CLARKSBURG, W.Va. (WBOY) — If you’ve ever wondered why canned cocktails, like High Noon, are more expensive than something like White Claws, even though they are about the same ABV percentage, it all has to do with West Virginia’s excise tax on different types of alcohol.
White Claw is technically a flavored malt beverage, which puts it under the classification of other malt beverages like beer. A 5% ABV 12oz malt beverage is taxed at 1.7 cents per can.
However, a drink that contains vodka, like High Noon, is considered a spirit and is taxed the same way a bottle of Jack Daniel’s would be, despite containing far less alcohol. A 5% ABV 12oz canned cocktail is taxed at 20.2 cents per can, 11 times more than a canned malt beverage, despite having the same alcoholic content.
This is causing one local distillery to get involved in the West Virginia tax reform process, to bring the tax on canned cocktails in line with similarly alcoholic drinks. Swilled Dog is a cidery and distillery in Pendleton County, and is a member of the Distilled Spirits Council of the United States, a national trade association that represents the makers and marketers of distilled spirits sold in the United States (DISCUS).
In DISCUS’ testimony to the West Virginia Joint Committee on Government and Finance regarding the tax rate, the organization said they found that 62% of craft distillers who are not making ready-to-drink cocktails found the higher tax rate as a barrier to entering the market.
Co-founder of Swilled Dog, Brooke Glover, said this lined up with her personal experience and said she knew of distillers in other states and at least one distiller in West Virginia that is staying out of the space due to the tax.
“We can only sell these cocktails at liquor stores, so a 4% ABV cocktail can only be sold at a liquor store where a 14% wine can be sold at the grocery store,” Glover said.
Glover said that with the extra tax rate, grocery and liquor stores would have much less incentive to use shelf space for a product with smaller margins, and many larger companies are shying away from coming into the state because of this.
“We’re losing out on all those tax dollars we could be getting. The consumers are wanting it, they just don’t have access to it. They can’t figure out why they can’t find it on the shelves. It’s kind of a double whammy,” Glover said.
Instead of taxing beverages based on their contents, an alcohol tax reform might tax drinks based on their ABV, with a higher tax rate placed on drinks with higher alcoholic content, similar to the U.K.’s alcohol tax reforms last October.
