Craft Beverage Modernization and Tax Reform Act of 2019

February 6, we will see the re-introduction of the Craft Beverage Modernization and Tax Reform Act. The new bill will be known as the Craft Beverage Modernization and Tax Reform Act of 2019. I will refer to it as the CBMTRA in most cases. The bill will be introduced in the Senate tomorrow and in the House next Wedensday. The lead Senate sponsors will once again be Senators Ron Wyden (D-OR) and Roy Blunt (R-MO). The lead House sponsors on the bill will be Representatives Ron Kind (D-WI) and Mike Kelly (R-PA).
The bill includes all of the provisions from the amended two year version. It makes all of the new credits permanent and includes an extra $15 million for the TTB. The language that will be introduced also retroactively fixes two of our three implementation issues from the last year. The new language will allow for credits to be taken on bond to bond transfers, which will eliminate the “alternate procedure” that was implemented by TTB last year to mitigate the issues with bonded wine cellars. Additionally, bulk wine transfers from winery to winery will be eligible for the credits. Because of the retroactive aspect of the bill, anyone that was forces to pay a higher tax due to the transfer issues will be able to see retroactive savings. It is unclear how that will work, but the bill allows for TTB to issue guidance and regulations.
What was not fixed in the current language is the Custom Crush issue. We have been working with Wine Institute and Napa Valley Vintners (as well as Oregon Winegrowers and Washington Wine Institute) to come up with a proper and amenable solution to the problem. We are currently negotiating with the staff from Senator Wyden’s office on what that solution will be. IN the immediate, we recognized the fact that the bill had to be introduced sooner rather than later. What we will do is continuing working with the staff to make come up with the solution to the problem. We have a similar situation to what happened in 2015. The bill was introduced, but we were not happy with many of the wine provisions. We worked with Senate staff to improve the provisions and we were able to make the changes to an amended bill. When we see a vehicle for passage we will have the amended language (whatever that might be) as the language that will be used for passage.
Over the course of the next two months we will be working with our alcohol industry partners on increasing the number of co-sponsors on the bill. That will be our main goal at the April meeting. Additionally, look for a press release on the new CBMTRA at some point tomorrow. It is a joint release from the entire alcohol coalition. Also, we will be lobbying hard on the issue in April.