Whitmer signs drinks to-go into law, tax drop on to-go cocktails

click to enlarge Gov. Whitmer signing bills, which will make it easier for distillers and retailers to distribute and sell mixed spirit drinks. - State of Michigan
State of Michigan
Gov. Whitmer signing bills, which will make it easier for distillers and retailers to distribute and sell mixed spirit drinks.

Gov. Gretchen Whitmer signed several bills into law Monday aimed to ease the distribution of mixed spirit drinks.

"This is a great example of bipartisan legislation that will create jobs and help our small businesses grow, and shows what we can do when we work together," Whitmer said in a statement. “Distillers are a growing industry in Michigan, and these bills make it easier for distillers to distribute their products. These bills will make canned mixed spirits more affordable and accessible, creating jobs and helping Michigan small businesses.”

Senate Bill (SB) 141, SB 142, SB 143 and SB 144 lift allowed alcohol content in Ready To Drink (RTD) from 10% to 13.5% alcohol-by-volume. Under the new law, the tax rate on RTD cocktails will drop from $0.48 to $0.30/liter.

SB 142 allow mixed spirit drink manufacturers to sell and deliver mixed spirit drinks to Michigan retailers if certain conditions are met. Sales to wholesalers and retailers are limited to 31,000 gallons per year.

SB 144 requires certain licensees to pay a charge per vehicle used for deliveries to retailers, and revise the definitions of several terms. The law creates an outstate self-distributor license with a $300 annual fee.

The bill establishes annual license fees of $50 per vehicle used by small winemakers, mixed spirit drink manufacturers, qualified small distillers, and outstate self-distributors for delivering products to retailers. Fee revenue will be deposited in the Michigan Craft Beverage Council Fund and would be used by the Michigan Department of Agriculture.

The Department of Licensing and Regulatory Affairs projects the tax rate drop in SB 144 will decrease tax revenue by $400,000, based on 2018 tax collection revenue. However, the bill also expands the definition of “mixed sprit drink,” which will increase tax revenues from canned cocktails to partially offset the loss.

“Ready-to-drink cocktails saw a huge increase in 2020 and show no signs of slowing down,” David Wojnar, Distilled Spirits Council of the United States senior vice president, said in a statement. “Expanding the outlets where spirits-based RTDs can be sold will increase consumer convenience and provide additional revenue to the state. Consumers will also benefit from the reduced tax rate for these popular products.”

When COVID-19 and state laws shut down indoor service at bars, Michigan lawmakers let customers take drinks to-go and even allowed “social districts” for outdoor alcohol consumption.

“Ready-to-drink cocktails have experienced massive growth in the marketplace over the last few years and this legislation is a critical piece in ensuring that these products are able to compete on a level playing field,” Sen. Curt VanderWall, R-Ludington, said in a statement. “These bills help our local distillers by removing tax barriers and giving them the ability to get their products in front of consumers easily and quickly.”

The bill package was bipartisan. Sen Jeremy Moss, D-Southfield said the state needed to “catch up” with alcohol innovation.

“I was proud to work on this bipartisan legislation that removes burdensome barriers to enter into the market while still safely regulating these products for consumers,” Moss said in a statement. “Cheers to Gov. Whitmer for signing our bills into law.”

This story was originally published by The Center Square. It is republished here with permission.

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