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Policy Issues
NBWA educates local and federal officials and regulators on the value of state-based alcohol regulation as well as the economic and regulatory issues that impact America’s beer distributors, who are local family-owned businesses that service every state and congressional district throughout the United States.
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Corporate Transparency Act
The CTA, which took effect on January 1, 2024, requires specific business entities with 20 or less full-time employees and $5 million or less in gross receipts or sales to regularly report information about their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network.
Beneficial ownership information refers to identifying information about the individuals who directly or indirectly own or control a company.
Reporting Timeline
- Covered entities in existence prior to January 1, 2024 are required to report by January 1, 2025
- Businesses covered by this timeline may want to wait to assess the outcome of further litigation, possible legislation or other unknown delays
- Covered entities formed on or after January 1, 2024 are required to report within 90 days of receiving actual or public notice that their company’s creation or registration is effective
- Due to the shorter designation, businesses covered by this timeline will need to evaluate the legal, regulatory or legislative landscape when determining when to form a new entity
- Covered entities formed after January 1, 2025 are required to report within 30 days of receiving actual or public notice that their company’s creation or registration is effective
Important Exemption
- Entities with more than 20 full-time employees, more than $5 million gross receipts or sales and an operating presence at a physical office within the U.S.
Learn more about beneficial ownership reporting requirements and file your report at the FinCEN website.
- Covered entities in existence prior to January 1, 2024 are required to report by January 1, 2025
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Alcohol and Tobacco Tax and Trade Bureau (TTB)
The TTB is the primary federal regulator of the alcohol industry. Alcohol wholesalers must have a TTB permit, and these businesses rely on the TTB to provide clarity on regulations to operate legally. The TTB is also responsible for:
- Collecting alcohol excise taxes. In FY 2022, the TTB achieved a return on investment of more than $340 for every dollar spent on collection activities.
- Enforcing the Federal Alcohol Administration Act and other federal laws that promote fair competition, support state alcohol regulation and prevent tainted alcohol products from reaching consumers.
- Maintaining a level playing field and facilitating a robust and diverse marketplace.
We Encourage Congress To:
- Support and fully fund the TTB.
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CBD and Marijuana
CBD and Marijuana Policy
As Congress continues its work on both marijuana and cannabidiol (CBD), policymakers should draw on the expertise and experience of the alcohol industry and public health leaders. In January 2023 the FDA announced it cannot regulate CBD products under current federal safety standards and a new regulatory pathway is needed. This lack of clarity in federal policy creates significant challenges in the workplace. Employers cannot reliably determine on-the-job impairment levels, which is confusing for workers and employers and creates transportation safety concerns. Employers face the challenge of maintaining their workforce, ensuring a safe workplace and protecting the public on the roadways.
We Encourage Congress To:
- Maintain the integrity of the existing alcohol regulatory structure as it exercises its authority to provide greater clarity to stakeholders on federal oversight of the marijuana and CBD marketplace.
- Draw on the expertise and experience of the alcohol industry and public health leaders as it considers federal oversight of the industry.
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Dietary Guidelines for Americans (DGA) Recommendations
Every five years, the Departments of Health and Human Services (HHS) and Agriculture (USDA) jointly publish Dietary Guidelines for Americans – a set of health, nutritional and dietary recommendations for the public. For many years, the DGA has defined moderate drinking as two drinks per day for men and one drink per day for women.1 The next set of guidelines are set to be released in 2025.
We Encourage Congress to:
- Urge HHS and USDA to use well-founded information and science to influence the guidelines.
- Maintain the definition of moderate drinking that has served the public well.
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Differentiating Between Alcohol Beverage Products
Recent Congressional Action on Alcohol Taxes
In 2020, Congress again acknowledged the rationale for a different federal alcohol excise tax rate for beer, wine and liquor, making permanent the temporary alcohol excise tax rates that were passed in 2017. The different rate for each category of product reflects the longstanding congressional recognition that beer, wine and liquor products are not the same and should be taxed differently. Attempts by some in the liquor industry to blur the lines of these distinctions are inconsistent with established alcohol policy and current law as well as public health and policy principles regarding alcohol.
Liquor and Beer Are NOT The Same
- Vodka, whiskey, gin and tequila are not the same as beer. The average alcohol by volume (ABV) of liquor (distilled spirits) is approximately 40%, while the average ABV of beer is approximately 5%.
- Congress has continually recognized the fundamental differences between beer, wine and liquor and the fact that the products are distinctly different. The federal tax code has further reinforced the bright lines of distinction, implementing a higher rate of taxation for liquor than for beer or wine.
Health Concerns Associated With Liquor and Beer Are Inherently Different
- Differences in taxation reflect the concentration of alcohol in the different products. Due to its higher concentration, liquor can intoxicate more quickly. Counterfeit liquor can be fatal to consumers, as happens in some countries outside the U.S.2
- According to the Centers for Disease Control and Prevention, approximately 2,200 people die each year from extreme alcohol consumption.
- Additionally, some liquor in certain markets is more susceptible to adulteration and can be fatal to consumers.
Attempts to Expand Federal Tax Policy Advantages
- Some liquor manufacturers are proposing a lower tax rate for liquor-based beverages sold in a can. A cocktail served at a bar and a cocktail packaged in a can are both liquor-based and the packaging should not change the federal tax rate.
- Additionally, some liquor manufacturers are pursuing an expansion of the drawback of excise taxes paid on imported alcohol. Legislation was introduced last Congress to expand the substitution drawback credit to include additional liquor-based products.
- Existing federal tax policy already offers significant support to liquor manufacturers1 and contributes greatly to a vibrant liquor industry.
- Even as liquor’s market share continues to grow,3 its effective tax rate is significantly reduced by government credits and refunds that currently exist in the tax law. Congress should avoid further attempts to expand liquor tax advantages.
The U.S. Beer Industry Contributes More to the Economy
- The U.S. beer industry has a significant impact on gross domestic product (GDP), providing good jobs and driving economic activity throughout the country.
- In 1983, there were fewer than 50 approved breweries in the U.S. Now, that number has grown to approximately 14,000.
- The U.S. beer industry supports more than 2.4 million good-paying, local jobs and contributes more than $409 billion to our economy.
- The independent beer distribution industry alone supports more than 137,000 quality jobs and each job in the brewing industry generates another 10 jobs in other industries, including farming, transportation and hospitality.
- The impact of the beer industry is equivalent to 1.6% of the U.S. GDP.
We encourage Congress to:
- Maintain the longstanding tax policy of differentiating between beer, wine and liquor as it relates to regulatory and tax policy.
- Oppose legislation to allow for the expansion of duty drawback and proposals to lower the tax rate for liquor in a can.
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ELDT (Entry-Level Driver Training)
In 2012, Congress directed the Federal Motor Carrier Safety Administration (FMCSA) to establish new minimum training standards for individuals applying for a Class A or Class B commercial driver’s license (CDL). The new requirements include a prescribed program of both knowledge and behind-the-wheel instruction provided by a training entity listed on FMCSA’s new Training Provider Registry (TPR). Additionally, the new rules incorporate performance-based concepts by requiring driver-trainees to demonstrate driving proficiency and participation in classroom theory training.
To ensure distributors had adequate time to adjust to new driver training regulations, NBWA advocated for a delay in the implementation of the ELDT rule that was originally set to take effect on February 7, 2020. Since the rule establishes new CDL driver training standards, NBWA worked to ensure that implementation of the new regulation minimized stakeholder confusion and offered a smooth transition for those affected. As a result, the new training requirements were delayed for two full years and will now take effect on February 7, 2022.
ELDT Important Information
The Entry-Level Diver Training (ELDT) rules apply to new drivers, in interstate or intrastate commerce, seeking a Class A or Class B CDL, an upgrade to their CDL or hazardous materials, passenger or school bus endorsement for their license for the first time. The requirements do not apply to those holding a valid CDL issued prior to February 7, 2022. Starting on February 7, 2022, entry-level driver applicants must complete a theory (knowledge) and behind-the-wheel (BTW) training program by a training provider listed on FMSCA’s TPR. Potential TPR entities include training schools, educational institutions, motor carriers, owner-operators, individuals and others.
Training providers are required to self-certify that they meet the ELDT standards. It is expected that the TPR will be open for registrants in the summer of 2021. The rule requires states, through their State Driver Licensing Agencies (SDLAs), to verify if a new CDL applicant has completed the ELDT theory and BTW training before allowing the applicant to skills test for their CDL. The new rules do not replace or supersede state-based ELDT requirements that exceed the new federal requirements. Additional state-based requirements must also be met.
The ELDT rule does not require any minimum number of hours for completion of any of the BTW training. The proficiency analysis of the BTW training is based solely on the training instructor’s assessment of the trainee’s performance of the required BTW elements. The rule does not require any minimum number of hours for completion of the theory requirements.
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Federal Taxes
Main Street Tax Certainty
NBWA supports permanent tax certainty for Main Street businesses. Focusing on tax certainty for S corporations and other pass-throughs, full and immediate expensing and estate tax relief all allow the 3,000 independently owned beer distributors to plan for the future. Congress should take action to pass permanent tax provisions that help family-owned businesses continue to create jobs, increase wages and stimulate the economy.
Pass-Through Deduction
There are more than 5 million S corporations in the U.S., employing one in four private-sector workers. NBWA member companies are largely structured as S corporations, and their business income flows through to the owner’s individual income tax return. The 2017 tax law provided a temporary 20% deduction of qualifying business income for pass-through businesses, while making America’s corporate tax rate reduction permanent. Also known as the section 199A deduction, Congress included the tax provision as an attempt to provide some degree of parity for pass-through businesses in light of the permanent tax rate reduction that was being provided for C corporations. This deduction will expire at the end of 2025, resulting in a significant tax increase on American small businesses.
Full and Immediate Expensing/Bonus Depreciation
Immediate expensing allows businesses to deduct 100% of the cost of new investments, like machinery and equipment, in the year of purchase. The phase out of the full expensing allowance began this year, with an annual 20% reduction in the amount allowed for deduction until the 100% allowance is fully phased out at the end of 2026. As an alternative to the phase out, Congress should make the full bonus depreciation allowance permanent to encourage business investment, support growth and create more employment opportunities.
Estate Tax
The majority of NBWA members are multigenerational, family-owned businesses. The 2017 tax law increased the estate tax exemption, which is currently $12.92 million per individual for 2023. When current law sunsets at the end of 2025, estate tax exemption levels will revert back to $5 million per individual. Legislative proposals that reduce the estate tax exemption or raise current estate tax rates will adversely affect family-owned businesses
Supporting Family-Owned Businesses
Congress should oppose limiting the ability of a beneficiary of an estate to use stepped-up basis at the time of determining the value of an inherited asset. Current tax law allows for the “stepped-up” tax basis of an inherited asset to reflect the fair market value at time of death, removing from taxable gain the appreciation in the asset’s value over time. Congress should also oppose expansion of the Net Investment Income Tax (NIIT).
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Franchise Laws
What are Beer Franchise Laws?
The 21st Amendment to the U.S. Constitution gives states the primary responsibility to regulate alcohol. State franchise laws are a key component of state alcohol regulations; they address the relationship between beer suppliers and distributors. Beer franchise laws provide balance and guidance for brewers and beer distributors.
Beer Franchise Laws Support:
1) Consumer Choice – Product Diversity2) Brewer Access – Distributor Independence
3) Public Safeguards – Responsible Sales
Who Benefits?
The consumer benefits because franchise laws support an independent system that generates tremendous choice in the market.
The brewer benefits because they gain access to equipment and personnel provided by independent distributors, who deliver and sell beer to retailers across the country. Small brewers especially benefit because distributors are able to act independently and carry all brands.
The public benefits because franchise laws support the system that regulates and safeguards a unique product..
Consumer Choice: Product Diversity
Consumers see new products in their marketplace. Beer franchise laws encourage distributors to make the investments necessary to expand distribution of new craft brands and allow new brewers with new products to enter the market through independent distribution.
Consumers have selection. American consumers access a wide selection of beer brands through an open distribution network, unlike industries where the distribution network is closed. According to the Nielsen Company, there is more selection of alcohol than any other consumer product.
Franchise laws promote consumer choice. Beer franchise laws prohibit brewers from terminating distributors for taking on new brands. Beer franchise laws inhibit forced consolidation and termination without cause. Combined with three-tier requirements, franchise laws prohibit vertical integration of the brewing, distribution and retail tiers, preventing monopolies.
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Multiemployer Pension Plans
Multiemployer Pension Plans
Many beer distributors participate in multiemployer-defined benefit pension plans and have met their contribution responsibilities. Although a number of these plans have been temporarily stabilized after receiving Special Financial Assistance (SFA), their long-term stability is unclear. Further, recent proposals from the Pension Benefit Guaranty Corporation could increase withdrawal liability. Although SFA addresses the financial needs for some of the most troubled plans, long-term stability is needed.
We Encourage Congress To:
- Address withdrawal and partial withdrawal liability, including requirements that often harm small businesses.
- Enact funding rules to allow trustees to address problems before they happen.
- Update notice and disclosure rules to ensure that both employers and employees understand the financial health of these plans.
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Responsible Alcohol Consumption
America’s 3,000 licensed, independent beer and beverage distributors and their more than 140,000 employees are citizens in the communities in which their businesses operate. They understand that alcohol is not like other consumer goods and can have consequences if abused or consumed illegally by underaged individuals. That is why beer distributors take steps to ensure the safe and legal sale of alcohol and fight efforts to weaken regulations that exist to provide a safe and orderly marketplace. They participate in a wide variety of programs to promote responsible consumption and to eliminate drunk driving, alcohol abuse and the underage purchase and consumption of alcohol.
In addition, NBWA supports legislation to protect public health and safety with regard to alcohol, including the Sober Truth on Preventing (STOP) Underage Drinking Act
See the below resources available to distributors to help promote responsible alcohol consumption:
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The Importance of the Three-Tier System
Alcohol is regulated differently because it is not the same as other consumer products. The three-tier system has been serving the American public for decades, helping to create and maintain a competitive, safe and efficient marketplace benefitting consumers.
Quality Jobs and State Revenue
Collectively, the alcohol industry contributes nearly $40 billion in annual tax revenue to state and local governments from sales and excise taxes on beverage alcohol. The three-tier system ensures that appropriate taxes are collected, all while supporting well-paying jobs — the beer distribution industry alone supports more than 140,000 quality jobs in communities across the country
Consumer Choice
Unlike many consumer goods with vertically integrated supply chains, alcohol beverage diversity has never been greater. Consumers benefit by having a variety of choices from the largest international brands to the smallest local brews and everything in between all on the same store shelf, menu and bar tap.
Regulatory Accountability and Consumer Protection
The three-tier system maintains a chain of custody from producer or importer to independent distributor to licensed retailer. This ensures product integrity and
helps keep alcohol away from minors. This time-tested, transparent and accountable regulatory system helps ensure compliance with and implementation of local laws and the collection of revenue.
Access to Market and Competition
Distributors play a vital role within the three-tier system, providing efficient access to market for ALL beer brands to ALL licensed retailers, promoting competition and access to thousands of brands, while ensuring consistent product availability and choice for consumers. As a senior administration official recently said, “While [alcohol markets] are not perfect, they do give us a sign of how the U.S. economy can be. For example, beer brewing has gone from an industry which consolidated all the way down to 89 breweries in the United States, where there’s now over 6,0002 breweries operating in the U.S., and they are regional, they’re competitive, they’re innovative.
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Workforce and CDL Relief
NBWA represents over 3,000 independent beer distribution facilities across the U.S. that employ more than 137,000 hardworking Americans. Beverage distributors provide competitive wages, benefits and long-term career opportunities; however, they face significant skilled and unskilled labor shortages, from workers who load trucks to commercial driver’s license (CDL) drivers who safely deliver beer. It is important that Congress take steps to help address labor shortages and supply chain challenges.
Labor Shortages and Supply Chain Challenges
Businesses continue to struggle to recruit and retain workers as well as manage continued stress on the supply chain. The Bureau of Labor Statistics reported over 300,000 job openings across the wholesale trade industry as of January of 2023.1 These unfilled jobs continue to put pressure on wages and contribute to rising costs and inflation.
As businesses work to find solutions, Congress should take steps to help address these challenges through greater access to and availability of apprenticeships, community college programs and trade schools. Additionally, Congress should consider expanding eligibility for employment for those individuals who have entered the country legally.
CDL Drivers Recruitment and Retention
Beer distributors employ CDL drivers who deliver thousands of popular brands of beer to licensed retailers and return to the warehouse at the end of the day. The shortage of CDL drivers was a concern before the pandemic and continues to contribute to supply chain and delivery disruption. Normal attrition and the expansion of delivery drivers, combined with an aging CDL-driver workforce, have resulted in a smaller pool of available drivers.
Bipartisan efforts to create an apprentice program that would allow CDL drivers between the ages of 18 and 21 to drive interstate will help grow the CDL driver workforce. Additionally, proposals to provide grants for training programs and tax credits for active CDL drivers will encourage new entrants to pursue a CDL driving career and incentivize current drivers to remain in the workforce.
We Encourage Congress to:
- Take steps to address the nationwide labor shortage and challenges in the supply chain, including apprenticeships, trade school and community college initiatives.
- Support meaningful efforts to increase the pool of eligible CDL drivers
- Consider expanding eligibility for employment for those individuals who have entered the country legally.