Distillers in Traverse City say cheers as they’re one step closer to competing with the big distilleries.
The Michigan Craft Distillers Association says the new bill will allow small distillers to get their products to market at more competitive prices. Owner of Grand Traverse Distillery Kent Rabish says most distillers purchase product from out-of-state then bring it in. He says the bill will help them and their customers.
“We can reduce our cost. We would lower the price to the consumer and still have more profit on our end,” Rabish explains.
House Bill 4842 was passed by the Michigan Senate Thursday and is currently awaiting approval before heading to Governor Whitmer’s desk for a signature. The bill will cut the current markup on local spirits in half. Representative Jack O’Malley says it’s time to show support to local distilleries.
“We’ve got a lot of distilleries, it’s your choice. You can use Michigan product or not. If you do you get a tax break and I think that just makes sense. Another way to stimulate two versions of an economy,” O’Malley says.
Rabish says the support is welcomed. They say the markup can be a lot for a small distillery like theirs. Distillers must sell their spirits to the state, where the state will than add a 65% markup. The bill would cut that percentage in half to 32.5%.
“So, to give you an idea of the impact. On a $30 bottle of vodka the state of Michigan gets approximately $14 and the manufacturer gets $16. If this gets signed that tax will go instead of $14 on a bottle, it’s going to go down to $7, that’s huge,” Rabish explains.
If the bill is signed by the Governor, it won’t just help the small distilleries, but Michigan farmers as well. The bill would make the sate more enticing for big distillers to operate out of, which in turn would mean more people buying products from Michigan farmers. Rabish says his fingers are crossed.
“I’ve been doing this 15 years. This will be the biggest change through the MLCC to help craft distilling. So, fingers crossed,” Rabish laughs.