Proos calls on stakeholders to find revenue neutral solution for craft distillers

LANSING, Mich. — Sen. John Proos recently met with representatives from Michigan’s up-and-coming spirit producers as well as state government officials to discuss legislation that seeks to remedy issues facing the industry in the state.

Senate Bill 448, sponsored by Proos, would provide a tax cut for distillers on the first 60,000 gallons of spirits manufactured in a calendar year, with each bottle beyond 60,000 gallons being subject to the current requirements.

“The law would operate in a similar fashion to the tax credit currently available to eligible brewers and brewpubs,” said Proos, R-St. Joseph. “Under current state law, small-volume or microdistillers are burdened with regulations and a tax system that treats them the same as massive, multinational corporations.”

Proos is hoping to find a solution that would use new revenue brought in by the blossoming industry to provide tax relief for distillers.

Other states have updated their craft distilling laws to allow for on-site retail sales and a much friendlier tax system. Proos argues Michigan’s tax has had a negative impact on smaller operations, citing a previous discussion with stakeholders who claimed the state taxes them at $15 per bottle, while the same bottle sold in Indiana is taxed at 53 cents.

“Michigan’s rate is 28 times higher and therefore 28 times less competitive,” Proos said. “We need to be competing with other states and giving our industries room to grow, not stifle them with burdensome red tape. That’s not how we do business in Michigan.”

Traverse City Whiskey Company co-owner Jared Rapp said, “Senator Proos’ bill will provide badly needed relief that distillers require to support the growth and success of an industry still in its infancy. We appreciate the hard work and long hours invested by the Legislature and the Michigan Liquor Control Commission to help these small businesses thrive throughout the state.”

Proos has been working closely for some time with industry representatives and the Liquor Control Commission to mediate an agreeable solution that would even the field and help the small distillery industry flourish in Michigan.

Journeyman Distillery owner and operator Bill Welter testified earlier this year before the Senate Committee on Regulatory Reform on this matter.

“While Michigan had a clear competitive advantage, it has since evaporated as Indiana and other states have updated their craft distilling laws to allow for on-site retail sales while also having much lower taxes,” Welter said. “Michigan’s tax has an incredible impact on us. We pay the state a tax of more than $15 per bottle on our best-selling product in Michigan. That same bottle sold in Indiana is taxed at 53 cents per bottle. Michigan’s rate is 28 times higher.”

“This is about helping an up-and-coming and lucrative industry thrive in Michigan while remaining revenue neutral,” Proos said. “That means more jobs, economic growth, increased tax revenues and more made-in-Michigan products.”

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Editor’s note: Audio comments from Proos will be available later on the senator’s website at www.SenatorJohnProos.com/audio.