Consumer- and business-friendly measure heard before the House Ways & Means Committee
The Distilled Spirits Council of the United States (DISCUS) testified before the Maryland House Ways and Means Committee today alongside Maryland craft distillers in favor of HB 736, a bill to reduce the discriminatory tax rate for spirits-based ready-to-drink cocktails (RTDs).
Monica Pearce, co-founder of Tenth Ward Distilling Company in Frederick, told lawmakers that Maryland’s current tax structure places small distilleries like hers at a severe disadvantage in the fast-growing RTD market.
“Today, spirits-based RTDs are taxed at a rate more than 17 times higher than beer- and malt-based products, despite having the same or lower alcohol by volume,” Pearce said. “Our RTDs range from 5 to 7.5 percent ABV, while many beers exceed 8 to 10 percent ABV and yet are taxed far less.”
Pearce also emphasized the broader economic pressures facing Maryland distillers and the urgent need for relief.
“This past year has been one of the most economically challenging our industry has ever faced,” Pearce said. “Consumer spending has slowed, costs of goods and labor have risen, and many craft producers across the state are struggling simply to stay open. Now more than ever, small businesses need relief — not barriers that make survival harder.”
Under HB 736, the tax rate on spirits-based RTDs would be reduced from $1.50 per gallon to $0.60 per gallon, better aligning the tax with products of similar alcohol content.
Emily Smith, vice president of state public policy for the Distilled Spirits Council of the United States, testified that while the ready‑to‑drink category has evolved rapidly and now offers consumers a wide range of options, state tax laws continue to fail the craft distillers who make these products and hamper their growth in Maryland.
“Lowering the tax on low‑ABV spirits-based RTDs isn’t about special treatment—it’s about a more rational and balanced tax policy,” Smith said. “HB 736 would strengthen state revenues, support Maryland jobs and expand consumer choice. There is no public policy rationale for maintaining policies that stifle innovation and prevent competition.”
Maryland is one of several states reevaluating the taxation of spirits-based RTDs to ensure fair treatment for producers and equal access for consumers. Twenty-five states already apply lower tax rates to lower-ABV spirits-based products.
