RELATING TO ALCOHOL.

HB1371

HOUSE OF REPRESENTATIVES

H.B. NO.

1371

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

RELATING
TO ALCOHOL
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION 1.
�
The
legislature finds that the existing definitions of alcoholic beverages under
section 244D-1, Hawaii Revised Statutes, are outdated and do not align with the
modern marketplace.
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Low-alcohol
beverages differ significantly from high-proof spirits.
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Low-alcohol beverages are ready-to-drink and
often feature an alcohol content comparable to beer or wine.
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Conversely, high-proof spirits are
substantially stronger.
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The legislature
finds that these differences and their respective impacts warrant distinct
regulatory treatment.
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Currently, all
beverages containing distilled spirits are taxed as if they consist entirely of
alcohol, regardless of actual alcohol content.
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In this context, a beverage made with one ounce of spirits and eleven
ounces of water or juice is taxed as one hundred per cent alcohol.

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The legislature further finds that this
inequitable tax treatment discourages local distilleries from producing
ready-to-drink cocktails, despite the growing demand for these products.
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While some companies on the continental
United States export small volumes of ready-to-drink cocktails to the State,
local production remains rare, largely due to the tax disparity.

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The legislature also finds that taxing
low-alcohol beverages at the same rate as high-proof spirits undermines the
intent of the State's tax system.

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Accordingly, the purpose of this Act is to
establish a clear definition of "low alcohol by volume spirits
beverage" and a corresponding tax rate lower than that of distilled
spirits, to encourage local distilleries to produce low-alcohol beverages and
enable fairer competition in the marketplace.

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SECTION

2
.
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Section 244D-1,
Hawaii Revised Statutes, is amended by adding a new definition to be
appropriately inserted and to read as follows:

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"
"Low
alcohol by volume spirits beverage" means any alcoholic beverage
containing not more than ten per cent alcohol by volume and includes distilled
spirits mixed with other ingredients, including both nonalcohol and alcohol
components.
"

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SECTION

3
.
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Section 244D-4,
Hawaii Revised Statutes, is amended by amending subsection (a) to read as
follows:

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"
(a)
�
Every person who sells or uses any liquor in
the State not taxable under this chapter, in respect of the transaction by
which the person or the person's vendor acquired the liquor, shall pay a
gallonage tax that is hereby imposed at the following rates for the various
liquor categories defined in section 244D-1:

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On
[
July 1, 1998,
]
July 1, 2025,
and thereafter, the tax rate shall
be:

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(1)
�
$5.98 per wine gallon on distilled spirits;

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(2)
�
$2.12 per wine gallon on sparkling wine;

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(3)
�
$1.38 per wine gallon on still wine;

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(4)
�
$0.85 per wine gallon on cooler beverages;

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(5)
�
$0.93 per wine gallon on beer other than draft
beer; [
and
]

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(6)
�
$0.54 per wine gallon on draft beer;
and

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(7)
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$1.10 per wine gallon on low alcohol by
volume spirits beverages;

and at a proportionate rate for any
other quantity so sold or used."

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SECTION 4.
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Statutory material to be repealed is bracketed and stricken.
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New statutory material is underscored.

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SECTION 5.
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This Act shall take effect on June 30, 2025.

INTRODUCED BY:

_____________________________

Report Title:

Alcohol;
Low Alcohol by Volume Spirits Beverage; Liquor Tax; Liquor Law

Description:

Establishes
a definition of "low alcohol by volume spirits beverage".
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Beginning 7/1/2025, establishes a tax on low
alcohol by volume spirits beverages at a rate of $1.10 per wine gallon.
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Takes effect 6/30/2025.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.