Twelve Indiana distilleries have sent a letter to Indiana’s congressional delegation, emphasizing the need for additional economic relief to distilleries facing financial hardship. According to advocacy group Distilled Spirits Council of the United States, craft distillers have faced major challenges throughout 2020 because of the COVID-19 pandemic. Now, they say they are facing the threat of a 400% federal tax increase if Congress doesn’t pass the Craft Beverage Modernization & Tax Reform Act by the end of the year.
In an interview with Inside INdiana Business, Huber’s Starlight Distillery co-owner Dana Huber says passing the bill is crucial to ensuring the livelihood and longevity of Hoosier distilleries, wineries and craft beverage operations.
“If the increase were to take effect, it hinders our ability to continue to expand our bourbon production,” said Huber. “We have plans to continue to build a fourth rickhouse. We have plans to expand the plant with more efficiencies in our equipment, with new bottling lines, with employees. By having a tax increase, it takes away our ability to expand our footprint.”
Starlight Distillery, which is located in the town of Borden in Clark County, is a seventh-generation farm with over 80 acres of vineyards that produces spirits and wine.
Huber says farms and agricultural businesses would also be impacted by the increase. Many of Indiana’s distillers source locally from farmers for grain and other ingredients not grown by the distillery.
The letter was sent from distilleries around the state, including:
- 18th Street Distillery in Hammond
- 8th Day Distillery in Indianapolis
- Bear Wallow Distillery in Nashville
- Cardinal Spirits in Bloomington
- Cedar Creek Distillery in Martinsville
- Indiana Whiskey Co. in South Bend
- Hard Truth Distilling Co. in Nashville
- Old 55 Distillery in Newtown
- Spirits of French Lick/French Lick Wine & Spirits Inc. in West Baden Springs
- Starlight Distillery in Borden
- Sun King Spirits in Carmel
- West Fork Whiskey Co. in Indianapolis
The letter notes that Indiana’s distilled spirits industry had been flourishing prior to COVID-19, supporting more than 25,000 jobs and $2.5 billion in economic activity in 2018.
“Due to the impact of the pandemic, many Indiana distilleries have been forced to furlough or lay off employees, and some are facing the hard decision of whether to close their doors permanently,” the letter states.
According to a study by the DISCUS and American Distilling Institute, craft distillers have seen 41% of their revenue disappear during the COVID-19 pandemic.
“Craft distillers are a special community of men and women who entered this industry with a passion for spirits and a dream to build a craft distillery in their local town,” said Erik Owens, president of the ADI. “For many, these dreams have been shattered in the blink of an eye. These small businesses are going to need the continued support from federal and state legislators to weather this unpredictable storm.”
The distilleries are specifically urging Congress to support business recovery by passing the act, supporting the RESTAURANTS Act, and seeking the suspension of tariffs on distilled spirits.
Huber’s Starlight Distillery co-owner Dana Huber says the tax increase would create additional financial hardships and would hinder the business’s expansion plans.