Kombucha enthusiasts just won big in Congress, as Colorado lawmakers introduced a bill called the Keeping Our Manufacturers from Being Unfairly Taxed with Championing Health Act, otherwise known as the KOMBUCHA Act. The bill is set to increase the alcohol by volume (ABV) limit for kombucha from 0.5% to 1.25%, leaving kombucha, which on average contains less than 1% ABV, free from federal alcohol taxes and regulations. Currently, kombucha falls under the regulatory jurisdiction of the U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau, and is subject to federal alcohol excise tax.
The fermented tea known for its health benefits has received a lot of hype lately, with many swearing by the probiotic drink in helping cure serious illness and promote overall wellbeing. While kombucha can be “home-brewed,” bottles of the beverages can go for $5 or more and are often sold on tap at trendy urban restaurants and small local shops.
A Boost for Small Business
Colorado Democrat Rep. Jared Polis is one of many who has deemed the classification of kombucha as an alcoholic beverage, “a complete misclassification.” Those backing the health tea say it has no harmful side effects, pointing to the fact that someone would have to consume 11 of the vinegar-tasting beverages to feel the “buzz” effect of a single beer.
On Wednesday, the battle gained momentum when Colorado lawmakers introduced the new KOMBUCHA bill intended to get rid of “unintended tax and regulatory burdens.” Republican Sen. Cory Gartner of Colorado called the bill a “commonsense fix,” set to help level the playing field for brewers, including a large number of small businesses. Republication Rep. Scott Tipton of Colorado agreed, adding, “too often, federal regulations get in the way of small business innovation.” Oregon Democrat Sen. Ron Wyden is co-sponsoring the bill with Gardner in the Senate.
While it’s been extremely tough for legislators to win bipartisan support for anything recently, it seems that the fight on taxation of a 2,000-year-old health drink may join the parties together. Kombucha makers are hopeful that with tax reform, they can reallocate funds used for compliance to hire more workers and build out their businesses.