Mich. breweries, wineries face delays from government shutdown

Detroit staff and wire reports
Breweries, wineries and distilleries in Indiana and Michigan are experiencing delays because some permits are not being issued due to the partial federal government shutdown.

Breweries, wineries and distilleries in Michigan are experiencing delays — and taking financial hits — because of the partial federal government shutdown.

The Alcohol and Tobacco Tax and Trade Bureau cannot issue permits that allow businesses to open, craft a new beer or wine, or create labeling for a product because the agency is closed. Other office closures are forcing businesses to pay out of pocket.

For a heavily regulated industry, it is important to have those agencies open and operational, said Scott Graham, the executive director of the Michigan Brewers Guild. Some breweries have been unable to open, Graham said; others can't introduce new products.

"There's some heartburn," Graham said. "They're not going out of business, but it's not handy to have the disruption. ... I'm surprised there isn't a brewers movement to support funding for the border wall to get the (agency) open."

The shutdown started Dec. 21 after President Donald Trump refused to sign a bill that would have fully funded the government because it didn’t include $5.7 billion for a border wall. Nearing three weeks without resolution, the shutdown is having repercussions on businesses across the nation.

Short's Brewing Co. is self-financing a major construction project to expand offices and build space for fermentation in Elk Rapids, said partner Scott Newman-Bale. The delays, he said, already have cost the company $250,000.

The brewery had a loan from the Federal Housing Administration but is working on refinancing it. All the company needs is a signature to move the loan, but the office was backed up because of the holidays, Newman-Bale said.

"The shutdown put a kibosh to it," he said. "The bank is working with us, but it's a stressful time not having the money."

The company is working with its suppliers and contractors, telling them some of the bills won't close until the government shutdown is over. Short's Brewing has put off other projects for the time being, too.

The brewery saw double-digit growth in 2018 and expects to do so again this year, but it needs to expand, Newman-Bale said. The company was planning to open a new shipping and logistics facility this month, but without its federal permit, that launch date could be delayed.

With can prices skyrocketing and steel for the construction almost doubling in cost because of new tariffs, these delays place even more strain on the company's cash flow.

"I don’t think anyone really gets how much of an economic impact there is across so many industries," Newman-Bale said. "We see already a lot of pressure on the economy from tariffs and other general concerns. It's really adding quickly."

John Neidermaier, owner of the Brewery Terra Firma in Traverse City, said he was planning to introduce four new products during the first quarter of 2019, traditionally the slowest time of year for brewers.

The first new label was approved in three weeks, faster than most, said Neidermaier, who has more than 20 years of experience in the industry. The remaining three, however, are caught up in the shutdown.

"It would be a great added boost to revenue to get the new products on shelves statewide in Michigan," Niedermaier said. "We’re still hopeful. We've been through this before. It didn't have much of an impact, but everybody in my industry is pretty concerned.

"It's dragging out, and no one seems really willing to budge. If somebody doesn't put on their big-boy pants and make it happen, there's going to be a lot of people hurting for this."

And once the bureau reopens, there will likely be a backlog of applications to be processed, which has business owners worried, including Jeff Lemon, a partner at Lemon Creek Winery in Berrien Springs.

“They’re already somewhat short-handed,” Lemon said. “There’s been a lot of new wineries and breweries, not just in Michigan but across the country. I think they’ve been pretty maxed out with their staff and this obviously is going to get them behind a little more.”

Although there is a slowdown in the number of new brands consumers might see, residents in Michigan, a top producer of beer, should not have any troubles finding their favorites at restaurants, bars and convenience stores, said Spencer Nevins, president of the Michigan Beer & Wine Wholesalers Association.

"I think we've got a vibrant alcohol market," Nevins said, "and I don't think the shutdown will have an impact on the vibrancy."

Detroit News Staff Writer Breana Noble and the Associated Press contributed.