President Trump’s “One Big Beautiful Bill,” combined with other federal legislative moves, is having an impact on state bottom lines, and brewers need to be vigilant about lawmakers seeking to replace those funds.  

States from coast to coast are forecasting massive shortfalls on programs from Medicare/Medicaid to education to nutrition assistance. As federal COVID-19 recovery funds dry up, states may look to plug budget gaps by raising excise taxes on beer, wine, and spirits — even as revenues decline and producers face mounting pressure. Members should stay alert to these efforts at the statehouse.

A July 7 article from The New York Times runs through statements from both Republican and Democratic governors across the country, and one theme emerged: painful changes are ahead.  

“They can scale back their investments in health and food assistance that are directly affected by the federal legislation,” said Carl Davis, the research director at the Institute for Taxation and Economic Policy. “They could shuffle money around to preserve health insurance — ‘Hey, we don’t want 600,000 North Carolinians to lose health insurance, but we’re going to take money away from education to do it.’” 

“Or,” he said, “we can see tax increases.” 

Some states will use “a mix of all three,” Davis added. 

A common target when states aim to refill coffers are so-called “sin taxes”—taxes on things like cigarettes, gambling and, yes, alcohol beverages.  

Colorado, New Mexico, and Oregon have in recent legislative sessions seen attempts to raise taxes on alcohol beverages to pay for various state programs. Those efforts came before the federal budget cuts became a reality.  

So what can you do to be prepared for these fights should they come to your state?  

1. Connect with your elected officials and encourage other brewers to do likewise. Start educating them on the realities of your business: thin margins, rising cost of inputs, shrinking market share. Casual conversations with your representatives at the statehouse can pay dividends later. Remember: Everything is theoretical to a lawmaker until they have a story to lean on. Make the story yours. 
2. Keep on top of state legislative happenings and conversations. If you’re not already keeping abreast of discussions that affect the craft beer industry in your state, now is the time to pay attention. Key words like “revenue raisers” or “offset cuts” should make you take notice. 
3. Engage with counterparts at other breweries and your state guild’s government affairs team. Start the conversations now and socialize the idea of a legislative fight with your legislative committee and rank and file. You’ll need their buy in early to be involved from the start.  
4. Stay in touch with your Brewers Association and state guild government affairs team. We’re tracking bills all across the country, and when something moves we’ll know quickly and can help you strategize. 

As ever, your BA Government Affairs Team is here to help. Do not hesitate to reach out if something catches your eye.