SB 5511
In CommitteeSenate
Low-proof alcohol beverages
Regarding low-proof alcoholic beverages.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill creates a new category called 'low-proof beverages' and imposes a $2.50-per-gallon tax on their sale and distribution in Washington. It also adjusts licensing and tax rules to treat low-proof beverages separately from other alcoholic beverages like spirits, wine, and malt liquor.
- Creates a new definition of 'low-proof beverage' as a beverage ≤16 ounces, containing >0.5% and <7% alcohol by volume, excluding wine, malt beverages, and malt liquor.
- Imposes a $2.50-per-gallon tax on the distribution and sale of low-proof beverages, payable by spirits distributors, distilleries, or craft distilleries (including those selling directly to consumers).
- Exempts low-proof beverages from the standard spirits license fee (17% of sales revenue) for spirits retailers and from the spirits distributor license fee structure.
- Clarifies that low-proof beverages are excluded from the definition of 'spirits' for the purposes of state retail and distributor taxes under chapter 82.08 RCW.
- Requires distilleries and spirits distributors to collect and remit the low-proof beverage tax, with specific rules for self-distributing producers and direct-to-consumer sales.
Who is affected
- Retailers and distilleries selling low-proof beverages — Retailers selling low-proof beverages (e.g., grocery stores, specialty shops, distilleries with retail licenses) will be required to collect and remit a $2.50-per-gallon tax and may be subject to new licensing rules if they sell low-proof beverages.
- Distilleries and craft distilleries — Distilleries and craft distilleries that produce or self-distribute low-proof beverages must pay the $2.50-per-gallon tax on their sales, including direct-to-consumer sales.
- Consumers purchasing low-proof beverages — Consumers may see higher prices for low-proof beverages due to the new $2.50-per-gallon tax, though the tax is levied on distributors and distilleries, not directly on buyers.
- State government (Liquor and Cannabis Board and state treasury) — The state will gain new tax revenue from low-proof beverage sales, and the Liquor and Cannabis Board will gain authority to regulate these products more fully.
Pro/Con Analysis
Potential Benefits (5)
The $2.50-per-gallon tax is expected to generate new state revenue, which could support public services such as substance use disorder treatment, enforcement, or infrastructure—though the bill does not specify dedicated use of the funds.
FinancialRef: Sec. 3(1)Exempting low-proof beverages from the 17% spirits license fee and distributor fee structure reduces regulatory costs for producers and distributors of these products, potentially encouraging innovation and market entry in the growing RTD (ready-to-drink) sector.
Business & EmploymentRef: Sec. 2(4)(b) & Sec. 4(3)(e)By defining low-proof beverages separately and taxing them at a flat rate rather than as spirits, the bill may help distinguish low-ABV products from high-ABV spirits in enforcement and labeling, supporting responsible consumption messaging.
Public SafetyRef: Sec. 3(1)The explicit exclusion of low-proof beverages from the statutory definition of 'spirits' for tax purposes provides regulatory clarity and reduces compliance uncertainty for producers and retailers.
Business & EmploymentRef: Sec. 5(10)(b)The bill clarifies tax collection responsibilities for low-proof beverages across distribution channels—including direct-to-consumer—reducing enforcement ambiguity and potential revenue leakage.
Local GovernmentRef: Sec. 3(2)-(4)
Potential Concerns (5)
The $2.50-per-gallon tax on low-proof beverages will likely be passed through to consumers in the form of higher prices, increasing the cost of everyday alcoholic beverages like hard seltzers, RTDs, and low-ABV cocktails sold in grocery and convenience stores.
FinancialRef: Sec. 3(1)The exemption from the standard 17% spirits license fee for low-proof beverage sales reduces regulatory burden for distilleries and distributors, but the new per-gallon tax may disproportionately impact small producers with lower margins and limited pricing power.
Business & EmploymentRef: Sec. 2(4)(b) & Sec. 3(2)-(4)The tax applies to self-distributing distilleries and direct-to-consumer sales, meaning small producers who rely on tasting room sales (a key revenue stream for craft producers) will face a new cost that larger distributors may absorb more easily due to scale.
Business & EmploymentRef: Sec. 3(2)-(4)The exclusion of low-proof beverages from the spirits distributor license fee structure (which is calculated as a percentage of sales) reduces administrative complexity for distributors, but the state loses potential revenue that could have been used to fund local enforcement and regulatory oversight.
Local GovernmentRef: Sec. 4(3)(e)By excluding low-proof beverages from the definition of 'spirits' for retail and distributor tax purposes, the bill creates a tax advantage for low-proof products relative to higher-proof spirits, potentially distorting market competition in favor of larger beverage conglomerates that can produce low-ABV RTDs at scale.
FinancialRef: Sec. 5(10)(b)
Who Is Most Affected
Small distilleries and craft producers who sell low-proof beverages directly to consumers (e.g., at tasting rooms) will face a new $2.50/gallon tax on those sales, which may reduce margins on a high-margin product line. However, they benefit from exemption from the 17% spirits license fee on those same sales.
Large beverage conglomerates (e.g., Molson Coors, Constellation Brands) that produce and distribute low-ABV RTDs at scale will benefit from the flat $2.50/gallon tax (which is lower than the effective tax on spirits per unit of alcohol) and the exemption from percentage-based licensing fees. They have the scale to absorb or pass on costs more easily than small producers.
Grocery stores, convenience stores, and pharmacies that sell low-proof beverages will collect and remit the tax but face no change in licensing fees for those products. Consumers may see modest price increases, but the impact is broadly shared across income levels.
Consumers of low-proof beverages—particularly those on fixed or lower incomes—may face modest price increases due to the tax pass-through. However, the tax is not regressive in structure, and the overall impact is small relative to household budgets.
The state treasury gains new revenue, and the Liquor and Cannabis Board gains clearer regulatory authority over a growing product category. However, without dedicated funding language, the fiscal benefit is general and not targeted to specific public services.