FISCAL NOTE
Date Requested: February 12, 2026
Time Requested: 05:30 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 4001 |
Introduced |
SB928 |
|
|---|
| CBD Subject: |
Alcoholic Liquors and Beers |
|---|
|
FUND(S):
General Revenue Fund, local governments
Sources of Revenue:
General Fund local governments
Legislation creates:
Creates New Revenue, Decreases Existing Revenue, Creates New Expense
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to afford West Virginia consumers responsible access to Low-Proof Alcohol Spirit Products consistent with their availability in adjoining states.
Per our interpretation, the bill would allow “Low-Proof Spirit Alcohol Products” to be sold or distributed in the same manner and to the same persons, and subject to the same limitations and conditions, as such license or legal right authorizes him or her to manufacture, distribute, or sell nonintoxicating beer. Currently, these products are sold through the West Virginia Alcohol Beverage Control Administration to licensed retailers, and they are subject to a 32 percent wholesale markup in lieu of any excise tax. Per the bill, the provisions of this article shall take effect 90 days from passage.
The bill adds a definition for “Low-Proof Spirit Alcohol Products” to W.Va. Code §60-1-5, State Control of Alcoholic Liquors. “Low-Proof Spirit Alcohol Products” are defined as “ any alcoholic liquor beverage drink, other than wine, beer, or nonintoxicating beer, containing one-half of one percent or more of alcohol by volume, but not more than fifteen and one-half percent alcohol by volume obtained by distillation, mixed with drinking water, fruit juices, flavoring or coloring materials, other alcoholic or non-alcoholic beverages and/or other ingredients in a solution, which are packaged in containers not to exceed 25 fluid ounces.”
Manufacturers are required to be licensed. Any person or licensee legally authorized to manufacture, distribute, or sell Low-Proof Spirits Products may sell or distribute the products in the same manner and to the same persons, and subject to the same limitations and conditions, as such license or legal right authorizes him or her to manufacture, distribute, or sell nonintoxicating beer. Since Low-Proof Spirit Alcohol Products would no longer be sold through the West Virginia Alcohol Beverage Control Administration, they would no longer be subject to the 32 percent wholesale markup on liquor. The Low-Proof Spirit Alcohol Products would be subject to an excise tax of $1.25 per gallon, in like ratio for any partial gallon or other unit of measure. The excise tax policy would change from a fee (i.e., tax) based on price to a tax based on units of consumption.
According to our interpretation, based on current product prices, there would be a net decrease in General Revenue Fund collections of up to $800,000 in FY2027 and subsequent fiscal years. The General Revenue Fund benefits from Liquor Revenue transfers received from the West Virginia Alcohol Beverage Commission Administration. The impact to the General Revenue Fund includes a loss in Liquor Profits Transfers of roughly $950,000, a gain in excise tax from the $1.25 per gallon tax of roughly $250,000, and a modest loss in sales tax due to reduced pricing. The bill would effectively reduce the tax imposed on these products while at the same time expanding their availability to additional retail markets. It is anticipated that consumption of these products will increase. However, the increased consumption is not expected to make up for the loss from reduced Liquor Revenue transfers. Additionally, the change in the structure of taxation for these products would also exclude them from the 5 percent municipal tax on liquor. Therefore, the bill would also cause a net decrease in Local Government collections of up to $290,000 beginning in FY2027.
Additional administrative costs incurred by the State Tax Division would be $27,500 in FY2026, $46,450 inFY2027 and $44,800 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2026
Increase/Decrease
(use"-") |
2027
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
27,500 |
46,450 |
44,800 |
| Personal Services |
0 |
44,800 |
44,800 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,650 |
0 |
| Other |
27,500 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-800,000 |
-800,000 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the bill would allow “Low-Proof Spirit Alcohol Products” to be sold or distributed in the same manner and to the same persons, and subject to the same limitations and conditions, as such license or legal right authorizes him or her to manufacture, distribute, or sell nonintoxicating beer. Currently, these products are sold through the West Virginia Alcohol Beverage Control Administration to licensed retailers, and they are subject to a 32 percent wholesale markup in lieu of any excise tax. Per the bill, the provisions of this article shall take effect 90 days from passage.
The bill adds a definition for “Low-Proof Spirit Alcohol Products” to W.Va. Code §60-1-5, State Control of Alcoholic Liquors. “Low-Proof Spirit Alcohol Products” are defined as “ any alcoholic liquor beverage drink, other than wine, beer, or nonintoxicating beer, containing one-half of one percent or more of alcohol by volume, but not more than fifteen and one-half percent alcohol by volume obtained by distillation, mixed with drinking water, fruit juices, flavoring or coloring materials, other alcoholic or non-alcoholic beverages and/or other ingredients in a solution, which are packaged in containers not to exceed 25 fluid ounces.”
Manufacturers are required to be licensed. Any person or licensee legally authorized to manufacture, distribute, or sell Low-Proof Spirits Products may sell or distribute the products in the same manner and to the same persons, and subject to the same limitations and conditions, as such license or legal right authorizes him or her to manufacture, distribute, or sell nonintoxicating beer. Since Low-Proof Spirit Alcohol Products would no longer be sold through the West Virginia Alcohol Beverage Control Administration, they would no longer be subject to the 32 percent wholesale markup on liquor. The Low-Proof Spirit Alcohol Products would be subject to an excise tax of $1.25 per gallon, in like ratio for any partial gallon or other unit of measure. The excise tax policy would change from a fee (i.e., tax) based on price to a tax based on units of consumption.
Currently, Low-Proof Spirit Alcohol products are sold through the West Virginia Alcohol Beverage Control Administration to licensed retailers, and they are subject to a 32 percent wholesale markup. According to the Distilled Spirits Council of the United States, as of January 2025, the effective tax on distilled spirits in West Virginia was roughly $8.98 per gallon. According to the West Virginia Tax Division website, current excise tax rates vary as follows: beer - $5.50 per barrel ($0.18 per gallon), wine - $0.26406 per liter ($1.00 per gallon) and hard cider - $0.226 per gallon.
According to our interpretation, based on current product prices, there would be a net decrease in General Revenue Fund collections of up to $800,000 in FY2027 and subsequent fiscal years. The General Revenue Fund benefits from Liquor Revenue transfers received from the West Virginia Alcohol Beverage Commission Administration. The impact to the General Revenue Fund includes a loss in Liquor Profits Transfers of roughly $950,000, a gain in excise tax from the $1.25 per gallon tax of roughly $250,000, and a modest loss in sales tax due to reduced pricing. The bill would effectively reduce the tax imposed on these products while at the same time expanding their availability to additional retail markets. It is anticipated that consumption of these products will increase. However, the increased consumption is not expected to make up for the loss from reduced Liquor Revenue transfers. Additionally, the change in the structure of taxation for these products would also exclude them from the 5 percent municipal tax on liquor. Therefore, the bill would also cause a net decrease in Local Government collections of up to $290,000 beginning in FY2027.
Additional administrative costs incurred by the State Tax Division would be $27,500 in FY2026, $46,450 inFY2027 and $44,800 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to afford West Virginia consumers responsible access to Low-Proof Alcohol Spirit Products consistent with their availability in adjoining states.
There appears to be a mistake in §60-8B-4(a) proposed by this bill as it is not grammatically sound. The section reads:
(a) There is hereby levied and imposed on all Low-Proof Spirit Alcohol Products sold on and after the effective date, by every distillery, or supplier to distributors, there is hereby levied and imposed on all Low Proof Spirit products sold by distilleries, manufacturers, and suppliers to distributors, a tax of $1.25 cents per gallon, in like ratio for any partial gallon or other unit of measure.
Presumably, the section should read:
(a) There is hereby levied and imposed on all Low-Proof Spirit Alcohol Products sold on and after the effective date, by every distillery, or supplier to distributors, a tax of $1.25 cents per gallon, in like ratio for any partial gallon or other unit of measure.
In §60-8B-3(a) and §60-8B-4(a), the bill uses the term “Low Proof Spirit Products” instead of the term “Low Proof Spirit Alcohol Products” used throughout the rest of the bill.
Person submitting Fiscal Note: Peter Shirley
Email Address: RADfiscal@wv.gov