Small businesses say change will make expansion more accessible
Tacoma, Washington – Senator Maria Cantwell (D-WA) has signed on to the first major piece of legislation to support US kombucha businesses, including over thirty businesses in Washington state: a bill that would protect kombucha with up to 1.25% alcohol by volume from being categorized as beer in the tax code.
Kombucha brewers, hit hard by COVID-19 restaurant closures, have been lobbying for the change for several years but feel an increased urgency in the wake of the pandemic– increasing the alcohol-by-volume allows for easier and broader distribution of the live beverage.
The KOMBUCHA Act, “Keeping Our Manufacturers from Being Unfairly Taxed while Championing Health Act,” proposes to amend the Internal Revenue Code of 1986 to increase the taxable alcohol-by-volume (ABV) threshold for kombucha from 0.5% to 1.25%.
While the ABV for traditionally fermented kombucha averages 0.5%, it fluctuates slightly due to the nature of living cultures and is difficult to keep at precise levels. This issue has forced small businesses to develop costly techniques and shorten shelf life to comply with the limit, which was set during Prohibition and clashes with globally accepted levels of trace alcohol ranging from 1-2%. Many fermented foods have such variability of trace alcohols and are not subject to such regulation, proponents of the bill say.
This is the second year Senator Cantwell has cosponsored the bill; introduced by Rep. Earl Blumenauer (D-OR-3) and Sen. Ron Wyden (D-OR), it has received strong bipartisan support and no opposition but has faced challenges finding a vehicle for its passage. Brewers are hoping the need to rebuild local economies in the wake of the pandemic will add urgency to the matter.
A group of kombucha companies met with the Senator’s office in March to discuss the issue and the shifts they have had to make to stay in business this year. If the KOMBUCHA Act passes, says Lowell Profit of Glorybucha in Arlington, “We can finally be assured of the hope that has come to change our industry forever.”
Julie Davidson, who started Komadre Kombucha during the pandemic, faced major challenges due to the strict regulations: “I appreciate Sen. Cantwell’s support of the KOMBUCHA Act and look forward to a future when kombucha producers can thrive, unfettered by burdensome tax codes and other barriers to small businesses that support community wellbeing.”
The bill is currently being reviewed by the Senate Finance Committee.