How the Government Shutdown is Affecting New Jersey Breweries

We speak to three local breweries about the impact of the shutdown on the state's craft beer industry.

Courtesy of Flickr Creative Commons: D_Neff

The now historically-long government shutdown just wrapped up its fourth week. Chances are, you’ve noticed. What you might not know: The shutdown’s lasted so long, it’s now impacting your local brewery.

Long story short: brewing and selling beer requires government oversight. Even before a bartender asks to see your ID, government regulations have a hand in getting that beer to those taps via the Alcohol and Tobacco Tax and Trade Bureau, or TTB. Anytime a brewery is born, expands, or wants to sell a new beer in New Jersey, it needs approval from the TTB. The most important is the Certification of Label Approval (aka “COLA”), basically the TTB green light to sell a new beer.

Except, well, the shutdown. Normal beer label approval times take 43 days on average (technically they’re allowed 90 max). With the shutdown, breweries are still allowed to access online applications, but nobody’s reading them. Meanwhile freshly brewed beer is going flat, bills are piling up, and equipment is sitting in empty warehouses. We spoke to three New Jersey breweries to see just how hard the shutdown hurts.

“We have 820 cases of beer pending.”

Beach Haus Brewery officially opened its doors on Belmar’s Main Street in March 2015. It’s been gangbusters ever since, then the shutdown. According to Beach Haus president John Merklin, they now have two pending label approvals with the TTB. “There was one we submitted prior to the shutdown and now we have something we can’t even submit, because they’re not open,” Merkling says. I ask him what that meant in beer terms. “It equates to 820 cases of beer, pending,” he says.

At 24 bottles of beer per case, that’s 19,680 bottles of Beach Haus’s American Pale Ale and New England IPA, respectively, that we might all be drinking—and Beach Haus might be profiting from. “Right now they’re sitting in a tank,” says Merklin.

Merklin isn’t just worried about the cost (though he notes beer drinkers go elsewhere if you’re out, so “it’s truly a lost sale”). What plagues Beach Haus, and craft breweries like it, is the “financial bottleneck.” Two of the brewery’s six tanks are occupied with beer they can’t sell. Meanwhile, as Merklin notes, craft beer curiosity is unquenchable. “People are experience junkies,” he says. “There’s a demand for constant innovation. It’s almost at a point where we’re releasing three or four new beers every month.” Add a shutdown and it’s the perfect storm. “Really, the trend of the industry, innovation, unfortunately plays right into the current dilemma.”

Beach Haus is doing everything it can to maintain the beer’s quality. “We have a lab at the brewery, every week minimally the liquid’s getting looked at.” Otherwise it’s a matter of waiting. “We normally have a creative meeting every Monday,” Merklin tells me. “This week’s was the shortest we’ve ever had.”

“It’s $1 million worth of equipment.”

Mike Roosevelt is more than aware of the imperfections of the TTB system. “Until a couple years ago, there was only one guy reviewing labels. For the entire country,” he says. Except now he and Hackensack’s Alementary Brewing Co. partner Blake Crawford are (almost literally) sitting on $1 million worth of equipment in a new brewing space, a space they can’t open without the TTB. Alementary put in their TTB Brewer’s Notice application back in August of 2018. It’s essentially a permit to start another brewery, though they’re just expanding Alementary’s output to another 10,000 square foot space across the street (another kink in the system: they have to apply as if it were a brand new, independent operation). “We’re putting in a much bigger production facility,” says Roosevelt. “We’ll go from 2,000 barrels a year to somewhere between 7,000 and 10,000 to start. With room to grow, even from there.”

That application was supposed to take 121 days. Roosevelt and Crawford began in August. “We had it all lined up, to be ready by the end of the year,” he says. And then the shutdown happened. “That 121-day application limit long since passed,” says Roosevelt. “I think it was up on Day 2 of the shutdown.” The only status update he’s had since is their application is ‘in review,’ which means Alementary isn’t just sitting on unsellable beer, but literally untapped potential. “It’s $1 million worth of equipment, plus expenses, the lease on this giant building in Bergen County,” he says (though Roosevelt also notes “we couldn’t be happier to be in Hackensack”). They just didn’t plan on a grinding halt in production.

The problem for Alementary is that major outlay of cash. “We need to make beer to make money for what we’re spending,” says Roosevelt. “They can have all the negotiations they want, I don’t care. I just want them to open the government in the meantime.”

“This is essentially a state of emergency.”

Carton Brewing was able to expand its production space with 10,000 more square feet on East Washington Avenue in Atlantic Highlands well before the shutdown. “We have more tanks, to make more [and] different beer,” co-founder Augie Carton told me via email. “Our output probably grew by about 40 percent.” And nothing, so far, is pending with the TTB. That doesn’t mean Carton isn’t frustrated. “This is essentially a state of emergency for 100 or so small New Jersey businesses.”

But the brewery’s solution is less panic and more politics. “I have dealt with both of my local senators on both sides of the aisle, Declan O’Scanlon and Vin Gopal. They are both very supportive of what’s going on in [New Jersey] brewing.” Carton has plenty of experience with the inefficiencies of label approval in the state. “Our mission begets a slow process with the TTB. We are used to it.”

Meanwhile, Carton actually is giving their beer away—just not the unlabeled stuff. “We have a lot of federal employee neighbors around us between Sandy Hook, the Coast Guard, Earl and other contractors. Anyone furloughed that comes in with a federal employee ID gets a glass of This Town on us for as long as this goes on.” (This Town, FYI, is Carton’s Monmouth County-only easy-drinking lager.)

“[The shutdown] is an annoyance that we will take in stride and figure our way through. But for some of our neighbors, it’s food and toilet paper,” says Carton. “At least they can stop in for a tasty beer while figuring out how to make ends meet.”

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