Oregon lawmakers try again on kombucha tax relief

Sen. Ron Wyden, D-Ore., and Reps. Earl Blumenauer , D-Ore., and Greg Walden, R-Ore., reintroduced legislation Thursday they said would update antiquated federal alcohol taxes and regulations on kombucha companies in Oregon and nationwide.

“Kombucha’s growth in Oregon generates jobs and small business growth throughout our state while creating fans everywhere of this tasty beverage,” Wyden said.”Modernizing outdated taxes and regulations on kombucha is a must so this industry can continue to build on its achievements.”

“Kombucha is one the fastest growing beverage industries in the world, with an expected economic impact of $1.2 billion by 2020,” Blumenauer said. This legislation is a common sense solution that would lift unnecessary tax burdens and instead support emerging small businesses in Oregon and across the country. ”

” Despite having more in common with yogurt than wine or beer, kombucha is subject to a costly federal excise tax as if it were an alcoholic beverage, ” Walden said. ” That’s why I am proud to join my Oregon colleagues in introducing the KOMBUCHA Act to make kombucha exempt from the alcohol tax and burdensome regulation.

” I’ve met with kombucha manufacturers in Oregon who have told me how this outdated tax is holding back their industry. This bill will help these small businesses keep more of their hard-earned money to reinvest in their businesses and create jobs in our communities. ”

Kombucha — a combination of tea, water, and a symbiotic culture of bacteria and yeast — has trace amounts of alcohol that can trigger federal excise taxes and regulations covering alcoholic beverages. Yet a person would have to consume, for example, between five and 10 bottles of kombucha to equal the alcohol in just one beer.

The Keeping our Manufacturers from Being Unfairly Taxed while Championing Health Act (KOMBUCHA) introduced Thursday by the Oregon lawmakers would eliminate those unintended tax and regulatory burdens by increasing the applicable alcohol-by-volume limit for kombucha from 0.5 percent to 1.25 percent.

Kombucha would still have to meet the health and safety requirements generally applicable to nonalcoholic beverages, as well as certain beverage alcohol labeling requirements.

The U.S. kombucha industry is one of the fastest growing beverage categories, with a current economic impact of $800 million and expected growth to $1.2 billion by 2020. An estimated 5,000-plus people work directly in the kombucha industry, with hundreds of regional brands that produce and distribute locally.

The legislation also was introduced in the last Congress but ran out of time for consideration, an aide to Wyden said.

The text of the new bill is available here. A one-page summary of the bill is available here.