Priority Issues and Current Initiatives

Federal
State

Brews to Barns Act

The Brews to Barns Act would create a federal excise tax credit for brewers that donate their spent grain to agricultural businesses. The credit would put up to $38 million per year back in the pockets of independent brewers, recognizing their role in supporting local, circular economies. By supporting stronger brewer–farmer partnerships and making it easier to repurpose spent grain, the bill can help you lower costs and reinvest in your businesses.

Background
American breweries produce millions of pounds of spent grain each year, and it is the largest byproduct of the brewing process. This nutrient-rich, high-fiber material is typically suitable for agricultural use, particularly as livestock feed or soil amendment. Many small and independent brewers already partner with local farmers to donate or provide this spent grain at little to no cost. However, logistical costs, regulatory uncertainty, and limited financial incentives can deter broader participation, especially for rural breweries and farmers operating on tight margins.
The Internal Revenue Code imposes a federal excise tax on beer production, with small brewers paying $3.50 per barrel on their first 60,000 barrels. For most of America’s craft breweries, the federal excise tax is one of their largest recurring federal costs. Despite the benefits of repurposing spent grain, there is currently no federal incentive encouraging this circular economy practice.

Summary

The proposed Brews to Barns Act would create a targeted federal tax credit to support sustainability in brewing and strengthen partnerships between brewers and farmers:
Tax Credit Value: $0.08 per pound (dry weight equivalent) of spent grain donated for agricultural purposes, including livestock feed, composting, or fertilizer production.
Credit Cap: Up to $35,000 per calendar year per eligible brewer.
Credit Application: Claimable as an offset against federal excise tax liability. If the credit exceeds the brewer’s annual federal excise tax liability, it will reduce the tax owed to zero but would not be refundable.
Eligibility: Applies to breweries of all sizes that donate spent grain to verified agricultural operations.
Documentation Requirements: Breweries would be required to retain records of grain weight, donation recipients, and end-use certification from farmers or agricultural entities.

Impact

For small and independent breweries, the Brews to Barns Act could eliminate their federal excise tax liability, freeing up capital for wages, equipment, or expansion. Breweries producing approximately 8,500 barrels annually typically pay close to $30,000 in federal excise tax.
For mid-sized and larger breweries, the credit provides a direct incentive to expand donations, lower waste disposal costs, and strengthen rural supply chains, despite the $30,000 cap.
For American farmers, it provides low-cost, protein-rich livestock feed and organic material for composting or soil enrichment, encourages circular economies, and shortens supply chains between breweries and agricultural communities.
For communities, it reduces methane emissions from land-filled organic waste.

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Tax and Regulatory Reform

The Brewers Association is seeking legislation designed to modernize the federal excise tax and regulatory framework for beer by aligning outdated rules with the realities of today’s brewing industry and reducing unnecessary compliance burdens. By clarifying key standards, raising filing thresholds, and ensuring penalties are reserved for willful violations, the legislation provides greater certainty and operational flexibility for brewers while maintaining the integrity of the tax system.

Background
The internal revenue code’s regulatory framework governing beer production and taxation was largely designed in the 1930s and has not kept pace with the growth, complexity, and operational realities of today’s brewing sector, particularly the needs of craft brewers. As a result, small and independent brewers face disproportionate compliance burdens, unclear standards, and the risk of severe penalties arising from minor or inadvertent paperwork errors rather than intentional misconduct. Outdated filing thresholds require frequent tax filings and bonding obligations that strain limited resources, while ambiguous rules related to aggregation, alternating proprietorships, and returns between affiliated breweries create uncertainty and inhibit efficient business operations. In addition, current regulations provide insufficient clarity and protection with respect to exports, fill tolerances, and the circumstances under which tax penalties or significant enforcement actions may be imposed. These proposed legislative changes modernize and clarify the excise tax system, align regulatory requirements with commercial realities, reduce unnecessary compliance costs, and ensure that penalties are reserved for willful violations, while preserving the integrity of the tax system.

Summary

The proposed legislative changes would:

Increase the threshold for quarterly filing of excise tax returns from $50,000/year taxpayers to $500,000/year taxpayers. This would reduce filing burdens and eliminate the bond requirement for such quarterly filers. It would also increase the threshold for annual filing of excise tax returns from $1,000/year taxpayers to $10,000/year taxpayers. See Section 5061(d)(4).
Require a showing of “willfulness” before TTB can deny a small producer excise tax rate. This would protect craft brewers against devastating penalties arising from inadvertent paperwork errors. See Section 5051(c).
Require Treasury to provide greater clarity on the “controlled group” and “single taxpayer” rules, making aggregation of production between different entities and/or different facilities for tax purposes more transparent and easier to understand. See Section 5051(a)(5)(D).
Create a statutory authorization for the longstanding practices of “alternating proprietorships” and “alternating premises” and require a simplified set of rules for establishing such operations. See Section 5563.
Mandate that TTB accept ordinary commercial records as proof of export for purposes of avoiding the excise tax on exported beer and for obtaining drawbacks (a refund) on taxpaid beer that is subsequently exported. See Sections 5053(a) & 5055.
Require a showing of “willfulness” before TTB can treat beer as “illegally produced” to avoid massive penalties stemming from inadvertent paperwork errors. See Section 5067.
Specify that returns to a brewery within the same controlled group as the producing brewery are treated as a return to the producing brewer for purposes of excise tax offsets. See Section 5056(a).
Require TTB to consider brewery size when setting tolerances for small variations from fill requirements. See Section 5051(a)(3).

Credit Card Competition Act (CCCA)

The Credit Card Competition Act (S. 3623/H.R. 7035), led by Sens. Roger Marshall (R-KS), Dick Durbin (D-IL), and Peter Welch (D-VT), alongside Reps. Lance Gooden (R-TX) and Zoe Lofgren (D-CA), would introduce greater competition into the credit card processing market by requiring large issuing banks to offer multiple network routing options. Shifting pricing power away from a dominant duopoly and toward a more competitive marketplace would lower transaction costs, improve fee transparency, and provide greater financial stability for small businesses like independent breweries.

Background
Independent breweries rely heavily on direct-to-consumer sales through taprooms, brewpubs, and on-premises retail. These transactions are predominantly made with credit cards, where swipe fees typically range from 2-4 percent, making them one of the highest operational expenses for small hospitality businesses.

For debit transactions, Congress acted in 2010 through the Durbin Amendment, which allowed routing choice and placed caps on fees for large issuers. Credit card fees, however, remain unregulated, and the market is dominated by two major networks, which together handle more than 80% of all transactions. Both companies update their swipe fees annually, increasing costs for millions of businesses nationwide and drawing bipartisan concern.

To address these rising costs and promote market competition, bipartisan lawmakers, including Sens. Dick Durbin (D-IL) and Roger Marshall (R-KS), alongside Reps. Lance Gooden (R-TX) and Zoe Lofgren (D-CA), introduced the Credit Card Competition Act (CCCA).

Summary
The CCCA (S.3623/H.R.7035) requires the largest credit card–issuing banks to enable two unaffiliated payment networks on their cards. This allows merchants to choose the most cost-effective and secure routing option, similar to the competitive routing system already used for debit cards. The bill does not cap fees, but rather introduces competition so the market, not a duopoly, shapes pricing.

Impact

Meaningful Reduction in Operating Costs: High-volume, small-dollar transactions mean swipe fees consume a significant portion of revenue in taprooms and brewpubs. Routing competition can meaningfully reduce these costs, keeping more dollars in the business.
Stronger Margins in Taprooms and Brewpubs: Beer, food, and merchandise purchases increasingly rely on cards, especially contactless payments, which often carry higher rates. More routing options help stabilize and strengthen margins.
Protection From Annual Fee Increases: With only two major networks, breweries have few alternatives when fees rise. Competition provides long-term cost stability, improving planning for staffing, equipment, and expansion.
Support for Local Economic Hubs: Independent breweries support local jobs, suppliers, and tourism. Lower swipe fee burdens allow more revenue to remain in the community rather than being absorbed by processing networks.

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Creating Hospitality Economic Enhancement for Restaurants and Servers (CHEERS) Act

The CHEERS Act (H.R. 7620), introduced by Reps. Darin LaHood (R-IL), Steven Horsford (D-NV), Claudia Tenney (R-NY), and Susan Delbene (D-WA) would modernize tax treatment for draft beer equipment by allowing breweries, bars, and restaurants to depreciate qualifying systems over a shorter time frame, improving cost recovery and encouraging investment in more efficient infrastructure. This approach aligns tax policy with the realities of hospitality operations, helping reduce upfront capital burdens, support equipment upgrades, and strengthen the financial stability of businesses that rely on draft beer sales.

Section 179 of the U.S. tax code is an immediate exemption that business owners can take on purchases of depreciable business equipment. Taking the depreciation in the year it occurs allows a business owner lower their tax liability in the current tax year instead of capitalizing it and depreciating it over time. The current tax code provides the Section 179D deduction for qualifying investments in energy-efficient systems on commercial premises.

The CHEERS Act impacts Section 179 as it relates to energy-efficient draught beer properties (identified as so under the existing tax code) primarily used in operating a restaurant or a bar. Hospitality businesses that undertake a remodel, refresh, repair, maintenance, or similar activities with respect to qualified energy-efficient draught property would be able to qualify for the deduction.

The legislation also addresses tax implications of lost or stolen kegs. Property that is lost or destroyed, whether by theft or otherwise, shall be treated as placed in service during the taxable year when the loss or destruction occurs.

The legislation is supported by the Brewers Association, Beer Institute, National Beer Wholesalers Association, National Restaurant Association, Independent Restaurant Coalition, American Beverage Licensees, the Steel Keg Association and other hospitality groups and companies.

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Intoxicating Hemp Products

The Brewers Association is actively monitoring legislative movements in the hemp space. We believe any legislation should establish a clear and consistent regulatory framework for cannabis and intoxicating hemp products that prioritizes consumer safety, responsible commerce, and fair competition. It should promote coordinated federal–state oversight, strong enforcement, sensible taxation, and clear standards for labeling, production, and market access to create a stable marketplace that supports compliant businesses while limiting illicit activity and protecting public health.

Background
The rapid growth of intoxicating cannabis and hemp products has created an unstable and confusing marketplace. Many products operate with little regulatory oversight despite their social sensitivity. Should Congress keep such products legalthe Brewers Association urges policymakers to establish clear regulatory systems to protect consumers and ensure fair, responsible commerce. The following principles guide the Association’s requirements for a legal, regulated market.

Guiding Principles

Intoxicants require coordinated federal–state regulation. A functional regulatory structure depends on cooperation between federal and state authorities. Current cannabis and hemp laws do not reflect this balance.
Enforcement must be well-resourced and balanced. Legal markets can only succeed if licit operators have incentives to comply and illicit actors face real consequences. A regulatory system should avoid excessive taxation or burdens yet enforce penalties that curb black-market activity.
Products should never be marketed or sold to minors. Age restrictions have reduced underage alcohol consumption. Similar protections must apply across all cannabis and intoxicating hemp products.
Regulation should discourage overconsumption. Systems should differentiate products based on potency and consumer risk. Widely available products, particularly those sold through beer channels, should be subject to potency limits that reduce misuse.
Rules should preserve competition and prevent market concentration. Regulations must prevent dominant firms from limiting access to market channels and avoid erecting standards that only large companies can meet. Policymakers should act before consolidation becomes entrenched.
Production must meet national safety and sanitation standards. As with alcohol, cannabis and intoxicating hemp production should operate under robust federal oversight to ensure product safety and protect consumers.
Labeling should empower consumers. Clear, consistent national labeling requirements, like those for alcohol, are essential so consumers understand a product’s identity, contents, and risks.
Health claims must face rigorous scientific scrutiny. Unsubstantiated health claims have historically misled consumers. Cannabis and hemp products should not be allowed to use implied or explicit health claims unless they undergo stringent FDA-level review.
Alcohol licensees should be permitted to participate in the new market. Existing alcohol producers, distributors, and retailers have deep experience managing socially sensitive intoxicants and should be eligible to apply that expertise in regulated cannabis and hemp markets, if legalized.
Excise taxes should be proportionate across intoxicants. If policymakers impose excise taxes on alcohol, comparable intoxicants should face reasonably aligned tax structures. Excise tax rates should support policy goals without being so burdensome that they fuel illicit markets.

Brews to Barns

Brews to Barns would create a state tax credit to reward breweries that donate spent grain to farmers, helping offset excise tax costs while turning a brewing byproduct into a valuable resource. Brewers Spent Grain (BSG) is a valuable product for livestock feed and composting. Brews to Barns will support agricultural economies with low-cost feed, lower methane emissions from decomposing landfill waste, and provides brewers a tax credit to do it. A win-win-win!

Self-Distribution

Access to market is a critical component for brewers to survive in a competitive environment, and self-distribution allows brewers to build an audience and following in a local market before signing a contract with a wholesaler. However, many states have such limited self-distribution caps, or have no mechanism for self-distribution for small brewers at all. The BA prioritizes market access through self-distribution so that a brewery’s opportunity is limited only by the work they’re willing to put in to build their brand.

The Brewers Association believes in the right of craft brewers to distribute beer to retailers, allowing them better access to consumers and to meet demand directly without the use of a middleman distributor. Experience has shown that successful self-distributed brands eventually move into three-tier channels after using self-distribution as a way to develop the brand and create market demand.

Craft brewers recognize the value and importance of independent wholesalers. Independent wholesalers distribute the majority of craft beer sold by retailers – even in states that permit unlimited self-distribution. Indeed, craft brewers support policies that limit vertical integration by the largest beer suppliers, as such vertical integration in most markets would effectively amount to the capture of one of just two viable wholesalers in a market by a major brewing competitor. In contrast, self-distribution by even a large craft brewer would not jeopardize the viability of existing beer wholesalers, and instead would supplement the market with an additional beer supply option for retailers to choose from.

In light of these dynamics, craft brewers should be able to distribute their products on the same terms as licensed wholesalers. While using a wholesaler remains key to many craft brewery business models, self-distribution allows for self-determination and ultimate control of a brewer’s products by the brewer themselves. We support three-tier as a flexible system, not a straitjacket.

Self-distribution does not affect the wholesale tiers in states where it is authorized. States like California, Colorado, New York, and Oregon permit brewers to also act as a wholesaler with few if any limits, yet those states have orderly markets and profitable middle-tier independent businesses. Given that craft brewers collectively make up a fraction of the beer market, even widespread self-distribution would hardly threaten the profitability of today’s large wholesale businesses.

Self-distribution is of paramount importance for the smallest and newest craft breweries. It allows them to build their brand, test their market, and develop a loyal following, all of which eventually will help a wholesaler sell their beers at retail. With small-batch and seasonal beers becoming more common, self-distribution allows brands to get the freshest beer possible to the most customers in the shortest amount of time.

Franchise Law Reform

Beer franchise laws, relics of the time when there were relatively few national and regional breweries working with small, family owned distributors, prevent brewers from enforcing fair contracts with consolidated beer wholesalers. The BA works to provide small brewers some relief from these outdated laws, and allow more freedom of movement within the distribution marketplace.

The time has come to revisit so-called beer “franchise” laws so that they reflect the current marketplace, not the 1970 and 1980s, when most were enacted. These laws did not contemplate a situation where hundreds of small brewers were seeking to do business with highly consolidated, large, sophisticated beer wholesalers. Giving such giant businesses special legal advantages when dealing with small businesses not only makes no sense, but it is also a fundamentally unfair form of corporate welfare.

In crafting franchise reform legislation, the Brewers Association adheres to the following principles:

We do not seek the complete repeal of such laws, and the large multinational brewers retain a bargaining power edge over most beer wholesalers. We want to reform such laws, not tear them down completely.
Whether exempting small brewers from these laws altogether or giving small brewers a way to terminate without cause, such changes should benefit all U.S. brewers and not be limited to the brewers of a single state. A franchise law that exempts or gives special rights to only in-state suppliers will not survive a legal challenge under the dormant Commerce Clause of the federal Constitution.[1]
Where the reform includes a non-contractual mechanism for a brewer to terminate a wholesaler without cause, it should also ensure that the wholesaler receives reasonable compensation for the loss of such brand distribution rights. While parties to a beer distribution agreement should be free to bargain as they wish, where they have not then the default should be that beer wholesalers get compensation when a relationship is terminated or expires.

Within these parameters, states still must wrestle with a number of important choices when deciding how to craft franchise reform legislation for their state. Foremost among them are:

How to Set the Exemption Threshold

The obvious choice is to set an exemption based on a brewer’s annual production volume. This is simple, but it also clearly identifies winners and losers when it comes to the legislation. Our preferred alternative bases a brewer’s eligibility for an exception or other relief not on brewery size but on the percentage of sales that the brewer represents to a wholesaler. This approach underscores how big these wholesalers are and how eligible brewers cannot dominate the wholesaler. It also means that the law’s application will depend on particular relationships, helping avoid intra-guild stresses based on size. Basing eligibility on a percentage of sales helps ensure that eligibility does not appear gerrymandered to advantage in-state brewers over out-of-state brewers, which would make the law vulnerable to a legal challenge under the dormant Commerce Clause. Finally, some states (e.g., New York) have adopted a hybrid approach, with eligibility for franchise law relief based on both the brewer’s annual production and an evaluation of the percentage that a brewer’s business represents to the wholesaler.

Blanket Exemption versus Specific Relief

We see two broad conceptual approaches to the franchise relief provided to small brewers. The simplest restores contractual freedom to the parties and allows them to fashion a distribution relationship as they see fit. Under such a reform, for example, not-for-cause termination clauses for a set buyout amount become enforceable under ordinary contract law principles. But because the bargaining power advantage tilts so heavily against the smallest brewers, the second approach would give brewers the specific ability to terminate without cause if the wholesaler receives compensation for its loss of the brand. This approach ensures that even the smallest brewers, who have little ability to reject a take-it-or-leave-it contract from a large wholesaler, enjoy greater brand mobility than they possess in the current franchise environment. We see a hybrid approach as ideal: The parties are free to bargain as they see fit, but in the absence of written contractual terms addressing an issue such as termination, then small brewers can terminate without cause, but must compensate the terminated wholesaler.

Decision Maker for Disputes

Most beer franchise laws rely on the courts to resolve disputes, but some rely on the state’s alcohol regulatory body as the initial decision maker. In addition, some franchise laws, and some franchise law provisions specifically aimed at providing relief to small brewers, invoke arbitration of key issues like the fair market value of a brand. In examining these issues, the Brewers Association generally recommends that any disputes over termination or fair market value be heard by a court or neutral arbitrator(s), not by the state’s alcohol regulatory body. State alcohol control bodies usually have extremely close and longstanding ties with the state’s wholesalers. Indeed, a great many state wholesaler executives are recruited from the ranks of state alcohol regulators.

[1] See, e.g., Mt. Hood Bev. Co. v. Constellation Brands, Inc., 149 Wa.2d 98 (Wash. S. Ct. 2003) (striking down the Washington wine franchise that provided an exemption for only in-state wineries); Kendall-Jackson Winery, Ltd. v. Branson, 82 F. Supp. 2d 844 (N.D. Ill. 2000) (striking down the Illinois wine and spirits franchise law [since repealed] for providing an exemption for only in-state producers).

Defending Beer

The beverage alcohol marketplace has shifted significantly. More companies are producing new and different beverages, from seltzers to hard tea to canned cocktails to intoxicating hemp. The BA works to save space on distributor trucks and in the retail cold box, and works to defend the industry against excise tax increases and other fees that can negatively impact a member’s bottom line.

Other Issues

From Extended Producer Responsibility (EPR) programs to underwrite new recycling infrastructure in states, to container deposit or “bottle bill” initiatives, to outright banning of certain materials, to pushes for lowering the Blood Alcohol Content (BAC) for a DUI, the BA works to ensure our smallest members aren’t negatively impacted by changes in state statutes.

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