After years of uncertainty, the US Congress today voted to finally pass into law the long-awaited Craft Beverage Modernization and Tax Reform Act (CMBTRA), making permanent the reduction in the federal excise tax (FET) rate paid by distillers. The White House has indicated that the president will sign the bill into law.

The measure was included only recently as a last-minute amendment to the much larger $2.3 trillion spending bill that will fund the US government through 2021, and which notably also includes a major $900 billion COVID stimulus package.

The CMBTRA originally became law on January 1, 2018 as a two-year tax break for spirits producers, lowering the FET rate from $13.50 to $2.70 per proof gallon, on the first 100,000 proof gallons. The measure was then granted a one-year extension at the end of 2019.

The passage of a permanent version of the CMBTRA is without question a critically important development for the spirits industry, keeping in place the reduced tax rate that distillers have relied upon for the last three years. Without today’s passage of the new law, the FET reduction would expire at the end of this month, increasing the tax rate on spirits producers by a whopping 400%.

“Making the CMBTRA permanent is a huge win for craft distillers,” said ADI President Erik Owens. “Since 2018, this tax break has meant distilleries were able to create jobs and fast-track growth in their communities. But the continual uncertainty around whether the law would ultimately expire has made it a rollercoaster ride. With all the current economic challenges, the last thing craft distillers need is a giant, crushing tax hike. We’ve already lost 40% of the distillery workforce due to the pandemic, and no doubt many more distilleries would have been doomed if Congress had not acted to make the CMBTRA permanent.”

Since being introduced by Senators Ron Wyden (D-OR) and Roy Blunt (R-MO), the CMBTRA has enjoyed broad bipartisan support in Congress. As of December 1, 2020, 77 senators and 351 members of the House of Representatives are on record endorsing the bill.

However, passage of the law has been up to now far from certain. Credit for today’s successful vote affirming the CMBTRA into permanence goes to all of the state guilds and industry associations and partners that mounted a years-long, comprehensive grass-roots campaign urging Congress to act.

Over the last year, ADI has partnered with the Distilled Spirits Council of the United States (DISCUS) and others in an advocacy campaign called Spirits United, which is aimed at mobilizing distillers and consumers to take action. And most recently, DISCUS hosted a nationwide “Day of Action” that saw engagement from over 30,000 people contacting their representatives in support of the CMBTRA.

The broader omnibus spending package also includes measures such as renewed Paycheck Protection Program (PPP) funding, including expanded PPP funds for eligible restaurants and bars; allowances for expenses paid with forgiven PPP loans; plus expanded business meal tax deductions intended to aid restaurants struggling with the COVID-19 crisis.