STAND. COM. REP. NO. 1367

 

Honolulu, Hawaii

                   

 

RE:     H.B. No. 647

        H.D. 1

        S.D. 1

 

 

 

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2023

State of Hawaii

 

Sir:

 

     Your Committee on Commerce and Consumer Protection, to which was referred H.B. No. 647, 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 expand and make consistent the definition of "beer" under the State's liquor tax and liquor regulatory laws.

 

     Your Committee received testimony in support of this measure from Kauai Beer Company; Big Island Brewhaus; Honolulu Beerworks; Craft Ohana; Lanikai Brewing Company; Waikiki Brewing Company; Pacific Business Advocates, LLC; Kauai Island Brewing Company; and one individual.  Your Committee received comments on this measure from the Department of Taxation.

 

     Your Committee finds that under existing law, the term "beer" is defined as any beverage obtained by the alcoholic fermentation of barley or other grain, malt, and hops.  However, under federal Alcohol and Tobacco Tax and Trade Bureau regulations, both malt-based and sugar-based hard seltzers are considered "beer".  The federal definition of beer reflects current standards in the craft beer brewing industry, as craft brewers have created a wider range of beer styles with a variety of additional ingredients in their recipes including other types of grains as base ingredients, other fermentable sugar sources, and brewed hard seltzers.  This measure aligns the term "beer" as defined in State law to more closely follow the definition used for "beer" under the Internal Revenue Code, federal regulations, and standards in the craft beer brewing industry to promote expanded local production opportunities.

 

     Your Committee acknowledges the concerns raised in testimony that certain amendments made to the definition of "beer" by this measure are potentially ambiguous and unnecessarily limiting.  Your Committee also notes the concern raised in testimony that certain spirits based, ready-to-drink beverages containing a low percentage of alcohol by volume are taxed at a rate more than six times higher than malt beverages and beer with similar alcohol by volume.  Therefore, amendments to this measure are necessary to address these concerns.

 

     Accordingly, your Committee has amended this measure by:

 

     (1)  Inserting a definition of "low alcohol by volume spirits beverage";

 

     (2)  Clarifying that the definition of "beer" includes beer obtained by the fermentation of other fermentable sugar sources;

 

     (3)  Deleting the specific reference to "alcoholic seltzer beverages" from the definition of "beer";

 

     (4)  Inserting language establishing a tax for low alcohol by volume spirits beverages at a rate of $1.98 per wine gallon; and

 

     (5)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

 

     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. 647, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 647, H.D. 1, S.D. 1, and be referred to your Committees on Judiciary and Ways and Means.

 

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

 

 

 

________________________________

JARRETT KEOHOKALOLE, Chair