Washington alcohol distilleries may soon see tax increase of nearly 400%

Alcohol distilleries in Washington are worried that they could soon see a drastic tax increase of about 400%. That's because a law lowering the amount owed is set to expire at the end of the year.

Back in 2017, Congress approved tax relief for distilleries so their excise tax would lower from $2.70 to 54 cents.

Without it, distillers are anticipating the worst.

“I’m either going to have to stop distribution, do it myself, or raise prices, and/or lay people off,” said Kim Karrick, owner of Scratch Distillery in Edmonds.

Karrick doesn't sugarcoat the issues facing her hard liquor industry.

“There’s no more money in the well,” she said.

Her distillery makes a variety of drinks, mainly gin, but she says her business is in jeopardy because of a potential end to that tax relief.

“It’s a hard industry,” Karrick said. “It’s very expensive but I’m trying to make it from scratch and support local farmers, all that. Yet at the same time be as competitive as I can with my price.”

She and other distillers say without this tax relief, competitive prices can be difficult.

The original relief, before 2017, was given to distilleries that produced at least 100,000 proof gallons in a year.

While that's easy for larger brands, smaller distilleries, like Scratch and others in Washington, make about a tenth of that number.

“You went from paying a lot per bottle to paying 54 cents,” said Nathan Kaiser, owner of 2bar Spirits in SoDo.

According to Kaiser, 2bar is one of the more sizeable distilleries in Washington, but he can only produce about 9,000 proof gallons.

“So, it will quintuple in total cost,” Kaiser said. “We can’t really past that cost on to the customer.”

Their hope is that congress will be able to extend the relief past New Year's Eve.

But with impeachment proceedings looming, they say the government has about a week to get the deal done.

“We really have five days to make this happen so we’re in the eleventh hour,” Kaiser said.

“We’re just trying to do the same thing: trying to keep our heads above water,” Karrick added.

If they don't get this tax relief approved by the end of the year, Kaiser said he anticipates 30% of distilleries across the United States will go under.