The Michigan Craft Distillers Association (MCDA) is one step closer to its goal of reducing the markup on its distilled spirits with news that HB 4842 has passed out of the Michigan Senate just this morning (Thursday, April 28, 2022) after being passed in the House in May, 2021.
This bill, which has received overwhelming bipartisan support in both chambers, would reduce the markup charged on a distilled spirits product from 65% to 32.5% with the usage of 40% Michigan agriculture in the distilling of the base spirit. Currently, a distiller selling their products in Michigan must first sell them to the State of Michigan (SOM), as they are the wholesaler of spirits. The State then applies a 65% markup to each bottle which grossly impacts small distillers based solely upon the scale at which they operate due to the inherent high cost to produce products at a smaller scale.
“HB 4842 is our signature piece of legislation; something MCDA has been working on for over five years,” says Jon O’Connor, MCDA President and co-owner of Long Road Distillers. “Having passed in both the Senate and the House, it will now be presented to the Governor for her consideration to sign into law. We want her to know how important this is to our industry and what a significant impact it will have for Michigan small distillers.”
The signing of HB 4842 into law will allow Small Distillers to get their products to market at more competitive prices, which will lead to significant additional growth within the craft sector while also allowing them to reinvest into their communities, create additional jobs and invest in people, real estate and equipment. It will also open up new markets for the sale of agricultural crops and the potential growth of additional commodities by producers. Combined, these efforts will be a driving force in economic impact in multiple sectors for the State.
“This bill represents an opportunity for the state of Michigan to become one of the most competitive states in our nation for craft distillers to sell their products while simultaneously bringing significant value-added opportunities for Michigan farmers and agricultural producers,” O’Connor says. “HB 4842 is an elegant solution to a complex problem, and one which we see having significant potential to grow and support both the distilling and agricultural sectors within our state.”
HB 4842 was first introduced May 13, 2021, by Reps. Outman, Rendon, Eisen, Hertel, Steenland, Liberati, Coleman, Garza, Witwer, Hoitenga, Beeler, Bellino, Bezotte, Beson, Martin, Ellison, Peterson, Hood, O’Malley, Paquette, Wakeman, Wendzel, Filler, Damoose, Whitsett, Brann, Jones and Yancey.
The Michigan Craft Distillers Association was formed in October 2014 as a non-profit organization charged with marketing the individual member businesses, their products and events, but also help bring a voice for the industry when it comes to legislative issues that affect the overall beverage industry.
MCDA currently represents 30 craft distilleries with nearly 50 unique tasting room locations around the state, as well as a handful of distillery in-planning members and nearly 30 allied members providing goods and services. Michigan’s craft distilling industry is growing at a rapid pace – ranking #9 in the nation in terms of overall number of distilleries according to annual data compiled by the American Craft Spirits Association.