EPISODE S.6, E.11

[POURED OVER POLICY: LAWS SHAPING CRAFT BEER]

Heather Jerred (00:09): Welcome back to another episode of the BrewDeck podcast, I am your host Heather, joined by our other host, Brittany. It is a toasty day here, and when I say it’s a toasty day here I mean it’s Canada hot. I am wondering what it’s like in Houston right now. Brittany Drennan (00:27): I was going to say, girl, don’t even go there. Heather Jerred (00:29): I know. Brittany Drennan (00:30): It’s actually cloudy and only 88, which is a brief reprieve from the 90s we’ve been experiencing. So. Heather Jerred (00:37): So, it’s a break week for you then? Brittany Drennan (00:40): Yeah. Heather Jerred (00:41): Yeah. Brittany Drennan (00:42): I would say a break hour or two, it looks like the high is still 91. Heather Jerred (00:47): Oh my god. Okay, well, I have to convert, so… Brittany Drennan (00:51): Oh yeah, sorry. Hot. Heather Jerred (00:51): Hot. It’s hot- Brittany Drennan (00:51): It’s hot and steaming. Heather Jerred (00:51): Fair. Brittany Drennan (00:56): But it’s fine. It’s what we have AC for. Heather Jerred (00:58): Yeah, I suppose. Okay, so it’s currently 70. Brittany Drennan (01:03): Oh, that’s beautiful. Heather Jerred (01:05): And with the humidity it feels like 81. Brittany Drennan (01:07): Jealous. Heather Jerred (01:09): And so, it’s definitely going to get a bit hot. It’s funny because it literally says heat warning on my app too. Anyways, Canada hot. It’s Canada hot, guys. Brittany Drennan (01:19): Back on track. Here we go. Heather Jerred (01:20): Yeah, here we go. So, just a reminder before we dive into our episode today, that Pink Boots Malt is available all year round at every Country Malt Group warehouse, and this honestly makes a very great beer, even when it isn’t International Women’s Day. $5 from every bag goes to the Pink Boots Society, and those donations help to fund scholarships and education opportunities for women and non-binary individuals in the fermented beverage industry. So, you can pick it up and do a Pink Boots brew any time. You can just use it in any brew at any time. I have a couple brewers up here that use it as their base malt regularly. Because it is- Brittany Drennan (01:57): It’s a base malt, y’all. Heather Jerred (01:57): It is a beautiful malt too. If you’re loving our Pilsner malts, you would love the Pink Boots malt. So, check it out, reach out to your rep if you have any questions. Today, on the Brew Deck podcast, we are going to be talking politics. Now, please don’t change the channel, I promise it will be a good episode. We are discussing legislation that impacts the craft brewing industry, so our side of politics. Brittany Drennan (02:24): The good side. Heather Jerred (02:25): The good side. Brittany Drennan (02:26): Is there a good side? Yes. Heather Jerred (02:26): I don’t know. Brittany Drennan (02:29): It’s mostly legislation, so it’s not polarizing anyway. Heather Jerred (02:34): Not in any way. Brittany Drennan (02:35): We’re chatting with Alli Nimik, commercial sales director for CMG, and Marc Sorini, who is the vice president of government affairs for the Brewers Association. And we talked to those two about the annual Hill Climb in D.C. We learn more about its importance, and they give us an inside view into what it’s really like to attend, and honestly, it sounds incredible, and- Heather Jerred (02:59): It does. Brittany Drennan (03:00): … I want to go next year. Heather Jerred (03:01): I want to go next year. I don’t even live in the US. Brittany Drennan (03:05): Also feel like we really just learned a lot, so a really great conversation there. Heather Jerred (03:10): Yeah. And the issue is that, obviously we’re going to dive into it, but the issues that got brought up are super, super important. So, yeah, [inaudible 00:03:18] some great work there. Brittany Drennan (03:19): Absolutely. We also are going to be speaking with Travis Bailey, who is the government affairs associate for Texas Craft Brewers Guild, and Adriane Hodges, who is the legislative co-chair for the Texas Craft Brewers Guild. We are talking with them about an exciting and new and revolutionary bill that they’ve introduced here in Texas to support breweries, and we talk about the challenges of fighting for, and in some cases having to defend, legislation as it relates to our favorite industry. Heather Jerred (03:53): That’s a super, super informative discussion as well. We also have a very special guest host this month, Jared Runyon is joining us, he is CMG’s own digital product manager, so you’re going to hear him jump in on both of the interviews. Let’s take a dive in. Brittany Drennan (04:09): Let’s go. Heather Jerred (04:11): We are now joined by no stranger to the podcast, commercial sales director for Country Malt Group, Alli Nimik, as well as Marc Sorini, vice president of government affairs for the Brewers Association. Welcome, both of you. Marc Sorini (04:24): Great to be here. Alli Nimik (04:25): Yeah, exciting. Heather Jerred (04:27): So, we did bring you on to tell us all about the BA Hill Climb, before we jump into that, Marc, can you give us a little introduction of yourself, and how you ended up working with the BA? Marc Sorini (04:38): Sure thing. So, I was a lawyer first before I got into government affairs, and was a partner at McDermott for 20 years, I started doing work for one of the BA’s predecessor organizations back in 1998, if you can believe it, and love working with small businesses, so it was always one of my favorite clients. In 2020, I thought that it would be a great capstone to my career to pivot more into helping change the law versus helping clients navigate what is the law, and government affairs for the Brewers Association was definitely the dream job to do that. Heather Jerred (05:18): I would guess so. Brittany Drennan (05:19): Are you a beer drinker yourself, Marc? Marc Sorini (05:22): Oh, yes. In fact, I was a law student when I started discovering what back then was called the microbreweries. I quickly figured out that the currency of the realm at law firms was clients, and I said, wouldn’t it be cool if I could be a beer lawyer? And I carved that niche out, I can’t say that most of my revenue back as a big firm lawyer was from small brewers, but it was certainly from alcohol beverage suppliers, and so I got to pursue my love of great IPAs and a nice stout into a legal career. Heather Jerred (06:02): Can I ask what your favorite beer is? Marc Sorini (06:04): Oh, that’s like asking me who my favorite kid is. There’s so, so many. Brittany Drennan (06:13): [inaudible 00:06:13] style- Marc Sorini (06:13): But offline, I might sneak out that there’s a few I particularly like, but… Heather Jerred (06:20): Okay, we’ll grab that. Marc Sorini (06:20): Yeah. Brittany Drennan (06:23): Okay. What is the BA Hill Climb? Can you just give us an overview in a nutshell, for the listeners who aren’t aware? Marc Sorini (06:31): Like a lot of trade associations, we think it’s important to show up on Capitol Hill once a year, and what I like to say is that the Hill Climb most fundamentally is about relationships. Nothing that you can do is going to guarantee that an elected official is going to vote your way, but having a relationship means that you’re much more likely to at least be heard. And so, showing up once a year to be able to get in front of a lawmaker and lawmaker staff is critical to building those relationships. And then we encourage our people to extend those relationships by inviting the member of Congress, the senator, hey, have an event at my brewery. We’re small businesses, we can’t write giant [inaudible 00:07:16] checks, but what we can do is show that this is the engine of the economy, small business, and putting people to work. So, that’s exactly what we do. Alli Nimik (07:26): Really cool being part of the New York congregation, because I was with Paul Leon and Fred Matt, so just icons of the industry. Marc Sorini (07:34): Absolutely. Alli Nimik (07:36): And they knew so many of the people that we were meeting with, knew so many of the elected officials, knew so many of their staffers even, so it was really cool to see that they were the prime example of building that relationship, and had the contacts already in hand, and knew how, if they swung one way or the other on certain topics and position points, so it was really cool for me to see that, and it helped understand the process and lobbying overall, just having those two iconic veterans of industry and of obviously the Hill Climbs. Marc Sorini (08:10): You’ll definitely get great tips following either Paul or Fred, they’ve been to many a Hill Climb, and certainly the Matt family has been involved in government affairs for a long time. In fact, a little aside, Fred’s dad was the chairman of the old BAA, when they hired me as outside counsel back in 1998. And I still distinctly remember my interview with that board, and yeah, they’ve been involved in government affairs for a long, long time. Brittany Drennan (08:39): That’s cool. Do you know how many years this BA Hill Climb has been happening? Marc Sorini (08:46): I should, because like I said, I’ve been, at least as an outside counsel, I’ve been with them forever. We used to take part in what was called the Joint Brewers Wholesaler’s, I don’t know if they called it a Hill Climb, back in the early, the late 90s and early 2000s, and that was with the big brewers, and with the NBWA, and I think things separated in the late 2000s, so probably 2008 or ’09. So, it’s probably coming on 20 years is my guess. Brittany Drennan (09:17): Oh wow. Okay. Heather Jerred (09:17): Oh. Wow. Alli Nimik (09:18): Yeah, that’s incredible, because if you even think of where craft beer was in that time, we weren’t quite booming yet. Heather Jerred (09:26): No. Marc Sorini (09:27): I remember for the 1998 or ’99 joint Hill Climb, the small brewers representative filled, I met with, and we filled one table at the old Cap City Brewing Company, I think there was about five or six people. Brittany Drennan (09:46): Oh wow. Marc Sorini (09:46): So, yeah, it’s grown a lot. Brittany Drennan (09:48): That’s awesome. Do you know how many attendees attended this year, and has that number grown from previous years? Marc Sorini (09:58): It’s 85, which is holding steady in the post-COVID era. We did have more numbers in the 2016 through 2020 era, mostly because we were working on the Craft Beverage Modernization and Tax Reduction Act, and that was a real rallying cry for our members, it halved the excise tax for most of our members, people making less than 60,000 barrels a year, and then it gave a $2.00 excise tax reduction to our larger members. So, that was a really huge rallying cry. It’s both a blessing and a curse not to have something as critical in front of Congress to motivate people to come out for something like that. Brittany Drennan (10:43): Okay. Is there a cap on how many people can attend and can you speak to if you have to be a BA member to attend? Marc Sorini (10:50): There is not a cap… Or I would put it this way. If we get to the point where we are running out of space, that would be a good problem to have. But believe it or not, I don’t know if we have a specific policy on this, but yes, I believe you should be a BA member to be able to participate, for sure. Brittany Drennan (11:08): Okay, and is the goal to have someone from every state present? Marc Sorini (11:12): That would be terrific. This year we had live representation from 36 states. Brittany Drennan (11:17): Wow. Marc Sorini (11:17): We’d love to get that to 50. Alli Nimik (11:18): Have we ever had it at 50? Marc Sorini (11:21): I don’t think we’ve ever made 50. My guess is that in 2018, 2017, we might’ve gotten close, back when the ramp up to [inaudible 00:11:31] getting made permanent in 2020 was probably the height. I’d have to check on what the records were, I don’t think we’ve ever gotten all 50. Alli Nimik (11:40): Oh. What a goal to achieve. That’s- Brittany Drennan (11:42): Yeah. Marc Sorini (11:42): It’d be great. Yeah, for sure. (11:44): Alli, since you were not exactly a New Yorker, was your experience a little bit different going to the Hill? Alli Nimik (11:51): I took American History in school, so I found it so incredibly interesting to just see all those iconic sites, so I will take that on the personal side. But no, I think I was treated as any other constituent, I would say. New York being a border state, I think there were a few hotter topics, as you can imagine, with tariffs and the economic impact of those being right next to Canada. I am Canadian, so I did want to make sure that was kind of near and dear to me, and especially barley procurement being the backbone of really what we do, those were definitely hot topics, and I think it was just a really cool opportunity to be able to educate some of these elected officials a little bit more on what barley is to us, and what barley is to beer, and how important it is, and how as much as it is important to be able to rely on your own country for your economic impacts, you do need to rely on others to get the full picture, and to be able to support the full customer base. (12:58): It just opened a lot of really interesting conversations and I think there are a lot of people that were quite pleased actually to have a Canadian there, and just did a little bit of a different perspective. Marc Sorini (13:09): Definitely. As far as you being a supplier also, representing the maltsters and the growers. Were there different conversations you were having with Congressional members? Alli Nimik (13:19): Like I said, mostly on the barley side, I think the BA was, they’re dynamite in setting this all up for you, so you do have talking points. You do obviously have a little bit of a different spin on it coming from the ingredient and supplier side, than the brewers or the guild members kind of have. But the BA presenting all those talking points to us gave us some really key topics to hit on, so that was pretty important. One of the ones that I know for us, from a supplier side, is just the appropriations into some of the funding that goes into barley research and hop research, those are again, like I said, backbones to our side of things, so those were definitely things that we spoke to strongly. Alli Nimik (14:03): So those were definitely things that we spoke to strongly towards the elected officials. Speaker 1 (14:06): That’s awesome. Heather Jerred (14:07): So obviously politics are ever-changing, so I’m going to assume the policies that you’re addressing every year are going to be different. What were kind of some of the main issues being discussed this year? Marc Sorini (14:19): Well, so this year was really tough because we had the sort of once a decade massive tax overhaul, which seems to happen about once a decade in the United States. We had the famous one in 1986, and then there was Obama’s 2014. Really it seems like once a decade we have a major tax bill, and the One Big Beautiful Bill was one of those. And of course it passed about two weeks before we were there. So we were revising our materials going in. (14:47): The One Big Beautiful Bill is very controversial for a lot of reasons, but there are things in there that were very bipartisan that we were supporting. And so the first was pass through entities. Most of our members are small businesses. They are either LLCs or S-corps. So while the big corporations, the C-corps already have a lower tax rate, ours, which was temporarily lowered effectively by a credit in 2017 was set to end this year. And so extending that we think is very important for us to get parity with the big corporations. (15:20): We’re also very excited about the accelerated R&D credit. Craft brewers are innovators. And so having the ability to do enhanced depreciation was really big for us. And then another big one, and you can appreciate this as suppliers, is we rely heavily on CO2 stream and there was a tax provision put in 2020 that basically incentivized sequestration of carbon instead of the use of carbon. And of course, we are a secondary user of carbon generated by things like creating ethanol. And so, creating parity there to avoid a tax incentive to create shortages was very important. So there were some things in there we liked that we then didn’t have to advocate for. (16:04): And then some of our other issues was we pay some of the highest credit card fees in the industrialized world, so we support something called the Credit Card Competition Act. It would require additional competition for banks setting up credit card services and therefore would push prices down through competition. We also have the USPS Shipping Equity Act, which would allow the United States Post Office, which in a pre-prohibition statute says they can’t carry alcohol. It would allow them to compete in the market for direct shipping alcohol. (16:37): And then we also advocated for full funding for barley and hops research, as was previously mentioned, also full funding for the TTB, the Alcohol and Tobacco Tax and Trade Bureau. We rely on them. There’s a lot of things that you can’t do as a brewer unless the government gives you a stamp of approval. And so if they have a 90-day backlog for approving labels, for example, that basically extends your path to market by 90 days, which really can be a killer in a fast moving market. (17:06): We are not supporting any specific legislation, but we are trying to educate members of Congress about the importance of things like the integrated North American barley supply chain. And then of course for us also aluminum is a big one because a lot of our raw aluminum comes from Canada. Brittany Drennan (17:24): Yeah, I’m glad you mentioned that because that was a really rough time. I mean, it still is, obviously. It’s ongoing. But during that time of uneasiness and uncertainty, we didn’t know if people were lobbying for our industry. And so it’s really good to hear that that’s definitely been happening in the background. In prepping for this episode, Alli also told us that some of the issues that were being discussed were changed up until the very night before or constantly changing up to the very last minute. So how does the VA stay so on top of those changes and those happenings and keeping the attendees informed prior to their meetings? Marc Sorini (18:07): I’ve become a political junkie. And usually we’re kind of in between personnel, but we generally have somebody on Capitol Hill who’s walking the halls on a weekly basis, multiple times a week. And so all of that gives us information and insight that hopefully we can make actionable as quickly as possible. So I’m not sure if we were changing things the night before, but certainly the week before, yeah, we were making adjustments on the fly based on some of the latest developments. So that’s the political game. It moves very, very fast and it seems to move faster every year, certainly this year. Heather Jerred (18:42): Yeah, I can imagine. That was something that Alli did say though, the VA was just so on top of everything, that it was so well organized. Alli Nimik (18:50): We were booking meetings, I would say too into the last night really, to get a response and obviously with the on-goings of what was happening in the political climate at that point, just who was available even for us to meet with and stuff was changing on the fly nearly. Marc Sorini (19:07): Yeah. Mark Prio on our staff does an amazing job doing that. And yeah, we are literally scheduling sometimes the morning of. Heather Jerred (19:15): Any highlight conversations you had, Alli? Alli Nimik (19:17): I would say on the New York side, one of the elected officials we met with actually wrote a position paper just on how tariffs and beer were so kind of I guess impactful. They use beer and the craft brewing industry in that area to show the bad stuff going on with tariffs, for a lack of better words, but just the full impact of tariffs and what they were having on their town and on the beer industry. (19:45): So I thought that was just a really cool way that the industry obviously has made such an impact, and how some of these smaller towns do really thrive and really need hospitality to be successful. And there’s a lot of value in that, and just the impact that these tariffs have had has been really detrimental to them. So I thought that was just really cool that beer, even on a small scale, is used in position papers for these very educated and important people out there. So that was neat. Heather Jerred (20:19): It’s nice to know it’s being talked about like that too. Alli Nimik (20:22): Yeah. Heather Jerred (20:22): What are the goals for the Hillclimb moving forward? Marc Sorini (20:26): Oh, moving forward, we’re going to continue to show up. We strongly believe that even if we don’t have a big ask, we haven’t had sort of a rally everybody around the flag issue of burning priorities since the Craft Beverage Modernization and Tax Reduction Act was made permanent in 2020. But we think it’s very important to show up, build those relationships so that when you do have a burning issue, you have people’s ear. (20:49): Again, you can’t guarantee that anyone’s going to vote with you. It doesn’t work that way. But certainly if you have a relationship, you can be heard, and that’s very, very important. Whether there’s a bigger issue that comes up in 2026, I can’t even predict that. It’s hard enough to predict what’s going to be happening in two weeks versus a year, but that is actually one important thing that it’s not a year because for the first time, we are actually shifting the timing of our Hillclimb to February. (21:16): Alli, as you experienced, it’s blastingly hot in Washington DC, and of course you’re dressed in your best wool suits and other good gear. So we think that moving it to February is going to be a good shift. We think that attendees will appreciate that. It’s definitely a time when people are in session, and also it probably will avoid anything like we had this year where the legislation was passing right before it. So we’re going to get earlier in that particular cycle of the congressional action. (21:48): So there’s a variety of reasons why we like the switch. It’s more like six months from now, but still hard to say exactly what our big issue is going to be. But if there’s not that big one, there are a number of issues that we care a lot about. I mean, certainly credit card fees are one of them. A lot of our members complain about music licensing and thinks there may be a federal solution coming up for that. Lots of the USPS Shipping Equity Act is something that’s kind of a long-term. We want to have that message coming out there. So that’s another one. And then obviously barley and hop research, funding for the MAP program, which actually did very, very well in the Big Beautiful Bill, and full funding continued for TTB. All of those are still going to be on our minds. Whether there’s other things, TBD. Heather Jerred (22:34): Wait to see. Yeah. Speaker 1 (22:37): Yeah, it’s hard to be able see that far in the future for sure. As far as how people in the brewing industry that can get involved, especially considering it’s going to be sooner this year, just in February, where should they reach out to and how can they help? Marc Sorini (22:53): I don’t think we have our website up. By the wat, it’s February 24th and 25th are the dates, so save the date. I’m 90% sure we don’t have the website up for that. If you want to get information early, as much as we can provide, I would say first of all, if you have a VA contact, contact them. If not, I’m msorini@brewersassociation.org and I’d be happy to field emails. And by the way, if you put Marc M-A-R-C at brewersassociation.org, you get to Marc Prio who’s the person who does a lot of the scheduling. So either Marc with a C will be able to help you for the 2026 Hillclimb. Heather Jerred (23:30): If people aren’t able to attend in person. Are there ways that they can get involved and support? Marc Sorini (23:36): Yeah, there is. One of the things that we’ve necessarily had to step back from over the last couple of years is our PAC. It’s up and running, but it’s not particularly well organized at the moment. I think that’s something that once we fill that vacancy in DC, we may be pushing on that. So that’s always a good way that you can help. But then others is get involved with not only your local guild. A lot of stuff in the United States is certainly state, but if you’re interested in federal, we love people stepping up to be on our government affairs committee and then participating in other ways. (24:09): We do grassroots a couple times a year at a national level and sometimes at a state level, but of course that’s state by state. So there’s a lot of ways you can get involved. And again, if somebody out there is listening and says, man, I wish I could help more, I’d love to hear from them. We love engaged members. Heather Jerred (24:25): Awesome. I also like that you said invite your representatives to the brewery. Marc Sorini (24:28): Oh, yeah. Heather Jerred (24:30): Yeah. We talked to some members of the- Marc Sorini (24:32): Thank you for reminding me of that. I should have led with that because that’s critical. Build those relationships. Heather Jerred (24:37): Yeah. We spoke to members of the Texas Brewer’s Guild and they said the same thing. They said it’s the best way to get them involved and to get them to understand what you do is to get them into the brewery. Marc Sorini (24:48): Politics is a very story driven business, and so being able to tell an individual story of, I’m an entrepreneur, here’s what I’ve done. Here’s my employee X, my employee Y. Here’s their story. That goes a long, long way rather than just cold statistics. Heather Jerred (25:05): Alli, Marc, thank you so much for taking time out of your day to come and chat with us. Thank you for all the work that you do with the VA Hillclimb. We’re excited to see where this goes in the future, and I know CMG is really excited about their participation in it. It was our first year that we got to participate in it, so we’re really excited for future ones as well. Thank you guys. Alli Nimik (25:23): Thank you. Marc Sorini (25:23): Yeah, thank you. And thank you for participating. Heather Jerred (25:27): We are now joined by Travis Bailey, government affairs associate for the Texas Craft Brewers Guild, as well as Adrian Hodges, legislative co-chair for the Texas Craft Brewers Guild. It was a mouthful and I knew I was going to screw it up at some point. Welcome, Travis and Adrian. Thank you so much for joining us. Travis Bailey (25:45): Happy to be here. Thank you all for having us. Adriane Hodges (25:47): Thank you guys. Heather Jerred (25:49): So we are obviously going to jump in. We mentioned it before. We’re going to jump in and we’re going to talk about Beers for Steers and that specific bill. Before we do, can you tell us a little bit about yourselves, how you got into the industry and how you got to holding these positions with the Texas Craft Brewers Guild? Travis Bailey (26:03): Yeah. My name’s Travis Bailey. I’m government affairs associate, as you mentioned. I kind of came into the industry, I guess it’s been almost 10 years ago now. After working for an AmeriCorps directly with FEMA, I started at Goliad Brewing Company and kind of worked my way up onto the brew deck there. Then about a year up in the Pennsylvania area, brewing for a brewery and coffee roastery, Stolen Sun brewing and coffee roastery in Exton, Pennsylvania for a year. (26:33): And then got tired of the cold and moved back down to Texas where I’m from, and spent a little time in the liquor business and kind of tripped and fell into this role actually applying for the events and education role. And after my first interview, our now executive director, Caroline Wallace, recommended that I try out the government affairs role and interview for that. And it stuck ever since and been here about a little over three years now. Heather Jerred (27:00): Amazing. Adriane Hodges (27:02): My path was a little different I would say. I was a Spanish teacher and my husband was a home brewer. We had home-brewed for a long time and toyed around with the idea of opening a brewery. We just went for in 2017, opened doors to our first brewery in 2018. I had a medical issue that kind of knocked me out of teaching and I fell into the craft beer world, which it welcomed me with open arms. And I’m a lifelong learner. I love learning new things, and legislation is something that I’ve had in my history for a long time, since high school even. And when I ended up on the board and there was a legislative session, it just kind of all fit together. And day-to-day brewery owner, and then the fun stuff is advocating for better craft beer laws in Texas and nationwide. Brittany Drennan (28:00): We’re really glad and lucky to have you on the Texas Guild for sure. Brittany Drennan (28:03): We’re really glad and lucky to have you on the Texas Guild for sure. Can we jump in and tell us about the Beers For Steers bill? I know, Adriane, that’s your baby, maybe if you want to take it away. Adriane Hodges (28:15): Yes, I’ll kick it off. The Texas Craft Breweries Guild, in an effort to really promote our legislative agendas had a great idea and that was the Legislative Pro-Am where they pair breweries with a legislator in your region. And two years ago when we were not in session, because Texas only legislates every other year, I was paired with Senator Pete Flores. As any middle-aged woman would do, I stalked him online to learn as much as I could about Senator Flores and get to know him before he came in. And I had an idea in my head for many years that the spent grain that we donate to farmers, we should get credit for it in some way, shape, or form. And excise tax always stood out to me as a really good fit for that because it’s not a huge tax on us. (29:07): And when Senator Flores came two years ago to that one, we had a great time. We brewed a beer and at grain out, I said, “All right, Senator Flores, I want you to grain out,” and he’s graining out and we’re taking pictures. And I said, “Do you know what we do with all of this grain?” And let the conversation naturally occur from that point on, I said, ” Wouldn’t it be cool if we got a credit for it?” (29:32): And he was like, “Yes,” because he’s in there seeing what we do as small business owners. (29:37): With the help of Cross Oak Group, the Guild over the next year, I’m the kind of person that will follow up with an email, follow up with a call. I’m very persistent. It got turned into a bill. And a lot of people, I would say initially were like, “What is this?” (29:55): Everyone knew Beer To You. People knew Interfacility and the out of the blue is this Beers For Steers thing, but it had legs and it had a great team of people to work on it. And that’s the start of Beers For Steers. It’s ultimately an excise tax credit for brewers who donate their spent grain to local Texas agriculture, whether it be a farmer or a rancher. Brittany Drennan (30:17): That’s awesome. And most breweries are doing that anyway, that’s just incredible. Travis Bailey (30:24): Yeah, we did a bunch of research on that throughout the year after the interim there between legislative sessions prepping to file this bill after Adriane and Senator Flores had their discussion on it. We found that, yeah, pretty much all of our members were donating and the ones that were large enough were selling it because they could get a train car load at a time. From there, it realized that we didn’t want to prevent anyone from doing that, but we were able to match up some of the rates and figure out how to do the tax credit side of it as well. Adriane Hodges (30:57): Yeah, the math worked really well on it, and Travis gets a ton of credit for that. With our brewery, I know when I testified in the House, it was within $20 of what we had paid in excise tax for the amount of grain that we had donated. Speaker 2 (31:13): That’s some really good math. Adriane, when the idea first came to you, because you said you’d been kicking this idea around for a while, was there a particular moment or instance where you were out with either farmers or brewers where it clicked that this was something that had some legs? Adriane Hodges (31:34): I think it clicked when someone took me seriously, and there was some movement on it, but it’s something I felt for a long time. As a small business owner, and particularly in the craft beer industry, we pay so many taxes to so many different agencies. We pay a federal excise tax as well as the state excise tax. And breweries, by large, are some of the most charitable small businesses, and I thought it was fair to get credit for supporting an entire industry of other small business owners, ranchers, and farmers, and creating a circular economy. I think the government should reward businesses that prop each other up and work together that way, it just always made sense in my head. Speaker 2 (32:20): Yeah, making a little business ecosystem. Adriane Hodges (32:25): Yeah, and reduce waste because if we didn’t donate the grain on a small scale, it would be difficult to sell it. It becomes a nightmare for your municipalities with what do you do with it at this point? Where does it go? Does it go in a landfill? You make it somebody else’s problem, and instead of creating problems, I think that legislation that’s solution oriented where it benefits multiple parties is the best kind of legislation that we could have. Heather Jerred (32:51): For sure. Our episode we did previous to this one was talking about spent grain and alternative ways to use spent grain, and the amount of pounds of spent grain in the United States was in the billions per year. So yeah, it’s great to have some options for them and to have that come back to the brewers as well. Brittany Drennan (33:10): How do you go about proposing a bill? Adriane Hodges (33:15): Travis? Heather Jerred (33:16): Step by step. Travis Bailey (33:16): Well, this one particularly was an interesting one. Adriane pitched it to Senator Flores and they got the ball rolling. Well, Flores’s office got real excited about this, and they called one of our members of the lobby team over at Cross Oak Group and told us to figure out what the language would look like to which I got the phone call from the lobbyist with those orders as well. So we sat down and tried to work out the math on it. (33:48): When we originally talked about this, we were actually looking for a way to also benefit Texas barley farmers at the same time and encouraged Texas barley use. Unfortunately, that got into some interstate commerce issues and some of the grain hold clause and things of that nature. So once we got this all figured out, we sat down, wrote up what we were looking at with the math and how it would work out and drafted this first version of it. (34:17): From there, we made sure that Flores’s office took a read through it, made sure it made sense to them, and then started checking with a couple actual lawyers. I’m not a barred attorney, I just play one on TV. We had them go through it and make sure we were clear, including Mark Serrini at the BA there, and took that to the legislative council who is a team of lawyers at the Texas State Capitol who actually draft all the bills. For the most part, there’s some other alternatives there, but for the most part they take it, make sure it fits in the code and decide where it’s going to fit in the code exactly, what code it applies to in the different various state law codes. (34:59): And then after that, it goes back to the office that filed the ask for the drafting, and that office can either pass it off to another office or actually file it at that point, but this one had a legislator behind it. When we look at something like Interfacility that we worked on, it usually involves talking to the office, getting an office to understand the basic concept and file the drafting request. And then we may have that office, or we may shop it around to a number of offices and try to find the best strategic partner that’s going to have the best ability to move the bill. That’s what we did on the other two major priorities we were working on this session. Adriane Hodges (35:44): And Beers For Steers really lucked out. Flores got the ball rolling, but boy did we have an amazing champion in House Representative Brad Buckley who carried the bill version in the House, who is himself a veterinarian in a rural community in Texas, and a big, big supporter of the craft beer industry. This bill just, it appealed to legislators I would say, and as it progressed, it kept getting co-sponsors and co-authors. It’s a feel good bill in a way. It feels good to be rewarding people doing the right thing, and it’s really ultimately about Texans supporting Texans. And it didn’t matter if somebody had an R or a D next to their name, they could see the value in this legislation. Heather Jerred (36:31): I would say it supports small business in the brewing industry, and then it supports our local farmers as well, which I think it’s a win-win on both ends. Adriane Hodges (36:39): And it’s a twofer. Heather Jerred (36:40): It’s a twofer. Adriane Hodges (36:41): Yeah. The government’s dollar goes twice as far on this bill. They’re really in a way subsidizing or relieving huge burdens for two industries at the cost of a very small tax credit for one. Travis Bailey (36:57): Yeah, the estimated total tax dollars were less than 1% of the total alcohol taxes collected by the state of Texas last year or the year before. It was a way that you can make sure these small businesses survive and can grow on the beer side driving more sales tax. And on the same time, you’re supporting an ag industry that’s struggling in the face of rising costs of land, and quite honestly, the land and feed. Heather Jerred (37:26): So you did say you worked with a lobby group? Travis Bailey (37:28): We do, we have a team of four lobbyists that we worked with over the last session out of the Cross Oak Group in Austin. They work on state issues. We’ve been partnering with them since I believe the beginning of the Guild way back when, and they helped us pass Beer To Go in 2019 as well. Always happy to work with the folks over at Cross Oak Group, they’re a great team. Heather Jerred (37:50): So where is this bill right now? Where is Beers For Steers right now? Adriane Hodges (37:56): It is waiting to be filed again. I guess that’s the truth of it. The journey for a bill was something I really had to learn, and how many steps and how hard it really is to get a law made and a piece of legislation passed. Just from it getting heard, getting filed, then it has to go to a committee. The committee has to schedule it to be heard where there’s testimony taken. Then they take a vote out of committee, then it goes to hopefully a full floor vote, a second reading and a third reading, and then it can transfer to the next chamber. (38:31): And Beers For Steers did all of that through the House, went to the Senate, passed out of committee at the Senate, and unfortunately the clock just ran out. There was a parliamentary procedure that one word triggered everything on, and unfortunately, it never got the chance for that full Senate vote, even though it passed unanimously out of Senate Committee. It had all the legs to be passed, and it’s a very well-liked bill. It’s in queue to go through the same journey again in the 90th legislature. Heather Jerred (39:04): And when does that start? Travis Bailey (39:06): That’ll be 2027. We are currently in special session in the state of Texas right now, which is a additional legislative session that the governor calls. However, during special session, they usually last 30 days. But the only things you can talk about during special session are the things on the governor’s call, so we’re not able to move anything as there was no beer issue presented on that, on the call this session or for this special. And I don’t think we’re going to get added in the next couple specials, so we’ll have another chance to run it again in 2027. Heather Jerred (39:40): Awesome. Adriane Hodges (39:41): It’s unheard of how far it made to give credit to Travis and the Cross Oak Group and all the work that was done, it is not easy for a bill to get passed law. It usually takes, I don’t know how many sessions would you say on average, Travis? Travis Bailey (39:58): It’s probably around three to five. On most things on alcohol, you’re looking at significantly longer. Just it’s an uphill battle to pass any alcohol bills at the state of Texas. Adriane Hodges (40:08): For this bill to go as far as it did, and it really, if the fates had shined a little bit differently at the end of session, it would’ve passed and become law. I don’t think any of that hard work is gone, it’s just that you really have to dig in and understand that politics and bill writing is not the game of instant gratification. Heather Jerred (40:33): Yeah, nothing’s happening quickly. But at least you’ve gone through it once now, so I feel like, do you feel like you’ve learned more and know what to expect going into it again? Travis Bailey (40:40): Yes. I think when we look at the bill that finally crossed the Senate Committee, there was some changes that were made throughout session. When we first filed it, you had to go to the Comptroller’s Office to receive the credit. This point by the final time we finally finished it, it went entirely through the Texas Alcoholic Beverage Commission. Being able to streamline and simplify and on the fly was a major player here. Adriane Hodges (41:07): Yeah, and now all of those parties are lined up and have come to agreement on how they want it to function when it does become law, so all of that legwork has been done. We have a bill that doesn’t violate the interstate commerce clause. As it moves through each House, and it picked up those co-sponsors and the support, that support’s not going anywhere. People like the bill, they want their name on the bill, and they’ll recognize that. It won’t have to be as explained, I would say, in layman’s terms as we did at committee and things like that going forward. But then again, committees change every legislative session and you have to look at the landscape and see what you’re working with. So there will be challenges for sure, but I think we’re a lot farther ahead of the game than when we first started out in the 89th. Brittany Drennan (41:53): For someone on the outside listening and looking and it just so unbelievably complex. Adriane Hodges (42:00): Yeah. Travis Bailey (42:00): Well, there’s reasons to that. I joke pretty regularly with our- Travis Bailey (42:03): Well, there’s reasons to that. I joke pretty regularly with our members that you want things to take a while in the legislative session because that way we can stop bad ideas from moving as fast. Adriane Hodges (42:14): Agreed, agreed. A lot of what the guild does, and our lobby group does, is play defense for bad bills that come up to protect craft beer so that we don’t lose any rights. Of course, we’re always advocating to gain rights to move our industry ahead. This one, for example, is a tax relief bill, which everyone could benefit from, but there are also bills that would make doing business difficult, and a huge part of the job is deflecting those or making sure they aren’t going to harm our industry in any way, shape, or form. Brittany Drennan (42:44): Yeah, no, I’m definitely glad you brought that up, because that will segue right into my next question. I did not know that, and that is something that I learned when Travis came to town for the last guild meeting that we had. Can you speak a little bit to the defense and what bills you’re having to defend? And those are federal, right? Travis Bailey (43:06): Those are primarily state. At the guild we kind of primarily focus on state legislation. We work through the BA on the federal side. Occasionally we dabble a little bit, but it’s mostly through the BA. But yeah, this session we had a couple of bills come up that were pretty bad for our industry should they have passed in their original versions [inaudible 00:43:29] example. Adriane Hodges (43:29): Senate Bill 650. Yeah. Travis Bailey (43:32): A hundred percent. Senate Bill 650 is the perfect example of this. Senate Bill 650 was filed after a tragic incident where a young boy lost his life due to a drunk driving accident after he was sold alcohol illegally at a convenience store and his mother testified on it. It was a heartbreaking story, but the bill would’ve required ID scans and/or swipes for every retail alcohol sale that includes- Heather Jerred (44:01): You were telling me about this, Brittany. Brittany Drennan (44:03): Yeah. Adriane Hodges (44:03): Yeah. Imagine that at a football stadium or a concert, let alone a craft brewery, Travis Bailey (44:10): It would’ve dramatically altered the way that the sale of alcoholic beverages happened in Texas, and we were able to negotiate and work out and point out that this was damaging, at least to small business here in Texas. And finally some of the authors and saw it and it was eventually substituted out, and where now it’ll only apply to liquor stores and convenience and grocery. But it was an uphill battle. Our primary goal every session is lose no rights. I grew up around high school football in small town Texas, and the old adage was defense wins championships, and that’s true. You got to play defense. Adriane Hodges (44:50): And just as a business owner, as soon as I saw the draft language of 650, I thought, oh, there’s something I have to spend money on that I didn’t have to spend money on before. It’s nice that we have a team where you’ve got the focus of people who are just so engaged on what’s happening at the capitol, people who understand the laws themselves and the draft. And then people who can contribute like, well, this is how it would affect me. (45:20): And getting that feedback is really how we look at each bill because some might benefit someone hurt somebody else. This one was pretty clear that it was going to cost everybody money and we wanted to defend against it, but I mean the list was pretty exhaustive of bills that we were monitoring this session, whether they came from our industry, from the wine industry or just a legislator, like a tragedy like this one. Travis Bailey (45:48): A hundred percent. Heather Jerred (45:50): Can you speak a bit to some of the other bills that you’ve worked on? Like I saw one, is it Senate Bill 1240 that allowed the transfer of beer between two licensed premises? Travis Bailey (46:00): Yeah, we call that one inter-facility transfer. Got a real sexy, attractive name on that one. Heather Jerred (46:07): Inter-facility transfer. Travis Bailey (46:10): Yeah, really gets everyone excited. That bill is something we’ve worked on for the previous two sessions and has been something that’s been tossed around for longer before that. As it stands in Texas, there’s no way to transfer finished beer between either… Between commonly owned manufacturing breweries or brew pubs and brew pubs have an option to be able to sell it to themselves. However, that beer would constitute a guest tap, which would prevent self-distribution at the receiving location. Adriane Hodges (46:45): If you want to move your beer, you have to jump through hoops and lose rights, which we don’t want. And again, this is my question always about this bill was, can anyone come up with any other industry, a manufacturer, where you create a good and you cannot move it between your facilities without using a third party who you have to sell your product to at a loss, and then buy it back from that same person at an even greater loss where they set the price for it. I don’t know any other industry who is constrained like we are for not being able to move our finished product [inaudible 00:47:22]. Travis Bailey (47:22): That’s wild. What’s the justification for that kind of red tape is there. Even any, our friends in the middle tier really like their 30% for cold storage and on-time delivery. Of course, they’ve got a long history of being pretty powerful in our wonderful Lone Star State down here. Heather Jerred (47:45): Also, they pretty powerful up here too. I was actually having a conversation with another friend of mine yesterday about this who also works in the liquor industry and just about, we’re looking at trying to do more direct to consumer shipping with interprovincial. I could order from a brewery and get it shipped to my house, but I can’t order from a brewery in. I’m in British Columbia. I can’t order from a brewery in Alberta and get it shipped to my house. And so that’s something that we’ve been looking at, but it’s the same thing. It’s having those middle men that are fighting against it so much. Travis Bailey (48:14): Yeah, it’s pretty attractive to get 30% of every beer sold in a state. Adriane Hodges (48:21): And I don’t think that I ever heard anyone say that when they were testifying in opposition to this bill, that they wanted 30%. The arguments that are made against it are ridiculous, and I think that’s part of this long game we’re playing is, people realize that they are ridiculous. You can’t say that someone in a warehouse with no connection to your brewery is going to care for your beer better, that they are going to take care of the product better, that they will transfer it better. (48:51): And that is kind of what they say. They prop up this argument that they’re the trusted sources for moving this, and we would not handle our own property as well as they would. And the absurdity is becoming clear, of the failures of the three tier system, but that could be its own whole podcast [inaudible 00:49:13]. Heather Jerred (49:12): I remember learning about the three tier system when I was studying for my certified sisterhood, which it’s not even a thing here in Canada, but I still had to learn about it to write my sisterhood exam. I was like, oh God. Travis Bailey (49:24): I will say that this session, more than usual, they were willing to come to the table and be a little bit more friendly than usual, and we’re very thankful for that. And we actually came to an agreed to set of language on the center facility bill on the house version, which was House Bill 4773, carried by the former speaker of the House, Dade Phelan, and current chair of licensing administrative procedures where our bill goes through, which is a huge get for us to have as a bill author. But they were actually willing to come to the table and talk to us. For the most part, there was, one of the groups that didn’t want to come to the table, but for the most part they did come to the table and offer a way that they would be okay with going forward. Brittany Drennan (50:03): Celebrate the small ones, Adriane Hodges (50:04): And I think they improved the bill. Yeah, they helped to improve the bill with some language, and that was definitely because all of their bills were going to have to go through LAP too. So having the chair of LAP be the sponsor of that bill was a huge win for the Texas Craft Brewery Guild. Travis Bailey (50:22): Absolutely. You can never get a former speaker of the house to carry a bill for you. You generally take that opportunity. Heather Jerred (50:29): I would write that down. Well, obviously this has been a lot of work and a lot more work to come. Do you have any advice for any other craft brewery guilds out there that may want to do something similar to this? Adriane Hodges (50:43): Yes. Invite your legislators out to your brewery. I can’t say it enough. They are people just like us. They’re people that live in your community. (50:53): They probably don’t understand what we do on a daily basis, so signing up for the program, just inviting them to come have lunch or take a tour of your facility and getting to know them, is the most valuable thing you can do. (51:09): I have zero illusions that I’m the only person who had an idea for a good bill. There are tons of people in this state with tons of great ideas. They just need to be in front of the right person at the right time. And the best way you can do that is by forming positive relationships with your legislators. (51:26): And as Travis would say, they’re legislators for a reason. They’re usually pretty fun to hang out with. They’re likable people, they’re great to have a beer with. Your voice does matter, and you just have to learn how to use it. And that’s the best piece of advice I would give is, form those relationships. Invite them out to your brewery and get to know them and let them get to know you as a person. Travis Bailey (51:50): Absolutely. One of the most effective organizations that killing bills that are bad for their businesses, is the Texas Medical Association, the group of doctors. And they do that because they all have personal relationships with their legislators. Why can’t brewers have that? Why can’t, you’re a respected business in your community. You do a lot for the community. Bring them out, show them that it’s okay to brag on yourself every once in a while. Adriane Hodges (52:18): Yeah, tell them your story. Tell them why you got into this, what you are doing for your community, because I guarantee I have just so much faith in the people in our industry. They’re doing good things, and they’re doing it under the radar, and they should get the credit for it, and they should get the pat on the back. And the great reputation that we’ve earned as an industry, I think is becoming more and more clear each year. Heather Jerred (52:42): Coming from somebody who’s spoken to a lot of brewers from all over North America, everybody’s story is a little different and everybody is really working within their community. So yeah, I agree. That’s really important. Travis Bailey (52:51): Absolutely. And another part of this is, North America, and particularly the U.S., We have a lot of agriculture that happens here. And being able to build those connections with agriculture as well, because beer is inherently an agricultural product. We spent the- Adriane Hodges (53:11): Say it louder. Heather Jerred (53:13): Yeah. Travis Bailey (53:13): Beer is inherently agricultural, as y’all know, Heather Jerred (53:17): As you’re telling the malt salespeople. Travis Bailey (53:19): Yeah, I know, a hundred percent. But we also built relationships with the ag organizations in the 2023 session. We went to as many Texas Ag Council meetings as we could and sat there and introduced ourselves, and built those personal relationships where when it came time, we had all of the ag organizations, a lot of the ag organizations, particularly cattle organizations in Texas, which have a lot of pull in our state, signed on in support of our bill. And that matters because that’s also telling them that the end user of this spent grain wants it. So work with those ag organizations, realize you are an ag organization to start, and use it. Lean into it, have some fun with it. Adriane Hodges (54:04): Get your foot in the door. Yeah. It’s so easy for everyone to recognize wine as an agricultural product and overlook beer. And you can get angry about it or you can try to change people’s perspective by educating them and meeting with them. And I think, hearing from ranchers and farmers, it really was a big shift, I think, in a lot of people’s view of our industry to see, all right, they are using stuff, it’s grain that’s grown right in a field down from their brewery. They’re donating it back to a farmer that’s a few miles away. (54:38): Like, this is a good agricultural product. I see why they’re making that argument now, and we’re always fighting to have parity with the wine industry. So the more we can get people to recognize that it is an agricultural product that opens so many doors for us legislatively in the future. Heather Jerred (54:57): That’s amazing. Thank you both so much for joining us today and talking about this. I definitely feel like we said the more you know, the less you know, so. It’s been fantastic and I wish you luck on the next go round of this. We have great things to report back in a couple of years. Brittany Drennan (55:18): Thanks so much, you two. Travis Bailey (55:18): Yes, thank you for joining us. Adriane Hodges (55:18): Thank you guys. Hopefully the next time we’re on, it’ll be a celebration podcast for the passing of the awesome legislation. Brittany Drennan (55:23): Yeah. Heather Jerred (55:28): Yeah, That is a wrap. Great big thank you to our guests, Ali, Mark, Travis, and Adrian for really just schooling us on some super important issues and a great big thank you to Jared for helping out with the hosting duties this month. It was great to have you on board. (55:43): Don’t forget to subscribe to the BrewDeck podcast wherever you listen to your podcast, so you don’t miss an episode, and we’ll see you next month. Brittany Drennan (55:52): Cheers, y’all.