FRANKFORT, Ky. — A comprehensive bill on alcoholic beverages, cannabis-infused beverages and other intoxicating products advanced off the House floor on Tuesday.
Rep. Matthew Koch (R-Paris), who is one of the sponsors of House Bill 9, said the legislation would streamline the regulatory and taxation framework for intoxicating products.
“That includes alcohol, cannabis-infused beverages, hemp-derived cannabinoids and products like kratom, all while laying out the framework to capture any new and emerging products as they come into the marketplace,” Koch said.
Although HB 9 is revamping the tax framework for intoxicating products, Koch said the bill is designed to be “revenue neutral-ish” when it comes to alcohol.
“We eliminated the cumbersome structure of the existing alcohol tax system to assist us with compliance while maintaining the revenue neutrality,” he added.
If HB 9 becomes a law, Kentucky would be the first state in the nation to establish a regulatory fee based on the pure alcohol content, Koch said.
The legislation would also establish a new 4% regulatory retail licensing fee on alcoholic and cannabis-infused beverages beginning July 1, 2027. To make the bill revenue neutral, Koch said other taxes were eliminated.
Additionally, HB 9 would streamline the local regulatory license fee collected by cities and counties and implement a 5% cap within a year, Koch said.
Cities and counties that drop the fee to 3% or lower will be able to use the funds for any emergency services and not just alcohol-related emergency services, he added.
As for the bill’s provisions on hemp, Koch said there is language to ensure proper lab testing and labeling on the products so hemp can be taxed properly.
Another major aspect of HB 9 would strengthen the penalties on retailers who sell alcohol to minors.
“Three strikes within two years at the same retail location is a lifetime ban on holding that alcohol license,” Koch said.
During debate on the legislation, Rep. Lisa Willner (D-Louisville) asked Koch if he could clarify who would be paying the taxes on the products.
Koch said who pays the taxes will not change under HB 9.
“(It’s) the same people who have always paid the tax on these products, and that’s all of us. That’s anybody that purchases alcohol,” Koch said.
Willner said she doesn’t think it is “sound fiscal policy” to continue to pass expenses on to consumers, so she would be voting against HB 9.
In answering a question on revenue from Rep. Adrielle Camuel (D-Lexington), Rep. Jason Petrie (R-Elkton) said the alcohol industry generates around $170 million in revenue.
Petrie, who is a co-sponsor of HB 9, reiterated Koch’s earlier statement that the goal of the legislation is not to gain or lose revenue, but to remain “revenue neutral-ish.”
“This is a realignment of taxes, not to shift it to consumers, because consumers are paying all the taxes now,” he said. “It’s just written into the price. This is just a realignment of where it’s collected.”
The Kentucky House passed HB 9 by a 63-31 vote. It is now before the Senate for consideration.
--30--
“Capitol Update” is a non-partisan publication of the Legislative Research Commission
Comments
