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Craft beer is becoming big business.

At the end of 2015, there were over 4,100 breweries in the United States, which is the highest number in the history of the nation. This figure narrowly beats the previous record dating back to 1873, when nearly every neighborhood had its own local brewery. Even more recently, the Brewers Association, a craft beer trade organization, announced that the U.S. had surpassed 4,600 breweries for the first time in history.

Today, the numbers keep growing. According to the Brewer’s Association, America’s small and independent brewery industry is composed of 175+ brewing companies that produce between 15,000 and 6 million barrels of beer per year; 2,400+ microbreweries that produce less than 15,000 barrels per year; and 1,650+ brewpubs (brewery restaurants) that sell 25% or more of their beer on site. These small and independent breweries also employ over 120,000 full-time and part-time employees, generating over $3 billion in wages and benefits, and pay more than $2.3 billion in taxes annually.

Despite the recent emergence of the craft beer industry, beer produced by independent breweries still only comprises approximately 12% of the nationwide market share. This figure makes more sense when one considers the challenges small brewers face in our economy. First, independent brewers typically employ anywhere between 10-100 employees, which means that the overall economies of scale are limited. As an example, you probably haven’t seen your local craft brewery release a 6 pack of beer available for under $9.99 per unit. Even if your local brewer developed a lower quality beer similar to the cheaper “macro-brew” options, they still would not be able to win the price war. This is because the larger brewers have streamlined processes that ultimately allow for lower costs for consumers.

Additionally, small and independent brewers are still held to many of the high regulatory burdens put in place for the beer giants. Many of these regulations were enacted when the beer industry was seen as a duopoly, in which the leading brewers were held to high standards of regulation and tax collection enforced by the Alcohol and Tobacco Tax and Trade Bureau (TTB). Nowadays, the market has changed dramatically, and has quickly become a new wave of blue collar industrial jobs, boosting a sector of the economy that has been down for decades.

Which brings us to the proposed Craft Beverage Modernization and Tax Reform Act, S.1562 (or “CBMTRA”), currently pending in Congress. The purpose and goals of the CBMTRA are fairly simple: make life easier on the little guys. Specifically, the Act is aimed at reducing taxes, compliance burdens, and regulations on the alcohol industry. The key changes to excise tax for brewers include the following:

Any domestic brewery that produces less than 2 million barrels a year would pay $3.50/barrel on the first 60,000 barrels, and $16.00/barrel on anything above 60,000 barrels if the 2 million barrel threshold is not reached. Currently, the tax rate is $7.00/barrel for the first 60,000 barrels. Adjusting this rate would provide an estimated $37.5 million per year (based on 2014 data) to help strengthen our nation’s smallest brewers and support their efforts to maintain their business and generate jobs.

Any domestic brewery that produces more than 2 million barrels a year would pay the current higher rate of $18.00/barrel.

In addition to the excise tax changes above, there are also several changes that would significantly help brewers, such as expanding the list of ingredients that can be used in beer without approval from the TTB, allowing brewers to collaborate on new beers by giving them the flexibility to transfer beer between breweries without ordinary tax consequences, and exempting brewers who pay less than $50,000 in federal excise taxes from some of the onerous bi-weekly filing and bonding requirements (note: this part of the bill was already passed in the 2015 Tax Extenders Package, which will be implemented in 2017). For more information regarding the language of the CBMTRA, the Brewer’s Association has provided talking points and detailed explanations on various portions of the bill.

The CBMTRA appears to be gaining ground in Congress. The bill has the sponsorship support of 50% of the Senate, and a companion bill, H.R. 2903 has 282 total sponsors in the U.S. House of Representatives. However, it’s been a long road for the CBMTRA so far. Sen. Ron Wyden, D-Ore., introduced the legislation on June 11, 2015, stating that the bill “takes targeted approaches to update antiquated rules and reduce taxes for these growing businesses to ensure that these innovators continue to create high-quality jobs”.

From a practical perspective, this movement seems to embody a theme of much needed progress. The craft beer industry is widely championed as an American success story, as it has seen rapid growth in recent years. However, it continuously finds itself caught up in the growing pains of federal regulations developed in a post-prohibition era. While the CBMTRA will likely not fix all the regulatory issues that negatively impact the industry, it certainly appears to be a major step in the right direction.