Boozy Nights

[00:00:08] Speaker A: Welcome to Taxing Poetic. I'm your host, Jenny. [00:00:10] Speaker B: And I'm Tim. [00:00:11] Speaker A: And this episode is called Boozy Nights, where we're going to talk about everything when it comes to sales tax on alcohol. And Tim, I see you brought your Kenergy today. And we did not plan this, y'all, for who is watching online. We both unexpectedly dressed in pink today to celebrate the Barbie movie that just happened. [00:00:34] Speaker B: You're celebrating the Barbie movie? I didn't even know that said thing even existed. But congratulations, because I bet. Yeah. Per Jenny, I live under a pop culture rock. [00:00:42] Speaker A: Correct. So I was very proud of you. You just unintentionally brought again the Kenergy. So thank you. [00:00:48] Speaker B: I was going to channel my inner Oppenheimer and just wear a dark suit, be all somber. [00:00:53] Speaker A: But anyways, that's your normal. All right, all right. So just a couple of updates here. We've had some feedback of our last couple of episodes, and apparently my haikus are a huge hit. [00:01:06] Speaker B: Shocking. [00:01:07] Speaker A: I know, I know. You're not surprised, Tim. [00:01:09] Speaker B: They were good, in all honesty. Actually, they are pretty solid. [00:01:13] Speaker C: I remember we were both like, that was good. [00:01:15] Speaker A: I mean, I'm not going to quit my day job yet, but put together. [00:01:19] Speaker B: A book, Jenny, and sell. [00:01:20] Speaker A: Yes. Yes, I will. Sales tax haikus, I'm sure will be in great demand. And we also heard that people apparently like JB, our producer. They like it when he talks. [00:01:31] Speaker C: Very unsurprising, I know. [00:01:32] Speaker A: I mean, I'm not surprised. [00:01:34] Speaker B: Hey, JB's got the Barbie shirt on too. He's got some nice pink cocktails going. [00:01:38] Speaker A: Yes, JB has the Kenergy, so we all are. [00:01:41] Speaker C: I love to talk, so that's good. [00:01:43] Speaker A: So, JB, we want you in the conversation more and more because I'm sure people get sick. Know Tim talking, not me, of course. [00:01:50] Speaker C: No problem. [00:01:51] Speaker A: Just to open this show with my haiku, if you're already. Okay. Sales tax audit coming. Going to be some boozy nights. Not so worried now. Get it? [00:02:08] Speaker B: Yeah. [00:02:11] Speaker A: I think so. [00:02:11] Speaker B: I think my face is probably as pink as my shirt. Red as my shirt. [00:02:15] Speaker A: Are you having secondhand embarrassment for my haiku? [00:02:17] Speaker B: I'm actually having secondhand embarrassment. [00:02:19] Speaker A: No, it was awesome. Whatever, Tim. [00:02:21] Speaker B: I love. [00:02:21] Speaker A: Okay, good. Back to our topic. Now that we're done with Barbie and Haikus, we're going to introduce our special guest. We have Kelsey Reed from Sierra Nevada Brewing Company. She's the accounts receivable supervisor. And Kelsey, we're just so glad to have you on today. [00:02:40] Speaker D: Thank you so much for having me. [00:02:42] Speaker A: Yes. Why don't you? Well, first of all, just give us a little bit about who you are and what your background is. [00:02:49] Speaker D: Thanks. So I've been with Sierra Nevada close to ten years now, and my team over the years has handled and navigated at least our portion of beer taxing and reporting throughout the years until we lucked out and came across some helpers through Synexus. Thank goodness, by the way. [00:03:13] Speaker B: Thanks for the shameless. I know, thanks for the shameless plug. [00:03:15] Speaker D: Quite a daunting. [00:03:17] Speaker A: Thanks for the shout out task to. [00:03:18] Speaker D: Get through in the middle of your close, which amazingly enough, it's like they know, they're like, so we're going to time this to make life really difficult. Let's make the deadlines just right here. So as soon as you're getting through the financial close, we need all of that reporting. Like now we feel your pain. [00:03:35] Speaker B: And isn't it awesome that they just can't all time it at the same time? They have to be spread out over like six different dates. [00:03:41] Speaker D: Yes. Although I like the ones that are towards the end of the month, they give you a little more of a buffer. [00:03:45] Speaker A: Yes. [00:03:45] Speaker B: There you. [00:03:46] Speaker D: So we definitely appreciate I I do everything know federal excise tax filing and reporting on down. So I've had a little bit of experience with federal, state and different jurisdictions since we also self distribute in California. So our presence there is a little bit different. [00:04:07] Speaker B: Awesome. What do you think is your biggest headache that you've dealt with with regards to either beer volume reporting or just regular alcohol tax reporting? [00:04:19] Speaker A: Can you narrow it down? How much time do we have? [00:04:24] Speaker D: Oddly enough, I would say the last few years it's been the transitions from old paper filings to actually having online services, which all the states that have gone out there and done that, the federal government just wonderful. Love that they went that direction. But like with anything else that any application you on board, it has some bumps and a lot of them had that. So transitioning from one to the other. Sometimes filings were misplaced or they're looking for something or they need you to re upload an old date. So it kind of created duplicate work at times. And I know it was an administrative headache for a lot of the people who are on their end trying to get everything going. And okay, we have online filing now and still there's a lot of pockets where you can file a reporting online, but you can't actually pay them, which is incredibly OD. You're like, I'm trying to give you money. [00:05:23] Speaker C: Take my money. [00:05:24] Speaker B: Take my money, please. [00:05:26] Speaker D: Exactly right come on. [00:05:28] Speaker B: And at least we've gotten away from having to stand in front of a fax machine and fax all the invoices into some of these jurisdictions, right? Yes. [00:05:35] Speaker D: And in my time, we've gone from having to paper mail everything to a lot of online offering, which I love. But yes, the transition between those was a bit of a headache. And then anytime too, you have new brands that come on. For us, it's been as we branch out into non alcoholic offerings, we have a hop water line. It took quite a while for folks to remember that the hop water is water. [00:06:05] Speaker B: It's non alcoholic. [00:06:07] Speaker A: Right. [00:06:07] Speaker D: Yeah. So you don't need to include that in anything. So a lot of the states that have online filings, some of our distributors were going through, and I had to refile back because they remembered, oh, yeah, I forgot to take the hop water off that. So I reported it in the seats. Like, we're not going to say anything because we get tax revenue. This works out fine for us. [00:06:31] Speaker B: There you go. There you go. So what kind of industry concerns are you actually seeing or what industry wide concerns do you think that your business has with regards to overall compliance? I mean, I know you talked about the change in the shift over from technical on the technology piece, but what else do you think is out there? [00:06:50] Speaker D: The new drive towards direct to consumer sales. So being able to sell from a supplier directly to an end consumer, kind of like how people can order a case of wine. A lot of states are offering that, but most of that came forward from COVID So it was sort of a slap together model of we got to find ways to bring back some of that tax revenue we were experiencing before because it's been a bit of a drought and we could use that right now. So a lot of the direct to consumer regulations and set up that they put into place was hastily done. So it's still being sort of vetted out and put into play in a productive way. [00:07:36] Speaker B: And a lot of those laws actually date back to post prohibition. Right. When you're talking to dram shop laws and other types of things, I mean, that's basically what kind of regulates all of that. So these states have to make massive changes, correct? Yeah, and that's what's so interesting to me about that. I mean, there's only a handful of states that actually allow that direct to consumer component right now. Right. [00:08:00] Speaker D: And I mean, they had to make changes for that. Or some of the states offering the ability for an on premise restaurant location to sell you a to go drink, which is certain states are actually, they're going for it all in now, and they're saying, you know what? We've written the regulations. It seemed to be working through COVID. We've had it in place. Let's. Let's ride this. [00:08:21] Speaker C: Just copy Savannah, Las Vegas, and where? Orleans. [00:08:26] Speaker B: New Orleans. Yeah. Yeah. Well, and actually, Georgia statewide is going to start doing alcohol delivery. Right. I mean, you're going to be able to do that with Publix and a couple of other folks. [00:08:35] Speaker A: Shambly. Georgia has an open carry law, don't they? [00:08:38] Speaker C: There's also, I think, Tucker, but, like, just downtown. [00:08:41] Speaker B: It's really weird how certain cities have drawn. [00:08:44] Speaker A: Well, because they see the revenue money possibilities. [00:08:47] Speaker B: Oh, 100%. [00:08:48] Speaker A: Yeah. You should have seen, Kelsey, the very beginning of that answer. When you said direct to consumer, both Tim and I nodded our. Did big. Nodding our heads like, oh, yeah, exactly. That's been definitely a pain point. I know. Just even working with you all and the taxation for direct to consumer is pretty intense in the reporting. [00:09:06] Speaker B: Absolutely. Reporting is the biggest thing. You guys deal with a number of different compliance components that I don't think a lot of people are really aware of from an alcohol perspective, correct? [00:09:18] Speaker D: Yes. And so there's a lot of data points to collect and that you are having to report to the states and especially the ones that are, or historically, I should say, have been more restrictive. That carries on into these spaces as well. So, like Virginia, for example, they tend to be very stringent in their regulations and their expectations. And that's the same as what we see with direct to consumer. But then you have to remember, too, with the start of how direct to consumer came to play for them, just like many others, is during COVID So it can be difficult to make that transition and find what makes sense to have people report on what's cumbersome from an administrative perspective for their staff, what makes sense that we would want a record of. Right. I think they're still working it out. [00:10:12] Speaker A: And just to bring this back to kind of a sales tax 101, if I'm correct here, I think three different types of reporting. You have to pay sales tax on any merchandise. Right. That you sell. You also have wholesale reporting because the majority of your sales go to wholesale distributors. Correct? [00:10:32] Speaker D: Correct. [00:10:33] Speaker A: And so I don't think a lot of folks, including myself, until I started working on this, were aware of how much wholesale reporting you have to do in every state. It's pretty intense. And then on top of that, just what you mentioned is the direct to consumer. So that's a whole separate taxation that measures it, I think, on barrels and gallons or the wholesale. [00:10:56] Speaker D: Yes. [00:10:57] Speaker B: It varies state to state. You're questioning how it actually works is it does vary drastically state by state. Right. And some states report, Kelsey, like barrels. Some states report kegs. Some states report gallons. Right. Or you have specify the size of the container that you actually sell it in and cases, the cases, the number of cases that you actually distribute. So it is definitely quite a complex reporting structure that we are able to automate drastically for them. But it's just very interesting on the amount of reporting that they actually have to deal with. [00:11:37] Speaker A: Right? [00:11:37] Speaker B: Yep. [00:11:37] Speaker A: Yeah. Just the end consumer doesn't realize when you are drinking your refreshing Sierra Nevada beer, if you bought it at a wholesaler, whether you had it shipped to your house, whether you purchased it at a bar or you got your Sierra Nevada T shirt, those are all separate types of transactions. [00:11:54] Speaker D: Taxable items. [00:11:55] Speaker A: Yeah, taxable. Different types of is. It is not. [00:12:00] Speaker B: So what we had marked on here, and we wanted to talk about something that's weird. Right. And we want to talk about, like, Utah versus New Hampshire or canned cocktails versus beer. So we're going to lob this up to you, Kelsey. Excuse me. Give us something weird about Utah versus New Hampshire. Why do we have that marked down? [00:12:18] Speaker D: Okay, well, you probably have that marked down because out of the country, most of the time, you can go to a store and get everything kind of all in one place, and that's where you can purchase higher ABV items. But New Hampshire, it's all state run. So New Hampshire, and I believe Wyoming as well, they have actually state run stores. And what's funny about New Hampshire is they've gotten it to the point where they bring in enough revenues that they can keep the prices really low. Like they can almost overcome the excise tax price increase that typically gets passed down to the consumer in their state because they've done such a good job of setting this up. But the beautiful part about New Hampshire is oftentimes if you're going to go to one of these stores, you can purchase fireworks there at the same little market area. They've got like a pull off of the road. It's this beautiful rest area, and they got A restaurant and a cafe. [00:13:18] Speaker B: This sounds like Redneck heaven. Why am I not there? This is absolutely. [00:13:22] Speaker A: JB, can you live for your diet? [00:13:26] Speaker B: Amen to that. [00:13:27] Speaker D: They live by this motto. [00:13:29] Speaker A: JB, can you confirm this? They're right on the highway as a New Hampshire. [00:13:32] Speaker B: Are you serious? [00:13:33] Speaker C: Oh, yeah. On both sides. So if you're leaving New Hampshire, there's one on this side and then 900ft on the other side of the road, there's another one. So that if you're coming from Massachusetts or you're going, they're like, hey, if you're coming in, buy bunch of booze and fireworks. And if you're leaving, like, hey, before you go, would you like some booze? [00:13:50] Speaker B: You know what, I'm not going to lie. I think me and my buddies from Winder are going to grab an RV and make a road trip to New Hampshire. [00:13:55] Speaker A: I know, let's do a taxing poetic retreat. [00:13:57] Speaker D: We won't regret it. That's how these places are just meticulously kept, too. [00:14:03] Speaker B: So, I mean, if you're going to. [00:14:05] Speaker D: Find a place to pull over and use the restroom, it's 100% going to be there every time. You're going to do it one time. And that will be your go to. My family does it. And that's like, it's our spot. Because you know what? It's consistent, it's clean. I know there's good food and obviously there is an amazing selection, apple cider. [00:14:21] Speaker C: Donuts and some fireworks. [00:14:23] Speaker D: And know you catch it at the right. Know the folks there, like, here, take some Apple cider donuts with your beer. [00:14:29] Speaker B: So you're talking about the Barbie movie. That is my version of like, Barbie Kingdom right there. That sounds absolutely cheap. [00:14:36] Speaker A: Fireworks, booze and cheap fireworks. [00:14:38] Speaker B: Beer and donuts. Can you get any better? [00:14:41] Speaker A: Yeah. [00:14:41] Speaker B: Homer Simpson everywhere, 64 slices. [00:14:44] Speaker D: And then on the opposing end, we have Utah that has a pretty state regulated lower ABV. What they're trying to allow to be sold in their state, they tend to be the lowest collector of sales tax revenue on alcohol. They've kind of taken that sin tax to a productive area. I guess if that's your goal is to deter and to use that as a way to help encourage good habits, then they've been successful at. [00:15:18] Speaker B: So they've actually made an exclusion, though, for microbrews and stuff like that. Because I know, like in Utah, that is correct. A lot of the mass produced beers used to have to be like 3% alcohol, right. It actually had to be a reduced percentage in the ABV. Did they just pass a law basically for microbreweries to be able to skirt around that because you all pale ale is higher. Right? [00:15:41] Speaker D: So they had the law setting a limit out about 4% by weight, which is about 5% ABV. So just like everyone likes to measure in different measurements, gallons, barrelage, we also do alcohol percentages that way as well, just to make things extra confusing. But, yeah, I think the goal with what Utah was trying to do was to give their local craft brewers a little boost. The catch being like, you have to get it here. And not only keep that tax revenue there, but encourage those local businesses and give them a little something. [00:16:20] Speaker C: Seems like it's opposite Russia, because in Russia, if it was less than 10% alcohol, they were like, anybody can drink this. It's only 9.5. [00:16:31] Speaker A: Like, we put it in baby bottles. [00:16:33] Speaker B: You're almost sick. Grow up. We use that as teething fluid. Congratulations. Can I insert my fun Utah story here now? [00:16:43] Speaker A: Please do. I'm sure you have. [00:16:44] Speaker B: Oh, my gosh. [00:16:44] Speaker A: This is awesome. [00:16:45] Speaker C: The word fun is probably in quotes. [00:16:46] Speaker B: Yeah, exactly. I just remember flying through Utah in Salt Lake City, and I'm a big Porter and stout fan. Like, I absolutely love porters and stouts. So I asked bartender, I was like, hey, man, just give me a porter. Whatever Porter you have on tap. He's like, oh, man, we got a great one here. I'm going to pour it for him. He pours me a nice porter, and I was sitting, I was like, god, this is delicious. What is this? And he's like, it's from Wasatch Brewing Company, and it's called Polygamy Porter. And I was like, you have got to be kidding me. And I was like, what a crazy name for a beer. And he said, hey, we actually have a T shirt if you want it. And so I actually have a polygamy Porter T shirt. And on the front of it, it literally saYs, I've tried polygamy, and I love it. [00:17:28] Speaker D: I respect that. I have also tried that beer, and it is a beautiful beer. You got to give it to them. [00:17:35] Speaker B: The marketing around that. Good for them. Oh, my gosh. [00:17:38] Speaker C: And free advertising for. What was the brewery called? [00:17:40] Speaker B: Wasatch. Yeah. Wasatch. [00:17:43] Speaker C: Wasatch. [00:17:44] Speaker A: What was the other tagline you said before? [00:17:46] Speaker B: Bring some home to your wives. Oh, you can't have just one. That was it. [00:17:49] Speaker A: Yeah, you can't have just one. [00:17:51] Speaker C: I mean, they had some fun with it. [00:17:52] Speaker B: That's good. Fun with it. [00:17:55] Speaker C: Go ahead and apologize. [00:17:56] Speaker B: So sorry for bringing up one of your competitors, Kelsey. [00:17:58] Speaker D: But still, you know what? We have industry, ride, respect, and people put out a beautiful beer. You got to give them some props and some kudos for that. [00:18:07] Speaker B: I love it. I love it. Hey, you know what? Speaking of, we're going to just divert here for, like, 2 seconds. What's your favorite? Sierra Nevada. Product. [00:18:15] Speaker D: Oh, that's a tough summer fest. Yeah. I was so pleased to have that back this summer. Probably purchased all of what was available at a number of local stores just out of my own. Sort of like golem from the Lord of the Rings hoarding. [00:18:36] Speaker A: Great pop culture reference. [00:18:39] Speaker D: There's only two left. They're mine. [00:18:43] Speaker C: You have to buy. [00:18:44] Speaker D: No one's watching. [00:18:45] Speaker A: Right? [00:18:46] Speaker C: You don't get free beer. [00:18:47] Speaker D: I know, actually, well, I'm not near any of the brewery locations, otherwise things like that would be a little different. But I don't mind. It's like financial. So, you know, they pay me, I go out and buy some. [00:19:03] Speaker B: Like, I love the way you put that. Financial recycling. That is awesome. That is great. We're going to have to get you down to Asheville and we'll meet you halfway. And we can have a group meeting at the brewery there at the tasting room. [00:19:14] Speaker A: Yeah. Tim just wants free beer. [00:19:18] Speaker D: It's a good place for that. It's a good place for that. [00:19:20] Speaker B: I will drive four and a half hours for free beer. [00:19:23] Speaker A: Absolutely. [00:19:23] Speaker B: And also to hang out with Kelsey, of course. [00:19:25] Speaker D: It's beautiful. I mean, a lot of people, it's like Disneyland for adults, right? It's this gorgeous property. Even coming in the gates, it's like nothing you've ever seen. So anyone who has the opportunity to visit our breweries, I mean, they're always impressed and just taken aback by the beauty and just the care put into, you know, anyone who has the opportunity, I encourage you to go and visit us. Take a tour, go check out the pub, have some beers. [00:19:53] Speaker B: Love it. [00:19:53] Speaker A: Taxing, poetic retreat again. So we'll hit Asheville and then New Hampshire. [00:19:57] Speaker B: That sounds fantastic. [00:19:58] Speaker A: Get an RV. [00:19:59] Speaker B: Fantastic. [00:20:00] Speaker D: Going to say, yeah, that RV is going to come in handy. [00:20:02] Speaker A: Yes. [00:20:02] Speaker B: Put some mileage on it. [00:20:03] Speaker A: Yes. [00:20:05] Speaker B: So the last thing we were talking about with, you know what's weird is canned cocktails versus beer. So what are the differences in canned cocktails versus beer? What's weird about the actual taxation that would be represented there, Kelsey? [00:20:17] Speaker A: Well, and Kelsey, real quick, also, just talk about the explosion of the canned cocktails. I mean, how it's changed your industry. [00:20:23] Speaker B: Jenny's favorite margaritas on tap all the time. [00:20:27] Speaker C: That's not coffee in that coffee cup. [00:20:28] Speaker B: No, it is not. [00:20:31] Speaker D: Well, yeah, a lot of the traditional brewers, folks that just need beer, maybe over the years, are starting to explore other avenues. And the market is changing. Consumer needs and interests are changing. So you got to match enthusiasm. So you've seen things like these canned cocktails come out and they sort of vary. It's everything from like, you've got seltzers and you've got the buz balls and things that are really driven to replace an actual mixed drink you would get from a bartender. And I think part of that drive came out of COVID We weren't able to go out to restaurants and have that experience, so people started looking to replace it. And it was sort of this perfect storm of where restaurant visits are down and people are doing more at home. We're buying more packaged product. So it slides right into that open spot of, hey, did you used to be the one that went out and would get XYZ cocktail? Now we have one that you can have at home. So I think that as far as the canned cocktails goes, the span of them, it's either something that's a malt based beverage that's more in line with how beer beer is treated. So even some of the hard seltzers, it's a malt base. But that goes on up to where it's actually spirits and it's actually a true cocktail. And the reason it's important for us is that the taxation rate is very different. So right now, there's a big push from a lot of the players that are putting out canned cocktails to reduce the tax rate for them. Because their logic is that it's very similar to beer and certain products are they hit lower. ABVs, they are a little closer to that. I think not everything falls within that. Obviously, something that's on par with having a glass of wine should not have the same tax rate as something that has half the alcohol in it, right? [00:22:35] Speaker B: Yeah. Why are you going to turn around and tax something if it's labeled as being vodka or whatever, but its ABV is 5%, why are you going to tax it as the same thing as a 35 or 40% bottle of vodka? [00:22:48] Speaker D: And that's sort of their logic. If it's something that has more of a comparable market space and make and makeup and ABV, they're hoping to get a reduction in their tax rates. And I think it's possible to happen. I think that it's going to be very calculated how it gets done if and when it does. I mean, you got to remember, essentially, this is the government's first source of revenue ever. They started taxing in the late 17 hundreds. And this is essentially something that has supported states and the federal government for a long time. So they're kind of careful about giving up any of that revenue and rightfully so some of the products, too, I think, that have come out, they've kind of been, I don't know if I would call questionable, but they've experienced more scrutiny. There's a lot of products coming out that mirror a non alcoholic version. And I think you're going to see a little bit more of cautious regulation changes when it comes to things that fall into that category. The labeling, for example. I would expect to see an increase in scrutiny on the labeling and probably fairly substantial repercussions for anyone who doesn't meet the standards and expectations of having unique labeling. That's very obvious that this is an alcohol product versus a non alcohol product. [00:24:14] Speaker C: I found that the other day. I actually got one that was supposed to be a painkiller, but it was just like a painkiller flavored drink. It was horrifying. And then there's this one in Atlanta called tip Top, and they make, like, a beautiful cocktail in a can. It tastes exactly like you'd get. So they've gotten much better. But it is interesting that they sort of looked the same. I couldn't tell the difference in the outside. [00:24:38] Speaker A: That's interesting. [00:24:38] Speaker C: It wasn't liquor based either. It was like she said, it's malt based. It was just like a flavoring of a drink. And I was like, that's not what I wanted at all. So, yeah, that's interesting. [00:24:47] Speaker B: Yeah. And I mean, just that whole overall concept. Right. And it's something exactly what we saw with Wayfair. Right. On the sales tax side. It takes states and governmental entities just so long to react to changes in the market. Right. Because they have to put everything up to committee, then they have to review it in the legislature. And whether they have two sides of the legislature have to have it approved. And all this other stuff, I mean, it could take years for some of these states to actually address this. Whereas the market changes, like you said, Kelsey, sometimes even in a matter of months. Right. [00:25:22] Speaker D: Where do they get the most bang for their buck? What makes sense for them to invest their time in? They're going to be calculated and careful about any changes they make. But if you're looking at priorities, are you going to put a cut to your own revenue at the top of that? Probably not. You're going to wait and make sure that that makes sense. [00:25:39] Speaker A: And I'm sure you've all seen the news reports that have come out about how during COVID I think alcohol consumption and post COVID. COVID and Post COVID went up like. [00:25:48] Speaker B: 40% or something ridiculous. You're not a representative sample of that. No. [00:25:53] Speaker A: Bringing champagne to one of our recordings. [00:25:56] Speaker B: Jeez. [00:25:57] Speaker A: Obviously. And I'm sure, Kelsey, you've seen that as well. The increase in sales or just industry wide, since we're at home a lot more and have all these newly available products to us, it's been a very much needed coping mechanism. [00:26:13] Speaker D: Well, and I would say that COVID did teach us to be more mindful of stockpiling. Right. You don't want to make as many grocery trips or many grocery runs. So in a way, it's been advantageous in a lot of areas. If you're going to be at home and you're going to have some drinks, great. You have plenty to last you the whole night. There is no reason for you to go anywhere. [00:26:31] Speaker B: It was completely acceptable to see somebody with a shopping cart full of, like, twelve cases of beer and 14 things of toilet paper. So congratulations. [00:26:39] Speaker D: Exactly. They're like, I got my paper goods. [00:26:42] Speaker A: The liquids, the necessities in life, toilet paper and alcohol. So, Kelsey, one of our favorite segments we do on taxing poetic is called fortune Teller, which is, what do you see happening in the future with alcohol? Taxation, sales, et cetera? Any fun things when you look into your crystal ball? [00:27:08] Speaker D: I do think that some of the malt based beverages, I think that you might see a change in the tax rate, but I think it's going to be really like a specific, finite group, which makes sense. Again, if you're going to do it, make any changes, you got to be logical about it. But I do think that eventually we'll see something awesome. [00:27:34] Speaker B: Do you have any fun products that Sierra Nevada is exploring that you can divulge, or is that going to be held a little bit close to the. [00:27:41] Speaker A: Chest, like Willy Wonka Style? [00:27:43] Speaker B: Yeah. [00:27:44] Speaker D: Well, I will say that we have an NA offering that's going to be coming out, an Na Beer, which I'm really excited about. And some folks around the country have already had a chance to try it out, has had some distribution already. So it's not a secret, but they can definitely look forward to that, which is nice, because if you've looked out there, Na beer has had a rise in offering some folks, that's their go to. And there are some breweries, like athletic, for example, that are doing really well in that space. [00:28:25] Speaker A: Forgive my ignorance. What's an NN? [00:28:27] Speaker C: Non alcoholic. [00:28:27] Speaker B: Non alcoholic. [00:28:29] Speaker A: That's why I don't. [00:28:29] Speaker C: Jenny has literally, she's like, I don't understand. [00:28:32] Speaker B: Does not compute. [00:28:33] Speaker C: Does not beer. [00:28:35] Speaker D: And on those, there's obviously more scrutiny, because they want to make sure that, hey, it's 0.5 or below. Right. You're coming in below the mark. Because once you hit that mark, then, yeah, they're going to look at that and say, okay, where's my tax dollars? [00:28:52] Speaker A: Got it. Interesting. All right, well, I learned something new today. [00:28:56] Speaker C: Some bear doesn't have alcohol. [00:28:58] Speaker B: There you go. Wait a minute. Let me introduce you to oduls. No, please. I will not introduce you to it anyways. But, no, that's absolutely, really interesting. I hadn't even thought about that market and the growth of that market, but, yeah, I'm sure that even, myself included, I've tried some different non alcoholic offerings and actually been quite surprised by, like you said, the quality of the product. It's actually really good. And it's hard to even differentiate from the fact that it just doesn't have alcohol. Right. But you get to still enjoy the taste of it. You get to enjoy the consumption of it and stuff like that. Yeah, I think that's awesome. That. Look forward to seeing your product. [00:29:36] Speaker D: People consume it in different ways too. Some people, it's a go between where they're driving or they've hit something or where they're, like, one or two beers. And after that, I'm going to switch to this and still have a good time, still enjoy that social occasion, but just in a different way. [00:29:55] Speaker B: I love it. [00:29:55] Speaker A: Some people might put it in a synexis mug, drink it during a podcast. [00:29:59] Speaker B: Drink it during a podcast instead of getting pie face. [00:30:02] Speaker A: Completely hypothetical? [00:30:04] Speaker C: Completely hypothetical. [00:30:05] Speaker A: Completely. [00:30:06] Speaker B: Well, thank you, Kelsey, very much for joining us today, and we really appreciate all the conversation and interaction regarding regulatory matters and everything that you have to deal with on a daily basis. So thank you. And we're actually going to move to our next segment, which is our pop quiz hotshot. Kelsey, do you want to stick around for the quiz? I don't know if you need to go or not. [00:30:26] Speaker D: Oh, thank you for having me. I would love to stick around for the quiz. I got to hear that. [00:30:30] Speaker C: Awesome. [00:30:30] Speaker B: I love it. Well, get ready, because in the last quiz, Jenny got the big donut. [00:30:36] Speaker A: It was not a good day for me. [00:30:40] Speaker C: We need Jenny to score some points. [00:30:41] Speaker B: I do. [00:30:42] Speaker A: Yes. [00:30:43] Speaker C: If you're unfamiliar with the quiz, at the end of the year, the winner will read a prepared statement by the other person that it's only nice things about them. Tim really wants to win. [00:30:54] Speaker A: Yes. [00:30:55] Speaker B: Jenny has nothing nice to say. [00:30:57] Speaker A: I was going to say otherwise, he doesn't hear any nice things. [00:31:01] Speaker C: Okay, so our first question is for. Tim, what is the current sales tax for a standard case of beer? [00:31:12] Speaker B: What is the current sales tax for a standard case of beer? [00:31:16] Speaker A: Yeah, good luck with that one. [00:31:18] Speaker B: Hey, Kelsey, can I phone a friend? [00:31:21] Speaker A: Good one. [00:31:21] Speaker D: I don't know if lifelines are permitted for this. [00:31:26] Speaker B: What's the answer, JV? I have no idea. [00:31:28] Speaker C: Four and a half cents per can, Kelsey, did you know that actually sounds. [00:31:32] Speaker D: About right if it's an average. Yeah, that seems to be hit the mark. [00:31:36] Speaker B: Four and a half cents per can, man. I did not know that. [00:31:39] Speaker C: That's on lower high to you. [00:31:41] Speaker B: It actually sounds low, actually. But I mean, if you're thinking about. It's four and a half percent, I guess. Four and a half percent per dollar, right? I mean, if you're thinking about. Yeah. [00:31:49] Speaker A: All right. Okay, cool. [00:31:51] Speaker C: All right, Jenny, what is the federal tax on liquor? [00:31:55] Speaker A: The federal tax on liquor? I don't think there is federal tax. [00:31:59] Speaker C: I'm going to give you a little bit of a hint here that it's a per proof gallon price. So it's like they do it by the gallon and there's a federal tax on that. And it's. [00:32:10] Speaker A: Kelsey, I'm going to phone a friend on that too. Do you know this too? [00:32:13] Speaker D: He doesn't get phone a friend. Lifelines. [00:32:15] Speaker A: You can't have it. [00:32:16] Speaker B: Thank you very much. [00:32:17] Speaker A: You know the answer, though. [00:32:20] Speaker B: I don't know the answer. [00:32:24] Speaker D: For alcohol spirits specifically. There is a little bit of a variation depending on the proof gallon. But first, I think 100,000 proof gallons in production, they hit you like 2.70 per. And then once you go over a certain over that, then they raise it. So they give you like a good deal for the first 1100 thousand. And then after that they're like, so then now we're going to need 13 and some change. So I think it's like around 1330, 1350. [00:32:58] Speaker C: She is corrected. It's 1350 per gallon. That's very good. [00:33:02] Speaker B: How is that smokes? [00:33:03] Speaker A: How is that reported, though? Where do you report that, Kelsey? [00:33:07] Speaker B: Is it on the 720? Is it on the excise tax return, the federal 720? [00:33:14] Speaker D: It is not. So it's a combination of places that essentially function as the same sort of true up that you have with states where we're providing reporting on what we sell to them. And then they're checking to make sure, hey, are you folks paying the taxes in line with the same volume? So you report it in multiple places, but you actually have to report your production and your removals so they know how much you made they know how much you make per year. All of that is a part of your operational reporting. [00:33:45] Speaker B: Wow. [00:33:46] Speaker C: Good thing Kelsey stayed for the quiz. [00:33:47] Speaker A: No kidding. [00:33:48] Speaker B: This is awesome, man. [00:33:51] Speaker C: Okay, Tim, what is the LBD tax rate? [00:33:57] Speaker A: I know this. Dang it. [00:33:59] Speaker C: Sorry. [00:34:00] Speaker A: I do these. [00:34:00] Speaker B: What is the LBD tax rate? I have no idea. [00:34:05] Speaker C: Wow. This is a tough quiz on a good job. [00:34:08] Speaker A: I say, I know this now. I'm like, oh, crap. [00:34:10] Speaker B: Yeah. So it is a. Jenny, is it 10%? [00:34:13] Speaker C: So it's 15%. [00:34:15] Speaker A: Okay. [00:34:15] Speaker B: Wow. [00:34:17] Speaker D: If you're going to do it, go big or go home. [00:34:18] Speaker C: That just seems really high. [00:34:20] Speaker B: That's ridiculously high. But I guess if you're penalizing people for drinking at a bar, congratulations, State. You do make a ton of money doing. [00:34:26] Speaker A: There is some LBD reporting we do for a restaurant client of ours. And a single liquor drink in Tennessee can get taxed up to 24%. Just when you tack on all the city, county, state, it's like tax on tax. [00:34:40] Speaker D: And then eventually we'll carry down to the consumer in some way, shape or form. [00:34:44] Speaker C: That's why there's $22 cocktails. [00:34:46] Speaker A: Honestly. Honestly. I mean, all of it's passed on to the consumer for the most part. Wow. 15. [00:34:52] Speaker D: If you go out drinking in Tennessee, essentially, it feels the same as if you go to like a sporting event or a concert. You're like, this is just the average cost. [00:35:01] Speaker A: Absolutely. [00:35:03] Speaker C: Okay, Jenny, what state has the lowest excise tax on alcohol? [00:35:07] Speaker A: New Hampshire. [00:35:09] Speaker C: So I think she means like that has one because obviously there's none in New Hampshire. [00:35:13] Speaker B: And she didn't put New Hampshire. [00:35:16] Speaker A: Let me think about this. [00:35:19] Speaker B: Alabama. [00:35:20] Speaker A: I think it's Kentucky. [00:35:22] Speaker D: It's definitely not going to be Kentucky. [00:35:23] Speaker B: It's not Kentucky. Yeah. She was talking earlier about Kentucky and the drinks from before we even started the episode. We were goofing around, like in our green room time. [00:35:32] Speaker A: I missed that. [00:35:33] Speaker B: Yes. [00:35:33] Speaker D: I want to say it's around the Midwest. It's like Missouri or one of those. It's probably on the lower end. [00:35:37] Speaker B: Yeah. [00:35:38] Speaker C: So the lowest is Wyoming. So it's two cent per gallon. [00:35:44] Speaker B: That's awesome. [00:35:45] Speaker A: Okay, so we're hitting Asheville. We're going to Asheville, New Hampshire, and then Wyoming for our. [00:35:51] Speaker D: Might explain something. So Wyoming might be kind of real NMN. They're like, hey, Utah people, if you don't want to stay there and you just want like a nice day trip, come on down. [00:36:01] Speaker B: I love that idea. That's actually probably really good point. That's awesome. The fly trap, that's Wyoming. [00:36:09] Speaker C: What is the highest. [00:36:11] Speaker B: What state is the highest? Alaska. [00:36:15] Speaker C: So Jenny did give you this answer a second ago. [00:36:17] Speaker B: Kentucky. [00:36:18] Speaker C: No, Tennessee. [00:36:19] Speaker B: Oh, Tennessee. [00:36:20] Speaker C: It has the highest one. It depends on it. So it's up to 129 per gallon. [00:36:27] Speaker B: Holy smoke. [00:36:28] Speaker C: What is the percentage? [00:36:28] Speaker D: We're number one somewhere. We're number one on this one. [00:36:31] Speaker C: What is the percentage? Georgia's hat like two cent in Wyoming. 129 in Tennessee. That's insane. Says anybody got one right. [00:36:41] Speaker B: Gotten one right. We absolutely got smoked on the well. [00:36:45] Speaker A: Hence, the point of why we're having this episode is because taxation of alcohol is complicated. It is. [00:36:51] Speaker B: In all honesty, it was great because it gave Kelsey a chance to flex some more of her. [00:36:55] Speaker C: Jenny does have one more. [00:36:57] Speaker B: Amazing. [00:36:57] Speaker A: Oh, I do have one more. [00:36:58] Speaker C: It is a true false. [00:36:59] Speaker B: Oh, God, really? Come on. You had to let her beat me once. [00:37:04] Speaker C: I know. It's not my fault. True or false, within a given state, the tax rate on all alcohol is the same. [00:37:09] Speaker B: Oh, my God. [00:37:11] Speaker A: I think it's false. [00:37:14] Speaker C: All we've been talking about is how it's each. I should probably ask that one first. [00:37:19] Speaker A: So hold on. So what you're saying is I win today versus Tim. [00:37:22] Speaker C: I think that's true. Tim, you got. [00:37:24] Speaker B: Yeah, I did. [00:37:25] Speaker A: Yep. [00:37:25] Speaker B: Yep. I got three, and I got the donut. So congratulations. [00:37:30] Speaker A: Hey, in your face. [00:37:31] Speaker B: Every player's got to strike out a few times in a game. It's okay. [00:37:34] Speaker C: It happens. [00:37:35] Speaker B: It happens. [00:37:35] Speaker C: So there's a bonus question that she just wanted just found interesting. Maybe Kelsey knows. What is the audit method used to test alcohol that's sold in a bar? You know what it's called? [00:37:46] Speaker A: The audit method used? Go up and try it. [00:37:50] Speaker B: Is it the Sip testip test? [00:37:52] Speaker A: Yeah, give me one. [00:37:55] Speaker C: It's called the poor test. [00:37:57] Speaker A: The what test? [00:37:58] Speaker C: The poor test. [00:37:59] Speaker A: Poor test. [00:37:59] Speaker C: Do you know anything about the poor test? [00:38:01] Speaker A: P-O-U-R. [00:38:02] Speaker C: Yes. Pour. [00:38:03] Speaker A: Yeah. [00:38:03] Speaker C: Poor test. [00:38:04] Speaker A: The poor test. I don't know. I've never heard of that. [00:38:06] Speaker B: Kelsey, have you heard of that? [00:38:08] Speaker D: I've heard of it. I'm not as familiar. So now I want to know you're intrigued. [00:38:14] Speaker C: We're to going have to go to. [00:38:15] Speaker A: The Google, so maybe we need to have a new side hustle where we're poor test auditors. [00:38:19] Speaker C: Well, I think an auditor will show up and they'll say, okay, pour me a drink, and they will literally see how much alcohol you pour. [00:38:27] Speaker B: That's why you have that drink. That's why you have those specific caps. Alcohol. Regulate the actual. [00:38:32] Speaker D: If they were to test the actual liquid, I imagine there's got to be like a kit or something, right? That they bring with, and they're like, all right. [00:38:40] Speaker C: They watch a bartender pour it, and if you just pour it like a maniac, they're like, you got to pay higher sales tax on that. And if you use the thing. [00:38:47] Speaker B: Well, see, what this whole segment has completely shown us is that we may be amazing sales tax experts. Right? We may know a ton about sales tax, but there are just specific forms of taxation where you need to have your own expert doing this. Kelsey is one of them. Right. We can help on the compliance front. She obviously knows a ton about the information. Donna knows a ton about this information. Who's on our team and stuff like that. You can't be an expert in everything. [00:39:11] Speaker C: We have some apologies, Jenny. You get two apology from Tim because he said he had secondhand embarrassment from your haiku. [00:39:19] Speaker A: That is so rude. [00:39:20] Speaker C: So mean. Yeah. And actually from me, I said I insinuated that you were day drinking. [00:39:26] Speaker A: It's okay. [00:39:28] Speaker B: That's not a bad insinuation. It was actually a true false. [00:39:31] Speaker C: The no fun but probably healthier people of Utah, we should say. [00:39:36] Speaker B: Just. [00:39:37] Speaker C: They're just trying to make sure we don't die. [00:39:39] Speaker B: That's it. That's all. [00:39:41] Speaker A: I love Utah. [00:39:42] Speaker D: They're promoting healthy lifestyles. [00:39:43] Speaker C: Exactly. People who eventually will pay us for advertising. We gave a lot of free advertising on this show. [00:39:49] Speaker B: That's what. [00:39:50] Speaker C: Sock. [00:39:51] Speaker B: No, Wasatch. [00:39:52] Speaker C: It's a wasatch. Wasatch. Tip top athletic beer. We were very generous to and our. [00:39:58] Speaker B: Friends at Sierra Nevada. [00:39:59] Speaker C: Sierra Nevada. Well, Sierra Nevada, like, worked for it, at least. [00:40:02] Speaker A: And in the Barbie movie, don't forget. [00:40:04] Speaker C: In the Barbie movie. Oppenheimer. [00:40:06] Speaker B: There you go. Hey, Kelsey, we really appreciate you being here today. Thank you so much. [00:40:11] Speaker D: Thank you for having me. It's been lovely. [00:40:14] Speaker B: Awesome. [00:40:15] Speaker A: Just a reminder for all of our listeners, you don't have to listen to these episodes in order. You can listen however you like. If you have a specific topic, just feel free to skip around. And you can listen to us on Stitcher, the Spotify app, the Apple Podcast app, the Google Podcast app, and also on YouTube. And you can watch us on YouTube and listen at the same time. [00:40:36] Speaker B: Thank you very much, Jenny. [00:40:39] Speaker A: You're welcome, Tim. [00:40:40] Speaker B: Perfect. I need a pale ale. I got to go. Grab me a cigarette in Nevada. Thanks. [00:40:45] Speaker D: That's a spirit. [00:40:51] Speaker B: Purple close.