a compilation of musings on one of the world's oldest beverages...and a few other topics.

Wednesday, March 2, 2011

Why Other States Have CA Beat...On Some Things

Oh, don't get all offended just yet! I could go on and on as to why CA is the Mack Daddy of states. But, that's for another blog post. Sort of. You can also gleam it from current blog posts :)

So- some context. A couple weeks ago, Krista and I attended an SF beer week beer tasting event.

The event was run by the always delightful City Beer Store and FiftyFifty Brewing Company in Lake Tahoe, CA. Don't expect to find a review of that event (which was a lot of fun. And you can bet your Sunday Slippers I'll be making a stop at FiftyFifty the next time I'm in Tahoe); rather, this post examines how...public policy? can affect the proliferation of the types of beers you enjoy drinking. My desire to discuss public policy comes not from my inherent nerdiness, but because the famed Todd Ashman, FiftyFifty's current brewer, brought up the first topic of our two-part blog series on Silly CA Laws That Have Unintended Consequences on Your Beer Drinking during our tasting. Ashman began explaining exactly why it was necessary he emphasize the BAB (barrel-aged beer) we drank "officially has little to no traces of liquor in it!"

Courtesy of Anderson Valley Advertiser Online, and their article "Liquor Tax Hits Barrel-Aged Beers":

"In 2008, some not-so-bright or savvy CA legislators wrote an initiative that called for "an extra tax on in-state sales of flavored malt beverages like Mike’s Hard Lemonade and Smirnoff Ice — low-priced drinks appealing to teenagers for their soda-like qualities but fortified with distilled spirits. Often called “cheerleader beer” or “alcopops,” these drinks were the target of the initiative’s authors, who brought down the hammer by requiring that they be labeled “distilled spirits” and be subject to associated liquor taxes. This, so believed the Board, would help keep alcopops out of the price range of children and alcohol abusers.

But the law’s fine print has unintentionally subjected a style of beer aged in bourbon, brandy, rye and rum barrels to the same tax. Such beers, now gaining popularity, are favored for their potent flavors of coconut, vanilla and butter, but they may also absorb a stiff shot of alcohol from the booze-saturated wood. Some barrel-aged beers can gain as much as two percentage points of alcohol by volume during this time period, far exceeding the half-percent ABV increase that the Board of Equalization agreed upon as the fortification limit before a beverage must be classified — and taxed — as a distilled spirit."

But WHAT, you say? This makes absolutely no sense! You're right. And it gets even worse:

"Brewers point out that the law’s fine print works in ironic ways; while many non-barreled beers are yeast fermented to levels of 15 percent alcohol and more without raising authorities’ eyebrows, even relatively low-strength beers lightly affected by distilled spirits are now subject to a state tax.

“I can make a 13- or 14-percent (ABV) beer with no problem, but if I put a 10-percent beer in a barrel and it gains a half-percent alcohol then it’s a distilled spirit and I have to pay a tax,” says brewmaster Steve Altimari at Valley Brewing Company in Stockton

In case you need numerics- some of us do well with visuals, some of us do well with numbers, some of us need to visualize numbers- behold, an example of just how this tax works:

"The standard beer tax in California runs 20 cents per gallon sold within the state, but distilled spirits are taxed at a rate of $3.30 per gallon. Barrel-aged beers are expensive to begin with, and the tax further boosts the cost; a 16.9-ounce bottle of North Coast’s bourbon barrel stout, for example, retails at approximately $20."

Not all breweries are throwing in the towel and hopping on the Beer Tax Express. When he spoke with us, Ashman alluded to the fact that FiftyFifty works to avoid being caught by the distilled tax bracket. He's not alone:

"In the coming year, Black Diamond’s Derek Smith has plans to release multiple batches of bourbon and brandy barrel beers. He doesn’t, however, plan to pay the state a dime in alcopop taxes. Like Altimari and others, he will simply blend down his barrel-aged beers to keep them out of the distilled spirit tax bracket. It’s probably the easiest legal fix there is. The required paperwork, Smith says, is a different story.

“Since the law passed it’s now up to us to submit these reports proving that every single new beer we make isn’t fortified with other alcohols. I’m not a big fan of alcopops myself, and I understand what they’re trying to achieve, but it’s become a pain in the ass

For a more comprehensive examination of this law, and more in-depth perspective from the parties involved in drafting and pushing for this absurd legislation, please check out the link to the article I referenced for this blog.

For an example of other states that don't appear as crazed when it comes to beer regulation, let's examine Virginia. I mention Virginia because, prior to moving to California, I lived there, and consumed MANY a beer there (special thanks go to the occupants and denizens of The Winch. You know who you are.) As far as I know, Virginia has no draconian laws governing barrel-aged beer (please, someone correct me if they know otherwise!) On top of that, and I'll get to this in my 2nd "Beer Public Policy" post, Virginia is very liberal when it comes to filling growlers. Did you buy a growler in California, and do you want to have it filled at a VA brewery? Done. (Mad Fox Brewing Company is a case in point, as it's the High Priest of honoring growlers.) On top of that, "Virginia law allows restaurants and grocery store chains to fill the glass jugs for takeout. The Whole Foods Market Fair Lakes store in Fairfax began filling growlers on Thursday, Feb. 25, and sold nearly 100 of the containers the first week, according to the store’s wine buyer, Walter Martley."

Am I implying that VA liquor laws, and the state's dreaded ABC, are anything but a giant PIA? Hell no! Do I think their laws governing liquor sales are incredibly anti-competitive, and anathema to a state that prides itself on being business-friendly? You bet! But, when it comes to beer, VA appears to have CA beat.

Get with the times, California. You may be cutting-edge when it comes to clean tech, emerging technology, hipster fashions, and a plethora of other things, but trust me, your clean tech scientists want to drink barrel-aged beer without paying $20 a pop, and fill their growlers at will, too.

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