Tax break bill could aid state’s craft distillers

EVERETT — Local craft liquors springing up on store shelves could get a little cheaper, and the distillers would have a better chance to survive and thrive, if a new bill is approved in Congress, proponents say.

The bill, sponsored by U.S. Rep. Rick Larsen, D-Wash., would cut federal taxes for distilleries that produce fewer than 60,000 gallons per year. Freshman Democratic Rep. Suzan DelBene, who represents eastern Snohomish County as part of the state’s 1st Congressional District, is a co-sponsor.

Small distilleries currently pay the same federal tax as larger distillery companies that mass produce their liquor, while small breweries and wineries pay a significantly smaller tax rate than their larger competitors, Larsen said.

It’s important here because Washington state now has more than 60 craft distilleries. That’s the most of any state in the nation, Larsen and DelBene said at a press conference at Bluewater Organic Distilling in Everett on Thursday.

A fifth of vodka made by Bluewater currently retails for about $29.50, owner John Lundin said. The change could knock between $2 and $3 off the price per fifth, he said. This would cut his costs at the outset and potentially increase sales, he said.

“The market even for high-quality products is very much price driven, and being more competitive and being able to present a high quality product at a lower price is huge for us,” Lundin said.

Craft distilled spirits are generally more expensive than the name brands.

“It’s like everything handmade — it tastes better, it costs more,” said David Hopkins, co-founder of Skip Rock Distillers of Snohomish. The company makes vodka, white whiskey and liqueurs.

Hopkins said the tax cut could help his business “tremendously.”

The bill would cut the current federal tax of $2.14 per fifth of hard liquor down to about 64 cents. Because the tax is levied at more than one distribution point along the way, the savings would likely be greater than the reduction of $1.50 per bottle, Lundin said.

Also, “it could mean the difference between signing a distribution deal or not, and this is really a volume game,” he said. “Our margins are always going to be tight. It’s a huge difference for us.”

Larsen said the matter came to his attention last year when he visited Bluewater, located next to the Scuttlebutt brewery on the Everett waterfront, on a tour of small businesses.

There are 12 small distilleries in his district, he said. The 2nd Congressional district stretches from the Snohomish County-King line to Bellingham along the water.

DelBene, of Medina, said there are nine craft distilleries in her district, which runs from King County to the Canadian border, east of Larsen’s.

Most of the craft distilleries fired up after a new state law in 2008 cut the annual license fee to $100 a year for small distilleries, compared to $2,000 for larger ones. A distillery must obtain at least half its ingredients from within the state to receive the break.

That’s all the more reason to help those businesses, said DelBene, former director of the state Department of Revenue.

“It’s the multiplier effect when many of the ingredients they’re using are from right here in Washington state,” she said.

Neither Larsen nor DelBene said they’d received much feedback from their colleagues in Congress regarding the prospects of the bill, but have no reason to believe it wouldn’t pass.

A similar bill recently failed in Congress but it set the threshold for small distillers at a higher volume, Larsen said.

He said it might take awhile to get the bill through.

“It takes longer to pass a bill than it does to make a bottle of gin here at Bluewater,” he said.

Bill Sheets: 425-339-3439; sheets@heraldnet.com.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

A firefighter stands in silence before a panel bearing the names of L. John Regelbrugge and Kris Regelbrugge during the ten-year remembrance of the Oso landslide on Friday, March 22, 2024, at the Oso Landslide Memorial in Oso, Washington. (Ryan Berry / The Herald)
‘Flood of emotions’ as Oso Landslide Memorial opens on 10th anniversary

Friends, family and first responders held a moment of silence at 10:37 a.m. at the new 2-acre memorial off Highway 530.

Julie Petersen poses for a photo with images of her sister Christina Jefferds and Jefferds’ grand daughter Sanoah Violet Huestis next to a memorial for Sanoah at her home on March 20, 2024 in Arlington, Washington. Peterson wears her sister’s favorite color and one of her bangles. (Annie Barker / The Herald)
‘It just all came down’: An oral history of the Oso mudslide

Ten years later, The Daily Herald spoke with dozens of people — first responders, family, survivors — touched by the deadliest slide in U.S. history.

Victims of the Oso mudslide on March 22, 2014. (Courtesy photos)
Remembering the 43 lives lost in the Oso mudslide

The slide wiped out a neighborhood along Highway 530 in 2014. “Even though you feel like you’re alone in your grief, you’re really not.”

Director Lucia Schmit, right, and Deputy Director Dara Salmon inside the Snohomish County Department of Emergency Management on Friday, March 8, 2024, in Everett, Washington. (Ryan Berry / The Herald)
How Oso slide changed local emergency response ‘on virtually every level’

“In a decade, we have just really, really advanced,” through hard-earned lessons applied to the pandemic, floods and opioids.

Ron and Gail Thompson at their home on Monday, March 4, 2024 in Oso, Washington. (Olivia Vanni / The Herald)
In shadow of scarred Oso hillside, mudslide’s wounds still feel fresh

Locals reflected on living with grief and finding meaning in the wake of a catastrophe “nothing like you can ever imagine” in 2014.

Kelli Littlejohn, who was 11 when her older sister Melissa Lee was murdered, speaks to a group of investigators and deputies to thank them for bringing closure to her family after over 30 years on Thursday, March 28, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
‘She can rest in peace’: Jury convicts Bothell man in 1993 killing

Even after police arrested Alan Dean in 2020, it was unclear if he would stand trial. He was convicted Thursday in the murder of Melissa Lee, 15.

Ariel Garcia, 4, was last seen Wednesday morning in an apartment in the 4800 block of Vesper Dr. (Photo provided by Everett Police)
Everett police searching for missing child, 4

Ariel Garcia was last seen Wednesday at an apartment in the 4800 block of Vesper Drive. The child was missing under “suspicious circumstances.”

The rezoned property, seen here from the Hillside Vista luxury development, is surrounded on two sides by modern neighborhoods Monday, March 25, 2024, in Lake Stevens, Washington. (Ryan Berry / The Herald)
Despite petition, Lake Stevens OKs rezone for new 96-home development

The change faced resistance from some residents, who worried about the effects of more density in the neighborhood.

Rep. Suzan DelBene, left, introduces Xichitl Torres Small, center, Undersecretary for Rural Development with the U.S. Department of Agriculture during a talk at Thomas Family Farms on Monday, April 3, 2023, in Snohomish, Washington. (Olivia Vanni / The Herald)
Under new federal program, Washingtonians can file taxes for free

At a press conference Wednesday, U.S. Rep. Suzan DelBene called the Direct File program safe, easy and secure.

Former Snohomish County sheriff’s deputy Jeremie Zeller appears in court for sentencing on multiple counts of misdemeanor theft Wednesday, March 27, 2024, at Snohomish County Superior Court in Everett, Washington. (Ryan Berry / The Herald)
Ex-sheriff’s deputy sentenced to 1 week of jail time for hardware theft

Jeremie Zeller, 47, stole merchandise from Home Depot in south Everett, where he worked overtime as a security guard.

Everett
11 months later, Lake Stevens man charged in fatal Casino Road shooting

Malik Fulson is accused of shooting Joseph Haderlie to death in the parking lot at the Crystal Springs Apartments last April.

T.J. Peters testifies during the murder trial of Alan Dean at the Snohomish County Courthouse on Tuesday, March 26, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Bothell cold case trial now in jury’s hands

In court this week, the ex-boyfriend of Melissa Lee denied any role in her death. The defendant, Alan Dean, didn’t testify.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.