SB977 would revise Hawaii’s liquor tax and licensing rules for class 18 small craft producer pub licensees. The bill creates a new definition for “low alcohol by volume spirits beverage” as an alcoholic beverage containing no more than 7% alcohol by volume, including distilled spirits mixed with other ingredients. It also amends the state’s liquor tax statute to set lower gallonage tax rates for certain products sold or used by class 18 licensees, including a specific rate for low alcohol by volume spirits beverages.
The bill also expands the production limits for small craft producer pub licensees. It increases the maximum annual amount of malt beverages that may be manufactured from 70,000 barrels to 175,000 barrels, while leaving the wine and alcohol limits unchanged. The bill preserves and restates the existing authority of these licensees to manufacture, sell, and distribute their products on-site, through producer-sealed packages, growlers, and certain direct sales channels, and it allows these activities at satellite locations under specified licensing and county-jurisdiction conditions. The act would take effect on July 1, 2025.
Impact
SB977 would amend chapters 244D and 281 of the Hawaii Revised Statutes by creating a new liquor category, adding a new tax rate for that category, and lowering the gallonage tax rates applicable to class 18 small craft producer pub licensees. It would also substantially increase the production cap for malt beverages for those licensees, which could affect local breweries and other small craft producers by allowing larger-scale operations and potentially reducing tax burdens on qualifying products. Counties and liquor commissions would continue to play a role in regulating satellite locations and retail conditions.
Sentiment
The bill appears generally favorable toward local craft alcohol producers and economic development. The stated legislative purpose is to support local manufacturing by reducing tax rates that are said to discourage production, and the bill’s structure reflects a pro-industry approach through lower taxes and higher production limits. No committee transcripts or recorded votes were provided, so there is no documented opposition or support beyond the bill text and its introduction.
Contention
The main policy tension is between supporting local small craft producers and preserving state liquor-tax revenue and regulatory oversight. The bill singles out class 18 small craft producer pub licensees for preferential tax treatment, which could raise concerns about unequal treatment among liquor license classes or reduced tax collections. The increase in the malt beverage production cap may also be contentious for stakeholders who worry that a higher threshold could blur the line between small craft producers and larger manufacturers, though the bill does not include recorded objections or amendments in the provided materials.