “And it keeps us from attending some beer fests.” And without certain hop contracts, popular hops will be unavailable, meaning recipes might have to change.

Station 26 Brewing Co., another soon-to-open brewery in Denver, lucked out with their application. They received approval for their Brewers Notice before the government shut down, and can continue on their path to opening, sometime in November.

“It is unfortunate that we live in a country with a dysfunctional government because this shutdown does have real consequences for breweries in all 50 states,” says Justin Baccary, owner and brewer at Station 26. “I would hate to be one of the many breweries-in-planning that might be ready to brew and start making money but are being forced to sit on the sidelines for however long it takes to get Congress to end the shutdown.”

Breweries can’t release new beers.

New breweries aren’t the only companies in the booze world hurting from the shutdown. Breweries aren’t required to get Federal approval for beers and beer names poured in their tap rooms, but they are for beer packaged for off-site sale and consumption.

Don’t get any crazy ideas – the taproom beer still has to follow the law, it just doesn’t require label approval. You can’t start spiking taproom-only beer with cocaine just yet.

According to the TTB website, the Certificate of Label Approval, or COLA, exists to ensure alcohol products are created, labeled, and marketed in accordance with Federal laws and regulations. Translation: you can’t sell a beer that contains illegal ingredients, suggests the beer has magical medicinal properties, or misleads consumers in some other way. This is the process that caused Dogfish Head to change the name of Golden Shower Imperial Pilsner to Golden Era, for example.

You might remember a beer Avery used to bring to festivals and pour in its taproom. It was called Meph Addict, and it clocked in at 15.5% ABV. When Avery submitted a COLA for Meph Addict, it was denied due to the name’s proximity to a less savory, more illicity, similarly named substance. That beer is now named “Tweak” due to this process.

Enough background. What’s important for this discussion is that without COLA approval, beer cannot be sold. Meaning breweries producing new beers for this fall and winter can brew it all they want, but that beer cannot leave the brewery until the TTB reopens its doors.

Avery Brewing Company in Boulder is feeling the shutdown directly this week. If the TTB’s doors remain closed for the next week, Fall Day IPA, an IPA infused with spruce tips, will be relegated to the tap room only. The original plan? “This would have been a draft-only specialty beer that we planned to pour at special events during GABF, and possibly beyond Colorado,” says Avery Marketing Manager Joe Osbourne. “If the shutdown continues into the near future, it could also affect label approval for the next Barrel-Aged Series beer we are hoping to release soon.  Fingers are crossed that the folks on Capitol Hill can get things back on track, so we can get back to our business and the beer.” Avery normally sees a two week turnaround for COLA submissions.

And what if the government does stay closed for a while? The TTB can’t approve labels at the moment, but that also means they can’t enforce unapproved labels. Jason Yester isn’t worried. “If this goes on for a long period of time and I need to get a new product out, I’ll just print the label without approval,” says Yester, Captain of the Pirate Ship at Trinity Brewing Company in Colorado Springs. “I’m pretty disconnected from all that and just do my own thing anyways (remember I have dreads).”

Distilleries are hurting too.

The effect of the TTB closing reaches further than beer. Colorado has about 45 distilleries right now, and that number is growing rapidly. Or was. New distilleries face the same issue as breweries. However, unlike the the loophole for breweries serving unlabeled beer from tanks inside of the taproom, distilleries put their product in bottles. Bottles require labels. And the labels are all dried up.

Sean Smiley, owner, fermenter, and distiller at State 38 Distilling in Golden, has a sad tale of timing. Smiley received his Distiller’s Permit at the end of June. State 38 uses all organic fair trade raw agave in their products, and because this can’t be called “tequila”, Smiley had to go through an intermediary process called Formula Approval before even applying for his COLA. The three-month formula review process finally ended less than three weeks ago, after which Smiley immediately submitted his COLA. The TTB told him it would be 47 days before Smiley would hear anything, and Smiley had heard rumors of it taking even longer. Smiley applied for an expedited review, citing his bootstrap situation and the fact that everything else was 100 percent ready to go, save for the COLA. The expedited request was approved last Friday, a few changes were requested and submitted that same day, and this past Monday, the TTB had one more request. Just one small request for one more form. Smiley submitted the form Monday afternoon, and logged in to the TTB website Tuesday morning.

And the TTB was shut down.

State 38 is just Sean Smiley. He has no bank loans, no partners, no backing. He has ten years of savings and he’s ready to sell his product. This morning, Smiley paid the rent on his space, and his landlord commented on the trickle down effect of the shutdown. “It’s not a trickledown effect,” said Smiley. “I still have to pay my bills. I still have my obligations. I can’t just tell people ‘I’m shutdown, sorry.’ Everyone below me is sheltered from the trickle. I’m the trickle gutter. The trickle stops with me.”

The clock is ticking on State 38. If the TTB doesn’t reopen in the next few weeks, Smiley will run out of money, State 38 won’t open, and another small business will close.

What’s next

As of this writing, the government is still shut down. It’s not shut down over give-and-take budget negotiations, and it’s not shut down for any reason that I can agree with. I’m not one for ransom, but last resorts are last resorts. Regardless of my own political leanings, or how the law actually works, the shutdown is affecting real people with real businesses. People outside of the booze world are feeling the effects when their flood relief money doesn’t come soon enough. They feel it when they can’t get the medicine they need. They feel it when they can’t go on the family vacation for which they’ve been saving for months.

But this is a booze blog. We write about alcohol, the culture around it, and the people involved in it. The shutdown is having a very real effect on alcohol producers new and old. It’s time for the people in charge to take charge, figure their shit out, and let our producers produce. Let Former Future open. Let Atom open. Let Avery sell their beer. Let State 38 open. Or Trinity will just have to start making their own labels.

I’m sorry for bringing up politics on a first date.

About PJ Hoberman

PJ likes beer. A lot. And whiskey. Gin. Wine. Cocktails. Um.. what were we talking about?

  • Sarah

    Very very well written. Thank you.

  • chris

    I think we should all just not go to work on 10/7/2013 than the USA will get their shit together.

  • Sean Smiley

    Thank you for the much needed attention to this issue. Sean Smiley – State 38 Distilling.

  • Earl Bandy

    Good article. Thanks for highlighting. Colorado maybe its time we started handling this issues locally and tell the BATF (the TTB in particular) to go pound sand.

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