Kentucky bill could add 4% fee to alcohol, cannabis-infused beverages

LOUISVILLE, Ky. (WDRB) — It could soon cost more to purchase alcoholic or cannabis-infused beverages in Kentucky.

House Bill 9 would impose a 4% state retail regulatory license fee on those purchases. It would create new wholesale license fees for kratom, hemp-derived and cannabinoid products.

This is on top of the 6% sales tax already imposed in Kentucky.

The bill would redefine alcoholic beverages to include any liquid, solid, powder or crystal that contains more than 1% alcohol by volume and intended for beverage use.

"All it is, is an additional tax on consumers," Louisville-area liquor store owner Mike Fisk said.

Fisk said the bill would move the burden from suppliers and wholesalers to retailers and eventually the consumer.

HB9 would get rid of the excise tax and some wholesale taxes that distributors and wholesalers pay on alcohol, then replace those with a new 4% retail regulatory license fee for retailers to pay.

"It's going to be a 4% increase in tax that consumers are going to pay at every liquor store, convenience store, grocery store and even restaurants," Fisk said. "All of that alcohol is going to get a 4% tax."

The bill would also introduce a $0.004 tax per mL of alcohol contained in an alcoholic beverage.

According to a news release, the per unit fee would be assessed at the rate of $0.004 per milliliter of alcohol and $0.016 on cannabis-infused beverages and would apply to wholesalers, distributors, microbreweries, distillers, small farm wineries, manufacturers, cannabis-infused beverage licensees and direct shippers.

Entities subject to the fee would be required to submit monthly reports and remit payments to the state.

Revenue from both fees would deposit into the state's General Fund with 0.5% of the fee collected directed to a fund that supports programs "aimed at preventing underage drinking and promoting responsible alcohol consumption," according to lawmakers.

"This measure takes a balanced and consistent approach for products already being sold in Kentucky. By establishing a state regulatory license fee and directing resources to enforcement and public health, it would help ensure accountability in the marketplace," House Licensing and Occupations Chair Rep. Matthew Koch, R-Paris, said. "

Koch said the goal is to "bring clarity to the industry."

HB9 had its second reading Tuesday and was passed by the House. It now heads to the Senate.

If the bill is passed, it would take effect July 1, 2027, but some parts of the bill would go into effect immediately under an emergency clause.

This would make Kentucky the first state in the country to tax alcohol by pure unit of alcohol regardless of the type of product.

For more information on HB9, click here.