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When taking your case for legislative action in support of Micro Producers in your State and at the Federal level, below are some talking points:

AGRICULTURE: Our business is an ag based business. We buy from local growers, and contract for custom cultivation. In an era when small agriculture is under attack by foreign producers and corporate farms which siphon revenue from the local economy as well as offset the international trade balance, "buy local" is not just an advertising slogan. Successful farmers want to farm, not sell off their land to developers. They don't need subsidies and charity, they need higher margin markets for their produce. Small farmers need consumers to know what they do and support them by buying their products and value added products (like spirits). The regional and Statewide Agriculture industry is your ally. If you are not already a member of the FARM BUREAU, join. It is not costly and the Farm Bureau is the single strongest lobbying group we can depend upon. They were greatly instrumental in helping us to get our NY laws changed.

TAX REVENUE: The potential revenue from the creation and sale of specialty Micro-Ag Spirits is enormous. State and Federal Excise taxes which do not exist now will grow to be a significant portion of the State and Fed revenue. Sales taxes generated by the sale of Micro Ag spirits put heretofore unavailable revenue into State coffers. At a time when the Fed is in such debt (no comment on the politics of THAT situation); and States are hurting for new revenue sources, rather than raise taxes, the creation of a new industrial base promises greater revenue with less impact on the individual tax payer.

JOB CREATION: The success of small producers creates NEW jobs at the local level. Jobs include skilled and unskilled labor. Again, employment taxes paid are a NEW source, non-existant beforehand. Jobs are local, entry-level and bring enormous pride to the workforce.

TOURISM: In New York the movement to promote our local farms extends to Tourism as the State educates consumers and the "buy local" movement goes into full swing. Farm stands and "you pick" opportunities are attracting families to farms and educating a new generation of consumers where their food comes from. Tourists buying farm goods return home with new products and if they are popular, the consumer is less likely to travel back to the source, instead they are likely (and we have seen this happen again and again) to take the empty bottle to their local retailer and request it be ordered, creating a new client for the producer. Tourism dollars have a multiplier effect roughly seven-fold, that is, the money gets respent up to seven times before it leaves the area. The steady increase in gas prices, coupled with a difficult national economy will have a positive effect on local and regional tourism, so for instance in NY we already are witnessing a shift in vacation and travel patterns that traditionally accompanies economic downturns and high fuel prices: Local and Regional Tourism thrives in these times. People do not cancel their vacation, they just don't drive as far and typically begin to discover local and regional attractions for the family outings.

BREWERS AND WINERIES: Form coalitions with the micro-wine makers and micro-brewers, we are all in the same boat. Form a substantial constituency among the brewers, wine makers, growers and the Farm Bureau and your State Tourism offices to plead your case to the Legislators.

Any other talking points or elaborations are invited.


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A wonderful discussion topic, Ralph.

My two bits...

Agriculture: as well as Farm Bureau, try to get the support of growers associations (apple, cherry, berry, etc. Whatever's there.) In WI, I approached the Malter's, too - but they don't dabble at the State level - just Feds. Also, the University Extension. In WI, this turned out to be an agent-by-agent task, as the top levels have some Temperant people currently.

As much as I prefer a strong merit-based approach, I think some defensive topics and talking points are necessary, too. Counters to distributor three-tier absolutism deserve their own thread, but I'll toss out another one for consideration.

In WI, another group that has taken an interest in micro-distilling is the Sheriffs and Deputies lobby. They tend to be on the Temperance side - and seem to have a special concern with spirit sampling. When I've delved into why, it seems that they have a generically bad opinion of the _consumers_ of macro-spirits. My argument is to try to convince them that people seeking out micro-distilled spirits are more like winery tasting room visitors (which they don't mind) and less like tavern drunkards.

Ah, there's another group that has so far gone to the wholesalers's side in WI - the Tavern League. They generally oppose anything that creates more market access. My approach has been to argue that tasting room sales and sampling don't compete with local bars and taverns - rather, it shifts the burden of educating consumers to new products to the producer.

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Points well taken.

In NY the SLA is dead set against tastings at any site, wineries, breweries or distilleries; citing concerns for DWI, a reasonable concern of course. However, the SLA has approved regulations which stipulate the protocols for conducting samplings, the amounts to be served and the number of samples for breweries and wineries, which are based on the accepted "serving size" for each different product. For spirits the serving size is a 1.5 oz pour. The "sample" size allowed is .25 oz and a limit of three (3) samples per visitor. No regard is given with spirits sampling to the actual proof, so in that way it is not an accurate way to regulate the alcohol consumption of the visitor. At pourings we use an auto-pour that measures out exactly .25 oz so that we do not run afoul of any passing inspector.

The "offensive" position is the fact that wineries and breweries are permitted to sample and sell at the wineries and breweries. The "regulated" substance, the "taxed" substance, is ALCOHOL which is the identical material, in the identical percentages content in a full "serving" of all three types of beverage alcohol. If the liquor regulators are positing that the tasting poses an unacceptable risk to the public, the risk already exists and they are saying that they are not capable of regulating the existing situation. Equal treatment under the law.

This problem, by the way, is nationwide both Federal and State levels. Distilled spirits are treated differently. Until a successful effort can be mounted to level the playing field among alcoholic beverage producers (the State and Fed admitting that it's all the same alcohol), we will always pay more taxes and be more heavily regulated and constricted.

FURTHER TALKING POINT: It would seem, as Melkon and I discussed yesterday on the phone, that the percentages of the tax breaks applied to our beer and wine cousins is based on the cost of making product and the risk we take. A winery has the ultimate risk of loss of crop due to weather or other conditions, that crop representing a whole year of his raw materials. Brewers and distillers can work year round. So the winery gets a higher break than the brewer. But when we take the costs and risks faced by a new micro distiller the case can be made we should have the greatest break in our Fed Excise tax. Add up the risks: laying out hundreds of thousands of dollars from private money and building out your facility BEFORE you even get license or produce product; buying raw materials; R&D and learning curve time; new make into expensive oak barrels and unavailable for sale for months to years and without any guarantee it will be good or anyone will sell it on their shelves. Add to that the enormously competitive marketplace, sewn up by consolidated distributors with big brands advertising worldwide with very very deep promotional pockets and known brands. Imagine if those first barrels turned out not so great, after two years waiting and producing.....

So there is plenty of logic and cogent argument. So here's the question: how much? How much of a discount should the Micro-Producer get over his big brother Mega-Distillers? The question can be answered with the math, if someone is willing to take on an analysis of risk/cost/benefit for a startup micro-distillery vs an existing mega-distiller. Comparing that to the existing discounts enjoyed by micro brewers and micro wineries will give an interesting picture. If risk/cost/difficulty are the criteria for determining the discount, who has the most to lose or gain and how should the discounted tax rates fall out among the three categories?

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