Michigan Bill Would Give Big Boost to Distilleries Using Local Ingredients

A new piece of legislation may give a big boost to Michigan’s craft distilleries.

Senate Bill 349 would allow liquor makers to get a higher wholesale price if they source more than 40% of their grains from Michigan farmers.

Currently, the state is the only wholesaler of distilled liquor, and they sell products to retailers at uniform prices. Michigan has some of the highest tax rates on products like vodka in the country.

“Our tax structure is less favorable than beer, wine and cannabis so that does put us in kind of an interesting position,” said Heidi Bolger, of Iron Fish Distillery in Thompsonville.

Iron Fish makes vodka, bourbon and other spirit products, and they source all of their wheat, rye, barley and grains from local farms. They say this bill would be a huge boost to their bottom line.

“It would definitely be significant for us so to the extent that we could have better margins and hire more people and do more things to grow this business,” said Bolger.

Grand Traverse Distillery is another Northern Michigan company producing, bottling and distilling all their own alcoholic products. Founder Kent Rabish says the bill would encourage other distilleries to think local.

“A lot of companies are buying product out of state, then they bring it in and bottle it. There’s a financial incentive, now, not to do that,” said Rabish.

Bill 349 passed the Senate 27-9 in November, and is currently being reviewed by the House.

Rabish is so confident the bill will pass, he’s invested in a new machine that he plans to use to process local grains. He anticipates that more companies will be interested in sourcing local if there is a financial incentive to do so.

“They get the tax benefit, and for us, we get busier,” said Rabish.

Some of his vodka sells for $30 a bottle. Currently, $14 of that product go straight to state taxes. If the bill passes, Rabish says he’d only be taxed $7.

He sells hundreds of bottles a year, and the bill would help his bottom line a lot.

Bill sponsor Senator Curt VanderWall says the legislation is also going to help farmers a lot. He says it’s a win for everybody.

“We’re going to see a net increase because we’re going to receive more dollars from alcohol that’s being made in Michigan and now selling more to the state of Michigan,” said Sen. VanderWall. “It benefits our agriculture side, and it develops a brand new distribution system on craft liquor.”