Beer Trade Groups Oppose North Dakota Bill Cutting Tax Rates for Spirits-Based RTDs
The Beer Institute (BI), Brewers Association (BA) and the National Beer Wholesalers Association (NBWA) have joined forces to oppose a bill in North Dakota, which would tax certain ready-to-drink canned cocktails (RTDs) at the same rate as wine.
BI president and CEO Brian Crawford, BA president and CEO Bob Pease and NBWA president and CEO Craig Purser co-signed a letter to North Dakota’s Finance and Taxation Committee, Wednesday, expressing concerns over H.B.1303. The bill would amend the state’s Century Code and reclassify some spirits-based products as “diluted beverages,” with an excise tax rate equivalent to wine ($0.60 per gallon).
“H.B. 1303 would take a group of liquor products and arbitrarily reclassify them as wine to reduce the tax rate,” Crawford, Pease and Purser wrote. “This change would blur the lines between distinctly different alcohol categories. Beer, wine, and liquor are not the same, and this legislation would send a confusing message to consumers.”
The proposed amendment – introduced in the North Dakota House on January 11 – defines diluted beverages as alcoholic beverages below 12.5% ABV that mix spirits or wine with “water, dairy products, fruit juices, or vegetable juices, to which natural flavors, artificial flavors, sweetening agents, or food additives may be added,” producing “a beverage distinct from the spirits or wine.”
Under existing guidelines, spirits-based RTDs are included under distilled spirits and taxed at $2.50 per gallon.
“It is worth noting that proposals like this were rejected in more than a dozen states during the 2021 and 2022 legislative sessions around the country,” the trade groups continued. “One exception to this is Nebraska, and the outcome in their state should be a warning for others.”
Nebraska passed legislation reducing the excise tax rate for spirits-based RTDs in 2021. Similar legislation was passed in Michigan the same year, and Vermont in 2022. Related bills have been defeated or stalled in Alabama, Arizona, Hawaii, Kentucky, Maryland, Washington and West Virginia.
Beer industry advocates have touted a November study by Public Sector Consultants (PSC), a Michigan-based public policy consulting firm, which suggests the price of spirits-based RTDs in Nebraska and Michigan have increased since tax rates were lowered, effectively costing consumers more, but spirits companies less.
The Distilled Spirits Council of the United States (DISCUS), a spirits trade group that has made reducing excise tax rates a legislative priority, called the PSC report “seriously flawed,” “lack[ing] credibility” and “misleading.”
New RTD Tax Rate and Lower Blood-Alcohol Limit Proposed in Washington State
Efforts to lower excise tax rates have been reignited in Washington state, with bipartisan bills scheduled to be read in the state’s House (H.B.1344) and Senate (S.B.5375) this month, My Northwest reported.
The proposed legislation would reclassify bev-alc products 16 oz. or less, with an ABV above 0.5% and below 7% – not including wine, malt beverages or malt liquor – as a “low-proof beverage,” with a tax rate of $2.50 per gallon. While the rate is still more than 10 times higher than malt-based alternatives such as hard seltzer ($0.26 per gallon), it is significantly below the spirits rate ($24 per gallon), according to My Northwest.
The proposed legislation would also disqualify spirits-based RTDs from certain fees required for spirits distributors, including a monthly fee of 5% of total revenue made during the month.
Taxes aren’t the only alcohol-related issue on state lawmakers’ minds. The Senate Committee on Law & Justice held a public hearing Monday for S.B.5002, which would lower the state’s maximum blood-alcohol concentration (BAC) allowance for drivers from 0.08 to 0.05.
The primary sponsor of the bill is Sen. John Lovick (D-Mill Creek), who is a former state trooper and Snohomish County sheriff, reported KUOW.
“I see driving behavior that is beyond anything I could have imagined when I started as a state trooper over 40 years ago,” Lovick said Monday. “Drivers are not just speeding, following too closely, passing on the shoulders, and driving aggressive, it is very clear to me that drunk driving is impacting the safety of our communities, and it is time that we do something.”
2021 was the “deadliest year on Washington roads since 2006,” with more than 540 fatal crashes and 600 deaths,” according to the proposed bill. Additionally, the state recorded a +31.1% increase in crashes that were a result of an impaired driver between 2020 and 2021, the bill reads.
If passed, Washington will join Utah as the only states with a BAC limit of 0.05, with Utah’s limit in effect since 2018. Washington’s bill was originally written to go into effect in July 2023, but legislators pushed the effective date to December 31 on Thursday.
American Cider Association Details Legislative Priorities
This year marks the 10-year anniversary of the American Cider Association (ACA), an industry advocacy group for hard cider.
ACA board president Eleanor Leger and executive director Michelle McGrath celebrated the decade mark in an email to members Wednesday.
“Thank you, dear members, for working with us over the last decade to grow the status and connectedness of the cider industry,” they wrote. “On this anniversary, we want to express our gratitude to the growers, the harvesters, the makers, the go-getters, and the storytellers. Without the contributions of members like you, the ACA doesn’t work.”
Since its founding in 2013, the ACA has touted numerous legislative achievements, including changing the federal definition of hard cider in 2015 to include “all ciders less than 8.5% ABV, less than 6.4 g/L CO2, and made from apples or pears,” passing the Craft Beverage Modernization and Tax Reform Act, and advocating for the inclusion of 355 ml and 200 ml in new standards of fill for wine and cider, both passed in 2020.
For 2023, the ACA’s legislative priorities include:
- “Create [Alcohol and Tobacco Tax and Trade Bureau]-approved language to include harvest years on labels with COLAs [Certificate for Label Approval];
- Add 16 oz. and 19.2 oz. to wine and cider’s standards of fill”;
- And “eliminate the bubble tax” – the higher tax rate placed on highly carbonated bev-alc – “for all cider and wine under 8.5% ABV.”
“Those are just the plans for this year – new initiatives beyond 2023 are up to all of us,” Leger and McGrath wrote. “It may be a challenging year for cider, but together we’ll prevail.”