An announcement came at the federal level last week that an agreement between the European Union and the U.S. was reached to postpone plans in Europe to raise additional tariffs on American whiskeys among other items such as boats, motorcycles, etc.
House Licensing and Occupations Chairman Adam Koenig (R-Erlanger) recently sat down with The Bottom Line to discuss what that move means for Kentucky distillers and further discuss key bills related to Kentucky’s signature bourbon industry that have become law since 2020, including a law that made it legal for Kentuckians to receive alcohol directly shipped to their homes.
“Bourbon has become a worldwide spirit; something people are interested in not just in our country but all over the world,” Koenig said. “And when you slap an additional 25-percent tariff on it, that obviously pushes down demand, especially when you’re competing with scotch and other spirits. Many of our distilleries have reinvested in their plants; expanding to new brands and building new rickhouses. You don’t necessarily plan for those new costs in your business, so it is a problem that needs to be addressed. We’re glad they have decided to delay the additional 25-percent tariff, but hopefully we can get to a point where we eliminate the initial 25-percent tariff that exists now.”
“In 2020 we went, as I like to say, from zero to 100 mph. You can do spirits, you can do wine, you can do beer, pretty much we treat it all the same, which is something we’ve worked on since I’ve become chairman of Licensing and Occupations five years ago, and it was a complicated bill, it was one of the harder things I’ve done,” Koenig said.
He added 15 states around the country are working on legislation to allow the shipment of spirits and he is excited to see opportunities opening up around the country for the bourbon industry and other providers.
Following the legislation in 2020 to allow the shipment, barriers to full success of this idea became evident which is what led to Koenig filing House Bill 415 to serve a clean up legislation and make the shipment of spirits as effective as possible. He said one of the biggest barriers was not allowing the use of fulfillment centers, which is used in ordering wine from someplace like Napa Valley. Most of those companies contract with a third party fulfillment center to ship out product. However, the ABC didn’t think that it was legal under the original legislation so it was fixed in the new law.
“The regulators wanted to define what a producer was from our end, and every state has somewhat different rules and regulations as to what is and isn’t a producer, and we basically said whatever that state says a producer is, is good enough for us because we don’t want those states telling us what is or isn’t a producer in our own state, and we’re not going to do that to them,” Koenig said.
Koenig also mentioned the passage of Senate Bill 68 to help with education in the field, making it easier for universities to operate small distilleries for the purpose of teaching classes on the craft.
“It’s important to make sure that, especially if we are going to keep Kentucky the hub of bourbon distilling for the future, then we need to have a program to create the next level of bourbon distilling employees here in Kentucky,” he said.
Finally, Kentucky’s new law allowing to-go alcoholic beverages as a continuation of a policy used throughout the pandemic was another success touted by Koenig.