STAND. COM. REP. NO. 1338

Honolulu, Hawaii

RE: H.B. No. 939

H.D. 1

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

Your Committee on Commerce and Consumer Protection, to which was referred H.B. No. 939, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO ALCOHOL,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Define "low alcohol by volume spirits beverage"; and

(2) Establish a liquor tax rate for low alcohol by volume spirits beverages at a rate of $0.93 per wine gallon.

Your Committee received testimony in support of this measure from Lanikai Brewing Co.; Kauai Beer Company; Kōloa Rum Co.; Johnson Brothers of Hawaii, Inc.; Maui Brewing Co.; Big Island Brewhaus; Hanalei Spirits Distillery Corp.; and Kona Brewing Hawaii.

Your Committee received testimony in opposition to this measure from the Hawaiʻi Alcohol Policy Alliance, Wine Institute, and Beer Institute.

Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that the tax rate for spirits based low-proof, ready-to-drink beverages under existing law is more than six times higher than the tax rate for malt beverages and beer with similar alcohol by volume. These beverages are currently taxed at the same rate as higher proof distilled spirits, despite having alcohol content more comparable to beer, wine, and cooler beverages. This measure ensures regulatory consistency and supports industry growth by creating a new tax category for low alcohol by volume spirits beverages and applying a more appropriate tax rate for low-proof, ready-to-drink beverages that fairly aligns with other similar alcoholic beverages.

Your Committee has amended this measure by changing the definition of "low alcohol by volume spirits beverage" to mean any alcoholic beverage containing no more than seven, rather than five, percent alcohol by volume.

As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 939, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 939, H.D. 1, S.D. 1, and be referred to your Committee on Ways and Means.

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

________________________________

JARRETT KEOHOKALOLE, Chair