Sen. Gary Peters visits Grand Rapids distillery, wants lower taxes on craft liquor – MLive.com

GRAND RAPIDS, MI – Those in the craft distillery business call the federal excise tax on liquor a “hangover from Prohibition.”

Flanked by a pair of bronze distillers in Long Road Distillery’s production facility Monday morning, Sept. 14, U.S. Senator Gary Peters (D-MI) said he hopes to significantly lower the sin tax on liquor, and therefore put distillers on the same footing as beer and wine makers.

In May, Peters and fellow Sens. Dan Sullivan (R-AK) and Kirsten Gillibrand (D-NY) introduced the Distillery Excise Tax Reform Act, which would reduce the tax from $13.50 per proof gallon to $2.70 for the first 100,000 gallons. That reduction would greatly benefit small businesses such as Long Road, while still allowing the government to collect tax revenue from larger national and international distilleries.

“The big guys can hit 100,000 gallons in a week,” Van Strien said.

Long Road is on pace to produce between 12,000 and 15,000 proof gallons of liquor during its first year. The distillery opened its bar and restaurant at 537 Leonard St. NW in May.

Peters’ appearance Monday drummed up support for the bill, which was referred to the Committee on Finance on May 21.

Long Road co-owner Kyle Van Strien said the bill, if passed, would save Long Road $100,000 annually, and potentially more as the distillery has yet to maximize its production capacity. He said he and co-owner Jon O’Connor plan to expand the production facility, kitchen and dining room, and would be able to make those changes more quickly if the bill is adopted.

Peters said the bill has “the same kind of economic dynamic as makers of beer, wine and cider, and the goal is to put them all on the same platform.”

During his 2014 election campaign, Peters visited Long Road during its construction phase and promised to introduce legislation to lessen the tax burden on a growing business. He said Michigan boasts 40 licensed microdistilleries, counting satellite locations a la the Grand Traverse Distillery, which, in addition to its Traverse City headquarters, has a handful of tasting rooms throughout the state.

Peters said many more distillers have applied for licenses, so that number should grow to nearly 100 in the next two or three years. The increase in production would be a boost for Michigan agriculture, as distilleries seek local sources for malt and grain.

It’s about “truly keeping all our money locally,” Peters said.

Interest in craft liquor in Michigan comes on the tail of a major boom in craft breweries, which now number nearly 190 statewide. It also echoes growing interest throughout the country, the number of craft distilleries has grown from roughly 50 to 769 in the past decade, according to the American Craft Spirits Association.

Peters’ bill would be one step towards helping craft distilleries, which deal with a lot of red tape via state and national regulations, some dating back to Prohibition. Van Strien said it takes 30 days to get label approval, and 60-70 days for formula approval, creating a four-to-six month window production process between development and sales.

“We could crank out new products on a weekly basis, but it takes months,” he said. “It hamstrings our ability to be creative.”

RELATED: Michigan spirits: In beer-thirsty state, craft distilleries wage uphill battle

John Serba is film critic and entertainment reporter for MLive and The Grand Rapids Press. Email him at jserba@mlive.com or follow him on Twitter or Facebook.