Posted on | April 11, 2013 | No Comments
At a press conference today in Olympia, House Democrats disclosed their new tax proposal. The Governor’s insane proposal to raise the tax on microbreweries by $0.50 a gallon, was watered down to a proposed $0.15 hike. Better, not good.
The new proposal would raise the tax on Big Beer, but just a bit higher than what craft brewers are going to pay. At least they are on the right path, but Washington brewers are going to fight tooth and nail on any tax increase. I am with them. The industry is too young and too fragile. Furthermore, few industries passively invigorate others like the brewery industry does. Farming, hospitality, creative, and many other industries benefit greatly – in Washington state – from these businesses.
So the Washington Brewers Guild has responded, and so has the great Dick Cantwell of Elysian Brewing. Read each of their justified responses. But brace yourself for a tax increase, because legislators have finally proposed an incremental approach. It’s time to rally your consumers and get them in contact with their congress person.
Here is the Washington Brewers Guild’s response because I fear it will be removed from their site at some point since it was posted on the front page:
|House Budget Proposal
|Listening to the press conference was pretty astounding that Rep. Carlyle wanted to be fair by continuing the R&D tax break for the small of the small, but going ahead and raising taxes on microbreweries. Here is our response:
April 10, 2013
Washington is believed to have the second highest market share for craft beer in the nation. Below are some statistics on why maintaining the small brewer tax rate at its current level allows for continued jobs production. Production data sheds light on the debate about equalizing alcohol tax rates among producers.
The Big 3 (Anheuser-Busch InBev, MillerCoors) employ around 25,000 people in the nation. Craft brewers employ over 100,000 people with only 6% of the marketshare. Which is a better investment in jobs growth? The current excise tax level is working. Washington breweries employed 3,499 people at the end of Q4 2011. Breweries are growing, expanding production facilities and adding jobs. Why lower the tax rate for multi-national breweries while raising it for homegrown Washington microbreweries, thereby cutting off the potential for job growth in a locally-owned and operated industry?
Equality in alcohol taxation: Anheuser-Busch InBev produced 99 million barrels in 2012 with MillerCoors following at 59 million. Together, the Big 3 produced 158 million barrels. Washington craft brewers, combined, only produced 293,716 barrels. 158 million : 0.24 million. To suggest that craft beer be taxed at the same rate as the Big 3 is hard to understand when combined, we make up less than 0.19% of their annual production. There is nothing equal about our industries. They probably spill more beer on their floor than the volume of my brewery’s annual production (2,700 bbls). We are so insignificant compared to the amount of beer they produce; suggesting that there be tax equality between such a Goliath and an itty-bitty microbrewery is astounding. They have economies of scale that we can not even begin to comprehend.
Washington State’s total beer sales were 4,013,072 barrels in 2012. An estimated 1,000,000 barrels are attributed to craft beer. Washington State craft brewers produced 293,716 barrels. We cannot even produce 1/3 of the demand for craft beer in our state. Washington brewers need the ability to continue to grow our industry, add jobs, and re-invest our profits back into our communities.
Annual Production in Barrels
Big 3: WA Craft Brewers
While an appreciated reduction, the current House proposal of a tax increase of $0.15/ gallon still almost doubles our tax rate. Is favoring multi-national corporations over at-home jobs growth really the message the Washington government wants to send to citizens of Washington?
Schooner EXACT Brewing Company
Posted on | April 9, 2013 | No Comments
I imagine that everyone in Washington has heard about the newly proposed beer tax raise. The proposal would rake brewers for 425% increases (up to $20.28 per barrel) in the current tax (from $4.78 per barrel) Wow, Mr. Governor, that much!?
I have often wondered why politicians seek the big score rather than making modest and reasonable increases. If Gov. Jay Inslee thought this was the way to prove that he understood small business – a platform he ran very hard – then yikes. If he was smart, he would have tried something incremental, but this is just nuts. A 425% increase of anything is business-changing, I don’t care what your business, success level, or profit margin.
The State of Washington is facing a big budget crisis and education has been the publicly acknowledged loser. Losing the stranglehold that the state had on liquor has apparently left the state low on short term funds for alcohol education and enforcement. But that is just a single component of the issue, and the Governor has looked to the, finally, growing beverage industry for help.
I have disagreed with the Brewer’s Guild in the past, but not here. This tax increase is a huge burden for brewers to stomach. The Guild has hit the nail on the head, citing that any tax increase needs to be broad-based and not industry-specific. I just hope that the Governor does not propose simply shifting the tax from the producer side (barrel tax) to the consumer side (sales tax on beer).
I am often perplexed why lawmakers see fit to curtail growth in an industry that can be uber-important to the public sentiment, culture and economy of a state. But this tax increase would quadruple what those brewers in Oregon are paying. Brewer flight is not out of the picture.
Read more about the tax increase at the Brewer’s Guild’s website. They have also issued this Letter of Opposition and a form letter for citizens to send to their congress person. Luckily, the Brewers Association has joined the fight.
Let us all hope that reason wins out in the end.
Posted on | March 22, 2013 | No Comments
In my “under the bus” column this week (this is not a regular column but it should be), I will be placing the City of Sacramento.
Thanks to the efforts of some justifiably ticked off brewers, it has come to the brewing world’s attention that good ole Sac-Town has a standing prohibition against the sale of beer in anything less than a 6 pack. Yes, that means that you will not see a 22oz Lagunitas Hop Stoopid, or even a 16oz bottle of Pliny the Elder.
Um, what the heck, Sacto. According to the good word from the folks at Western Pacific Brewing (Oroville, CA), the city instituted this law back in the early 1990s to curtail the wonderful practice of cracking a 40oz of Schlitz Blue Bull and hanging out in your favorite parking lot (ah, memories). Unfortunately, the law inadvertently really puts a hurting on local brewers who would love to jump on the 22oz bottle craze.
So does this prohibition make sense? No way. Can you still buy a 750ml bottle of red wine for $6.00? Ya dang right. Do the people in Sacto really have to keep buying a sixer just to try a new release? Let’s hope not.
There is an active movement led by a council person to try and create an exception to this law. I am all for it. God knows we don’t need to deprive the new generation of SacTowners the ability to practice the great art of “Edward 40-hands.”
Get this law changed. Help your local brewers.
Posted on | March 5, 2013 | 1 Comment
Back in December, I spent a week down in San Antonio on official business. But official business does not prevent me from enjoying local craft beer. Days are for working, nights are for fun (or most of the time, working).
One evening I ventured out to Freetail Brewing to enjoy what I was told was the best beer in the area. No jokes there. They pour a nice pint. In fact, Freetail pours about a dozen different beers that pair nicely with an incredible pie from their wood oven. Needless to say, it was a good experience.
But I left that place without knowing that their brewer, Scott Metzger, was a fearless proponent of my undying mantra against using legal force to resolve TM debates in the brewing industry. Scott apparently received a letter from hired legal counsel for Steelhead Brewing Co, demanding that Freetail cease use of the name “Hopasaurus Rex.” The response – is a beaut.
I may be extremely late to the party on this story (it has been out for a few years) but it won’t stop me from letting it free. Scott’s insists that a phone call from the Steelhead owner would have nipped this in the bud – as it will almost every TM dispute between brewers. If you learn anything from this, remember how bad the PR might be for the brewery that sends a letter like this one.
Posted on | February 13, 2013 | No Comments
Trademark issues are becoming the single most popular legal topic amongst breweries. I hear the gripe in brewer meetings, client calls and publications across the web. The world of beer is shrinking and the pool of names is shrinking.
Do we have enough words left to continue naming beer creatively? Should we just stick with descriptive monikers like IPA, Pale, ESB and so on? I say nay to the latter. Brewer creativity is at all time high as we are seeing more new styles, style-less beers, and blended concoctions each day. So keep this creativity rolling and let’s figure out a better way to handle it.
Here are a few things that you need to know about beer trademarks:
- Start your journey by researching the use of your intended brand or mark. Check out this prior article that I published here on Brewery Law and be sure to check the US Patent and Trademark Office’s (USPTO) TESS, COLAs Public Search and even RateBeer.com to find out whether their is a prior use of your name.
- The US Patent and Trademark Office no longer distinguishes between beer, wine and spirits. In the past, someone could get a TM registered for “rickshaw” in all three classes. Nowadays, as the disappointing Black Raven/Ravenswood action taught us, the USPTO considers each of these classes “related products” and that a mark in one class will likely cause confusion with the same mark in another class. So, if you find a wine or liquor brandishing your name – it is best to look elsewhere.
- If you are in the clear, you need to register quickly. The law allows a person to file for registration before even using the mark, by filing a 1(b) application with an intent to use the mark. By law, you are entitled to file a total of five (5) individual six (6) month extensions (a total of 30 months) to show the USPTO that you are indeed selling a product using the mark in interstate commerce (better find your favorite over the border store!).
And now for my best advice. This advice can save you thousands of dollars someday – and lawyers might hate me for it. If you have a dispute over a mark that you want to use, or that you currently own, here is what you do: TALK. DON’T SUE. The brewery community is a tight one, even though it continues to grow every day. By simply shooting an email to someone who has a potential right in the mark – or a potentially conflicting use – you can save thousands of dollars, months of time, and respect in the brewery community. Heck, some breweries have even turned these conversations into a collaborative, and very profitable, brew.
There is a time to file a lawsuit to enforce your trademark rights – and it is nowhere near the time you first learn of a potential problem. Breweries are pulling the trigger on a legal letter from their lawyers way too early these days. There is always an opportunity to resolve the dispute well before the letter goes out. Once the legal letter goes out, you immediately put the recipient on the defensive. So please offer an olive branch first, before you pull out the guns.
Your attorney should be more than willing to help you come up with the right words to say in your initial discussion – it just does not have to come on their letterhead.
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