A pair of alcohol-adjacent bills have been introduced in the Colorado Legislature.
One (SB24-181) seeks to create a tax on beverage-alcohol products distributed in the state to fund “alcohol and related substance use disorder prevention, early intervention, treatment, harm reduction and recovery services” across Colorado.
The proposed tax rate for beer, cider and other malt beverages is $0.16 per gallon, or $4.96 per barrel – double the $0.08 per gallon rate Colorado brewers currently pay. However, manufacturers that produce fewer than 60,000 barrels annually are exempt, Brewers Association (BA) state and regulatory affairs manager Pete Johnson noted on the organization’s website.
Colorado craft breweries that produced more than 60,000 barrels annually in 2022 (the most recent year in which production data was available from the BA) include New Belgium Brewing, CANarchy (now Monster Brewing), Odell Brewing and Tilray Brands-owned Breckenridge Brewery. Anheuser-Busch InBev and Molson Coors also operate production facilities in Colorado.
SB24-181 was introduced in March, and sent to the state Senate Finance Committee on April 9.
Colorado isn’t the first state to consider leveraging alcohol excise taxes to support addiction recovery efforts. Oregon lawmakers introduced similar bills in 2021 and 2023. The 2023 bill would have raised taxes +1,200%, to $33.60 per barrel by 2028 – a marked decline from the bill’s 2021 version, which proposed a +3,000% tax hike, to $72.60 per barrel. A task force has been formed to study several aspects of Oregon’s bev-alc industry – chaired by Rep. Tawna Sanchez (D-Portland), the same legislator who introduced both bills that proposed tax increases in 2021 and 2023 – with discussions scheduled through this fall.
Oregon’s efforts came under fire earlier this year when The Oregonian reported that the Oregon Health Authority, one of the bill’s promoters, failed to publish results of a study that found higher alcohol taxes do not lead to declines in consumption.
In Colorado, SB24-181’s voter approval is underwater, according to a Nelson Research survey; 58% of respondents disapproved of the bill after learning “how the bill was structured to get around Taxpayers’ Bill of Rights (TABOR) provisions as well as its effect on Colorado’s economy,” according to a press release from the Colorado Brewers Guild.
Slightly more than one-quarter (26%) of respondents approved of the bill, according to the survey.
Opposition to the bill increased to 66% when respondents were told the bill would double or triple current tax rates for bev-alc manufacturers, and to 70.4% when respondents were told it would results in “over $25 million in lost retail sales” at “local restaurants, brew pubs and craft breweries,” according to the guild.
Nearly two-thirds (65%) of respondents agreed that “legislators should prioritize the way they currently spend their alcohol tax dollars instead of requiring more taxes.”’
Beer Institute president and CEO Brian Crawford testified to the Senate Finance Committee last week, and cited the Nelson Research survey.
“Voters are alarmed by its potential harm to Colorado’s economy, particularly when you factor in rising labor costs, continued high inflation,” he said. “It will disproportionately impact the tourism sector – local restaurants, brew pubs and craft breweries.”
Another Colorado bill (HB24-1373) would revoke spirits sales privileges for about 30 chain grocery stores, according to Colorado Politics. Those 30 stores hold liquor-licensed drug store licenses, and will be converted to fermented malt beverage and wine retailer licenses. The former license type predates Colorado’s conversion from an independent market that confined bev-alc sales to licensed liquor stores to one that permitted sales at grocery, mass retail and convenience stores, after the enactment of a law in 2016.
The transformation began in earnest in January 2019, when full strength beer sales began at chain stores, and continued in 2022, when voters passed Proposition 125 to allow wine sales in the same stores. That change caused liquor store sales to drop as much as 40% in 2023, according to the Colorado Independent Liquor Stores United, which supports HB24-1373, Colorado Politics reported.
In addition, HB24-1373 would ban alcoholic beverages stronger than 14% ABV in beer and wine-licensed retailers. Those stores would be prohibited from stacking bev-alc products on endcap displays, at the point of sale or anywhere beyond “a single location on the licensed premises.”
The bill would also ban wholesalers from offering “more favorable product, availability, information, pricing, deal quantities, fee structures, discounts, rebates, credits, coupons or other terms or conditions of sale” to one type of licensed retailer over another.
HB24-1373 was introduced in March, referred to the House Committee on Business Affairs and Labor on April 4, which referred it to the House Finance Committee on April 11.