The Michigan Craft Distillers Association thanks U.S. Senators Gary Peters (D-MI), Dan Sullivan (R-AK) and Kirsten Gillibrand (D-NY) for introducing bipartisan legislation this week that would reduce the federal excise tax from $13.50 to $2.70 per proof gallon on the first 100,000 gallons of production per year. This reduction would directly affect every Michigan Small Distiller, who is limited by the State to no more than 60,000 gallons of production.
“Although the number of small distillers in Michigan have increased over the past 10 years, our members have struggled to build profitable businesses in an industry that requires significant up-front investment in buildings, equipment and aging of their products before going to market,” says Don Coe of Black Star Farms, secretary of the Michigan Craft Distillers Association. “Federal excise taxes are a considerable component of our member's costs.”
The combination of federal and state taxes and markups make distilled spirits the most highly-taxed consumer products in this country. Michigan is an extreme example as distilled spirits are taxed and marked up at over six times the rate of wine and beer, and represent over 60 percent of the consumer retail price.
“Any relief that we receive in federal excise tax can be directly invested in the growth of our businesses with resulting job creation and purchases of goods and services or helping to make our products more competitive in the market place,” Coe says.
According to Senator Peters’ office, estimates show that the growing spirit industry could add up to $400 million to Michigan’s economy, and many Michigan distilleries utilize locally-grown grains and fruits for their products, tapping into the million-dollar agricultural industry as well. Across the country, the distilled spirits industry directly employs over 800,000 Americans directly and supports over 1.2 million jobs.
The Michigan Craft Distillers Association was formed in 2014 to organize the growing number of spirit producers in the state, to serve as a united voice on legislative, promotional and business levels. Michigan currently has the third highest number of craft distilleries in the country, with nearly 40 across the state, many of which opened in recent years.
Official Statement from U.S. Senator Gary Peters' office: