Senate Bill 413 is one of many sitting on the desk of New Mexico Governor Michelle Lujan-Grisham after the completion of the 2019 Legislative Session. It is, however, the one that will specifically affect our craft breweries, in a very good way, if it obtains her signature.
I sat down with Tractor Brewing co-owner/president Skye Devore, who spearheaded the effort on behalf of the New Mexico Brewers Guild, on Friday morning to go over what SB413 will mean to breweries if it is passed into law. The bill is pretty much as originally described by outgoing executive director John Gozigian, combining everything our breweries had hoped for into one bill in this legislative session. It passed the Senate by a 36-2 margin and the House by a 54-10 margin.
“I’m really proud of this because I feel like it has something in there for everyone in our membership,” Skye said. “It’s not a bill for the big breweries, or something that will just benefit the small ones. It had widespread support throughout our organization. I don’t think I got a single person saying I have a problem with any piece of this bill. And, that’s true across beer, cider, and spirits. We really all came together.”
Here is everything in the bill, summed up:
- Craft beverage manufacturers (breweries, cideries, distilleries, wineries) will be able to obtain private celebration permits. Currently, breweries can only support public events such as festivals and art openings, but cannot provide their products to weddings or college graduation parties. This could be of particular benefit to small-town breweries.
- All CBM will be able to sell alcohol at 11 a.m. on Sundays. You will not have to wait until almost halftime (noon) for a beer during the next NFL season.
- This bill officially sets guidelines for cider manufacturing to match federal standards (it can be made from pears as well as apples, but must not exceed 8.5-percent ABV), as well as formalizing that a winegrowers license is needed to make cider.
- SB413 sets an official minimum production standard for a business to hold a small brewer license, which will be 50 barrels per year or 50 percent of total sales must come from beer brewed on site. This would keep a business from holding a license and using it solely to provide guest taps of beer and cider from other manufacturers, which was a sort of go-around for those who did not wish to purchase a full liquor license.
- There will also be stratification of excise tax rates for breweries, cideries, and distilleries. For breweries, the new tiers will see a tax of $.08 per gallon on the first 30,000 barrels, $.28 per gallon for 30,000 to 60,000 barrels (currently only Santa Fe Brewing would fall into this tier), and $.41 per gallon for 60,000 to 200,000 barrels (no brewery in state history has ever come close to this tier).
- For cideries, currently paying $.41 per gallon regardless of final production totals, that will now match the same structure that exists for brewery barrelage.
- For distilleries, the current tax of $1.60 per liter will be replaced by a tiered structure. For spirits up to 10-percent ABV, it will be $.08 per liter for the first 250,000 liters, and $.28 per liter for the next 250,000. For spirits above 10-percent ABV, the tax will be $.32 per liter for up to 175,000 liters, and $.65 per liter for the next 175,000 liters beyond that.
“April 5 is going to be her deadline,” Skye said. “We’re looking at (this) week trying to get as many people as possible to send her (messages such as), ‘Hey, I support this, craft has made a meaningful impact in my life,’ and stuff like that. We’re just trying to get everyone a little bit of room to breathe from far away. She’s had events at Marble and La Cumbre, so we’re really hopeful that that’s a good sign. I can’t see why she wouldn’t (sign it), but you don’t want to count your chickens or anything.”
For anyone interested in expressing their support for SB413, you can send a message to the governor via this link.
As for how each clause in the bill helps the breweries, Skye was happy to explain the benefits.
On private celebration permits: “We get a lot of requests (too) because we’re so proactive in the art world,” she said of Tractor. “We have to go down this gamut of questions, like is your event ticketed? Well, no, it’s like a donor appreciation. OK, that’s a private party. If someone can’t walk up to the door and buy a ticket and come in, that’s not a public celebration. It’s been a little bit limiting, even for us, when we want to make a contribution or something.
“But, it is really important for the rural breweries, too. There’s a county in New Mexico, I don’t know which one it is, but there are two liquor license holders, Allsup’s and a winery. So you’re going to get Allsup’s to do your wedding? I don’t think so. You’re not able to do things within the confines of the law. Then you might get someone who is not a certified server doing things, or stuff like that.”
On setting minimum standards for small brewer license holders: “The production floor we all felt was really important,” she said. “Craft spirits has one. If you’re not making 50 barrels of beer (a year), two kegs a week, or selling 50 percent of your own beer, you’re not a brewery. You’re just trying to have a liquor license without paying for one. I felt that was important for the integrity of the industry.
“I think people not (making their own beer) really puts a target on all of us from the full liquor license holders and stuff like that. I get that, I totally understand, so we wanted to make it you could be as small as you wanted to … but, manufacturers have to make things.”
On the changes to the excise tax: “There’s no sunset clause, which is really important, because the current one was going to sunset in 2023, and what that reverted to was over 5,000 barrels you paid 41 cents,” she said. “That had some people freaking out for sure.
“We felt like we really don’t need a sunset anymore, because by the time you get to 60,000 barrels you can afford the 41 cents. The small (breweries) will always need the protection.“
New Mexico had a higher state excise tax rate than any of its neighboring states, save for Utah, so this bill will help level the playing field somewhat in comparison to Arizona, Colorado, and Texas. It will also help breweries pour more of their profits back into the building, whether that means more equipment, raises for existing employees, or hiring new employees.
Skye said the tax changes, nor any part of the bill, did not run into any major opposition in the Legislature, which was not the case in past years.
“It was interesting to me, it was a very different experience up there than the previous year when I was working on our cider bill and we were working on private celebrations and open-at-11 separately,” she said. “There was a very different House of Representatives and a very different governor. The whole atmosphere at that Roundhouse was very different.”
There really was no opposition along party lines, either.
“We had a reception this year which was really great,” Skye said. “We did it at Santa Fe Brewing’s Brakeroom. We had bipartisan support, we made a lot of friends. We’re looking forward to next year not necessarily running a bill, which I think would be nice. Just to like say hey to everyone and not ask for anything, hopefully, if this passes the governor.”
Skye wanted to thank the two sponsors of the bill, Representative Javier Martinez and Senator Mimi Stewart.
“Javier Martinez is for here, this district (which includes Wells Park),” Skye said. “I think at last count there’s 13 breweries, cideries, and distilleries in his district, plus taprooms, so that’s like a huge industry in his district.
“Senator Mimi Stewart, she’s our senator for Four Hills, so that’s really cool, too. She’s talked about how (the Tractor Four Hills Taproom has) brought back (life) to that shopping center.”
Skye said that if the bill does obtain the governor’s signature, breweries could move quickly to take advantage.
“I think this is a good thing for all of us,” she said. “I’m really interested to see what everybody does with their extra dollars that they’re going to have in their pockets, whether it’s from those private celebrations or Sunday sales or excise taxes or whatever.
“We’re coming up with a really cool plan with what to do with what we save this year, because this would go into effect in July if it happens. That’s like six months worth of excise tax savings that we hadn’t really budgeted for this year that we feel like we can really use to give back to our employees and our community.“
Overall, SB413 sounds like a winner for the breweries, cideries, and distilleries. Let us all cross our fingers, and maybe send a polite message of support to Governor Lujan-Grisham, to see that it becomes law in July.
Thank you to Skye, John, and everyone else involved in your tireless efforts!