Small brewers hoping for some tax relief

Local breweries and distilleries are doing more than crafting beer and spirits. They’re carving out a social and economic niche.

The rise of craft breweries, and their importance to small-town and tourist economies, were discussed at the recent Western Governors’ Association meeting in Whitefish. Acacia Coast, who works with Montana craft brewers as a representative of the Brewers Association, described the economic importance of craft breweries.

There are fewer than 5,300 small brewers in the nation, but they account for 12.3 percent of beer sales in the United States. These small breweries are also responsible for 128,000 jobs.

Coast called for a tax reform act for craft brewers. Each $1 of relief, she noted, would add $8 to the American economy.

And the small business owners need the help.

“Craft brewers are entrepreneurs and risk takers,” she said. “They put beer before the bottom line.”

Brewery or distillery owners are also models of the American dream, Nevada governor Brian Sandoval remarked during the session.

Tim O’Leary, owner of KettleHouse Brewing in Missoula, is a perfect example: he started with one employee in a glorified closet and now has state-of-the-art equipment and 40 employees.

John McKee, who runs Headframe Spirits in Butte, said his distillery supplies two percent of all alcohol sold in Montana, and is the third highest-rated destination on TripAdvisor’s list of activities in Butte.

People are paying attention. In 2015, $300 million was invested in distilleries, McKee reported.

“You’re not seeing growth like this in other industries,” he noted.

But the tax issue is a big one. McKee remarked that he’s producing the same molecule we put in our cars — ethanol — but he’s getting taxed $13 per gallon while gas is taxed 50 cents per gallon.

Regardless of the taxation problem, none of the representatives were overly concerned about buyouts by larger companies.

“Consolidation is a part of any growing industry,” Coast said. “When they restrict shelf space and access to ingredients that the small brewers are using, that’s when it becomes a concern.”

Sandoval asked what, if anything, is holding small brewers and distillers back.

McKee responded that aside from tax reform, the owners need more governmental support.

“When we show up to the courthouse or the legislature, just have our backs,” he implored.

Coast agreed, noting that governors could allow production increases — as Montana and Nevada have done — and try to rewrite restrictive self-distribution laws.

Restrictive laws are a big problem here in Columbia Falls, too. Carla and Darin Fisher, who own Backslope Brewery, can only serve their craft beer until 8 p.m., they’re limited to selling 48 ounces per person per day, and they can’t bring outside alcohol into their business — even though it’s also a restaurant, which is unusual among Montana breweries.

Even though she’d like to see the liquor licensing system addressed and revamped, Carla Fisher is optimistic.

“I think it’s fairly clear that even with those restrictions, the craft brewery industry is doing really well,” she noted. “We’re still seeing the growth. If the intent was to stifle the competition, it’s not working to the extent (larger commercial brewers) hoped.”

But she still wants to better serve the community, and would love to stay open later than 8 p.m. in the summer months.

Backslope Brewery opened in March 2016, fulfilling the Fishers’ version of the American dream as soon as the equipment and building became available.

“We had talked about it and never thought it would be an option,” she said.

They started with 13 employees and had to hire three more just in the first week. Now they have 31.

“Our goal has been to be a community gathering space, particularly for families with children who want to go out,” she noted. “We see this as our way of providing something to the community. We want to be seen as members of the community.”

The brewery draws business from local conferences, especially those held at Cedar Creek Lodge. Western Governors’ Association attendees dropped by for a bite and a brew as well.

Fisher thinks the rise of craft beer is an offshoot of the movement focusing on local products, and knowing where food came from.

“Craft beer has more flexibility to provide something different, the excitement of exploration, of being able to expand your palette and try new things,” she said.