Friday, May 29, 2015

Axe the Drink Tax!

In 1794, our young country faced an armed rebellion in several states. Threats were made on the lives of government officials, violence broke out, and the insurrection even resulted in a few casualties. The rebellion escalated to the point of President Washington calling for action from the state militias. What caused all of this? Taxes. Specifically, a tax levied on alcohol through the Distilled Spirits Tax Act of 1791, more commonly known as the Whiskey Act. This was a first for a country that just won a revolutionary war against taxation. Today, alcohol remains one of the highest taxed products. While the rebellion was relatively ineffective, people should still question the implementation of these taxes.

A tax collector is tarred and feathered by anti-tax rebels. Source.
There was an economic analysis done of the tax burden on the U.S. beer industry which concluded that federal, state, and local taxes accounted for 40.8% of the total retail price of beer. A major contributor to this tax burden is due to excise taxes specifically targeted at beer. States implement their own excise taxes which vary greatly from $0.02 to $1.29 per gallon. Minnesota falls just outside the top ten with a rate of $0.47 per gallon.

Source
Prohibitionists and social conservatives argue that these taxes are aimed at curbing alcohol abuse, drunk driving, and teen drinking. However, the majority of studies show little to no direct correlation between higher taxes and reduced abuses. While these taxes may influence purchasing patterns of responsible drinkers, the excessive drinkers just find other ways to continue their addiction.
People can't be taxed into responsible behavior. Abusive drinkers are the very last people who will reduce their consumption when the price of alcohol goes up. In response to higher prices, abusers have many ways to maintain their high levels of alcohol intake - they can switch to cheaper brands, switch from on-premise to off-premise consumption, or purchase less expensive forms of alcohol including non-taxed illegally produced beverages. (Source)
These taxes are ineffective at achieving their intended goals. To combat alcohol abuse, policies should be developed that directly target those individuals, not by casting a large net at the general population. Tax policy should not be the vehicle we use to influence behavior.

Efforts have been made to reduce these excise taxes at the federal level through the Small BREW Act and the Fair BEER Act. There is a debate as to which proposal is better for the beer industry, but both aim to reduce the federal excise tax. The current federal rate of taxation is $7 per barrel for the first 60,000 barrels and $18 per barrel there after. The Small Brewer Reinvestment and Expanding Workforce Act (Small BREW Act), which was introduced by Minnesota Congressman Erik Paulsen, is supported by the Brewers Association as it only applies to breweries that produce less than 6 million barrels per year. It would reduce the rate of taxation to:
  • $3.50 per barrel for the first 60,000
  • $16 per barrel for 60,001 to 2 million
  • $18 per barrel above 2 million
The Fair Brewers Excise and Economic Relief Act (Fair BEER Act) is supported by the Beer Institute and the National Beer Wholesalers Association who represent the macro-breweries, importers, and suppliers. This proposal applies equally to all brewers and importers regardless of production amounts. It would reduce the rate of taxation to:
  • No tax on the first 7,143 barrels
  • $3.50 per barrel for 7,144 to 60,000
  • $16 per barrel for 60,001 to 2 million
  • $18 per barrel above 2 million
The debate about which is better hinges on the impact these tax cuts would have on the deficit, the fact that the macro-breweries are owned by overseas corporations, and the sentiment that the macro-breweries don't need the tax cuts. My preference would be to focus on helping out the small craft brewers, but the principle remains that we shouldn't have these taxes at all so any cut to them is a good thing. I applaud Congressman Paulsen and the other cosponsors and I hope to see this at least get a hearing in the House Ways and Means Committee.

Egészségedre!

Tuesday, May 26, 2015

Brewery Review: HammerHeart Brewing Co.


This past weekend, my wife and I went camping with two of our good friends just North of the Twin Cities in Lino Lakes, MN. Sunday was pretty wet and cloudy so instead of drinking beer at camp we went straight to the source and visited the closest taproom, HammerHeart Brewing Co. They are the first and only brewery in Lino Lakes and they now hold the spot of my favorite brewery.

In the ever-growing taproom market of the Twin Cities, I feel like you need to do one of two things really well to succeed. One of those would be constructing an awesome taproom by creating an environment that provides a one of a kind experience (i.e. Surly Brewing). The other would be to focus on brewing a line-up of consistently good beer. HammerHeart has nailed both of these.

The taproom makes me think of the Prancing Pony, the pub from the Lord of the Rings. The whole place is covered in carved wood and Nordic inspired decorations and above the front door is a menacing sea serpent figurehead from a viking longboat. You can enjoy their brew outside on their small pine-covered patio or you can saddle up to one of their bourbon barrel table tops.

Source
The people that work there also contribute to the unique experience. Nathaniel Chapman and his brother-in-law Austin Lunn who own the brewery happened to both be there during our visit, which is apparently a rare occasion. These guys are exactly what you would picture the owners of a Nordic and heavy metal inspired brewery to look like. Long beards, long hair, tattoos, and leather vests. Basically they look like the guys from ZZ Top. Despite their intimidating bad ass appearance, they were both super welcoming and overall nice guys. Chapman came to our table and talked to us about the place, their history, and what was next for the brewery. Austin, the head brewer, made himself available to a group to talk about how his experiences in Norway inspired his beer's profile.

Head brewer Austin Lunn
Most of the new small craft breweries that I have visited only feature around five taps at one time. They may have one or two flagships with a couple other rotating taps. HammerHeart has a shocking twelve taps that are all rotating. I made sure to sample all of them and I can confidently say that all of them are worth the purchase of a full pint, though none of them were below 6.5% so pace yourself. Half of their beers feature beach or cherry wood smoke malts which provide a nice twist on some of your favorite styles. I was also really excited to hear that they have a couple sour ales fermenting right now that may be available this fall.



While it may be a bit of a hike from Northeast Minneapolis, HammerHeart is definitely worth making the trip for a growler or two of their delicious product. They are open 2PM-10PM Tues-Sat and noon-8PM on Sundays. You can also find them on tap at various bars across Minnesota and at a few places in Chicago and Louisville.

Skål!

Thursday, May 21, 2015

And on the Seventh Day...

Nothing grinds my gears more in the world of liquor regulations than blue laws. Blue laws are laws that are meant to reinforce religious observances of the Sabbath, which in the Christian tradition is on Sunday. These vary by state, but generally deal with the sale of alcohol. Currently, there are twelve states that prohibit the sale of liquor on Sundays, including the state that I live in, Minnesota.

In 1858, the first Minnesota legislature met and one of the first laws that they passed that year was to restrict the sale of liquor on Sunday. In fact, they didn't even use the word Sunday, but instead referred to the Sabbath. Interestingly, the next line in that chapter of statutes requires the owner of a licensed establishment to "keep a quiet and orderly house, and not permit gambling with cards." So you could go to the tavern to party, just as long as you kept it down and didn't play poker with your friends. This makes it quite apparent that the establishment of these blue laws were to enforce a moral code of conduct. This is no surprise considering that the majority of people who decided to settle in Minnesota were conservative Lutheran Swedes. This is in contrast to their beer-loving German neighbors to the East in Wisconsin who only played around with banning liquor sales on Sunday for about 20 years in their history as a state.

So, why not Sundays?

Knowing the history and culture of Minnesota, it is apparent that the original reason was due to religious opposition towards drinking and drunkenness. This mindset still exists today among religious conservative populations. But why should the spiritual objections of one group restrict the free exercise of the rest of us? Today, we live in a world with a multitude of opinions and a diversity of religious thought which runs counter to allowing one group's beliefs control those of others.

While religion may have been the original reason, today the main reason is money, or at the very least, a resistance to change. The two main groups opposed to allowing Sunday sales are the distributors and the retailers. Both groups like having their guaranteed day off from work. Wouldn't we all? To ensure that this outdated business practice remains in place, these groups pad the pockets of legislators. Now, nobody would actually admit this, so they construct arguments to scare folks into believing that the repeal of this prohibition would shut down small businesses, because it would spread six days of sales over seven days of costs.

Liquor store owners have said that allowing Sunday sales would not increase the total amount of liquor sold, instead whatever someone would have bought on Saturday or Monday will now be bought on Sunday. Though their sales will not increase, their costs of business will increase because they will be forced to hire more staff and pay for the other expenses of being open an additional day.

This would not be a terrible argument if it weren't for the fact that the day that they are closed is one of the busiest shopping days of the week. Just think about when you do your shopping. Saturday and Sunday, right? This year, the Minnesota legislature debated repealing the Sunday sale prohibition and during one of the committee hearings liquor store owners discussed the costs of being open an additional day. During this discussion, it was asked what their worst day of sales was and generally it was agreed that Tuesdays were the worst. Since businesses are not forced to open any other day of the week, these stores could very easily choose to close or have restricted hours on Tuesday to compensate for being open on Sunday.

Additionally, there is evidence that Sunday sales do generate more revenue for businesses. In 2005, the state of Washington implemented a pilot program to test the benefits of allowing Sunday liquor sales and the results were beyond what anyone could have predicted.

A study of the sales figures would eventually conclude that being open on Sunday increased sales far in excess of the additional staffing costs. At the outset of the program, the Washington Liquor Control Board staff estimated that it would see increased sales worth $9.55 million in the first two years of Sunday sales, while increased staffing and store costs were estimated at $1.43 million. The actual increase in sales among those in the program over the first two years: $18.5 million. - Why one of the most popular arguments against Sunday liquor sales is bunk - MinnPost, January 23, 2015
It should be noted that none of these arguments actually matter. All of this debate could be avoided if we could all agree that it is not the government's job to create arbitrary barriers in the market place. Alcohol is a legal product which can be purchased by individuals from businesses who freely choose to sell it. The positives and negatives of restricting sales are moot if we can all agree that this freedom to contract should not be restricted. But that seems like quite the uphill battle.

Salute!

Tuesday, May 19, 2015

The First Round is on Me

Creating a blog about beer seems pretty natural considering my heritage. I was born in Wisconsin, once the beating heart of the American brewing industry. I grew up in the small town of Chippewa Falls, home of Leinenkugel's Brewery. Both my maternal grandfather and my paternal great-great-grandmother were Millers. Plus, my great-grandfather, Vernon Holliday, was a bootlegger of corn liquor during prohibition in Southern Minnesota. Mix all of these ingredients together and you have me, Cody Holliday.

A couple of additional things to know about me:
  • I recently married my absolutely amazing and equally beautiful wife last November
  • As of today, I have enjoyed a total of 332 different beers. You can follow my continuing explorations by adding me on Untappd.
  • I am pursuing my certification as a Cicerone® (beer expert), starting with becoming a Certified Beer Server (to be a central focus of this blog)
  • I have nerd tendencies with a focus on video games, superheroes, and the Walking Dead (all of these will most likely sneak their way into this blog)

My passion for beer has really been intertwined with my career in politics. In 2011, I was working as a legislative assistant at the Minnesota House of Representatives. This was the same year that the "Surly Bill" was introduced and passed allowing breweries to serve their product directly to the consumer, resulting in a large number of new taprooms opening across the state. It was this piece of legislation that introduced me to the complex, and often ridiculous, laws that govern the production, sales, and consumption of liquor. Since then, I have explored the growing craft beer movement that has gained a strong foothold in my neighborhood of Northeast Minneapolis.

I am going to try to focus my posts on beer and the politics surrounding the liquor industry, but don't be surprised if you also find a random post about the next installment in the Assassin's Creed franchise.

Cheers!