STAND. COM. REP. NO. 899

Honolulu, Hawaii

, 2025

RE: H.B. No. 1370

H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 1370, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose of this measure is to amend the definition of draft beer, for purposes of the Liquor Tax Law, to mean beer in an individual container of five gallons or more.

Your Committee received testimony in support of this measure from the Maui Brewing Co.; Hana Koa Brewing Co.; Kauai Beer Company; Lanikai Brewing Company; Honolulu Beerworks; Kauaʻi Island Brewing Company, LLC; Napali Brewing Company; Howzit Brewing; Brewers Association; Ola Brew Co.; Big Island Brewhaus; and two individuals. Your Committee received comments on this measure from the Department of Taxation.

Your Committee finds that the classification of draft beer under the Liquor Tax Law is inconsistent with the existing industry practice. The common container sizes for draught beer are 15.5-gallon kegs, 13.2-gallon kegs, and 5.16-gallon kegs. In the 1990s, 7.75-gallon kegs were popular but have since dwindled in popularity. Now, businesses prefer to either have the bigger size or smaller size, not the intermediate option.

Your Committee further finds that most restaurants and bars in the State have limited space and typically order individual container sizes of 5.16-gallon kegs. Many establishments can only accommodate the smaller kegs, including Waikiki hotel bars and pool bars. This measure amends the definition of draft beer under the Liquor Tax Law to conform with industry practices, which will promote compliance, reduce administrative burdens, and foster industry growth among local brewers, distillers, and small producers.

Your Committee notes the request by the Department of Taxation to have this measure take effect January 1, 2026, to provide sufficient time for the Department to make form instruction changes and provide notice to taxpayers.

As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1370, H.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,

____________________________

SCOT Z. MATAYOSHI, Chair