FISCAL NOTE
Date Requested: February 13, 2026
Time Requested: 05:43 PM |
| Agency: |
Alcohol Beverage Control Administration |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 4053 |
Introduced |
HB5504 |
|
|---|
| CBD Subject: |
Alcoholic Liquors and Beers |
|---|
|
FUND(S):
General
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Creates New Expense, Creates New Program
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
This bill and SB 928 are related to the manufacture, sale, and distribution of low-proof spirit alcohol products.
Under current Code, the WV ABCA has regulated ready-to-drink liquor products in glass and plastic bottles for decades.
In recent years, ready-to-drink “canned” products, which are at a lesser proof than typical liquor products which are at 80 to 120 proof, have increased sales and gained in popularity. Currently, this category is the only growing category amongst liquor, wine, and beer products.
SB 928/HB 5504 authorizes beer manufacturers, beer distributors, and beer retailers to distribute and sell both ready-to-drink canned products and traditional liquor bottle-shaped products (not a can) in glass or plastic. The definition in the bill of low-proof distilled spirits proposes to allow spirits (liquor) that are 31 proof or 15.5 % alcohol by volume to be sold by beer distributors to beer retailers.
Further, the bill’s definitions sets the volume or product size of what the bill defines as low-proof products at 25 fluid ounces or 739 ml. Most liquor bottles are sized to 700ml and 750 ml. It does add that the solution must be mixed with drinkable water, fruit juices, flavoring or coloring materials, other alcoholic or nonalcoholic beverages and/or other ingredients.
The bill does not propose a license fee for manufacturers, distributors, and retailers. However, the agency would have significant costs to institute and regulate this new structure of low proof distilled spirits with no revenue from the products. The Beer Division currently regulates pricing, franchise agreements, franchise brands, franchise territories, label registration, transportation permits and etc. The Beer Division has 3 FTEs who stay busy with beer products and additional 2 to 3 FTEs would be needed to regulate 283 low-proof distilled spirits that would now be treated like beer products. This level of regulation is not currently being performed for liquor.
The bill may also decrease the value of a liquor license by carving out a product which these retailers currently have exclusive license to sell. This would also potentially impact General Revenue Fund collections when liquor licenses are set to re-bid in 2030.
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 |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
-1,219,297 |
-1,219,297 |
-1,219,297 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
From WVABCA Staff, the bill’s defined term of low proof distilled spirits up to 31 proof and 25 fluid ounces or 739 ml would include products in cans, glass bottles, plastic bottles and plastic bags amounting to 283 products/configurations currently sold by the WVABCA. The WVABCA’s 2025 total gross sales number for these products is about $4,114,980 and generated revenue for the state from markup of $997,571.35 and from state sales tax (assuming an average retail markup of 29% and sales and municipal tax of 12%) of about $682,717.53 from $5,689,312.71 in retail sales. Thus, in total the state received about $1,680,288.88 from the sales of the products in the bills.
WVABCA Staff then converted ml to gallons to compare the $1.25/gallon tax rate proposed in the bills. If the proposed tax rate was in place in 2025, the tax would have generated $253,071.80 in tax revenue on 202,457.44 gallons, and using a 15% markup with a 6% tax rate on beer (since the statute says to treat it like beer) the tax revenue would be $281,502.03 (($3,117,409 * 1.29) * .07) for a total of approximately $534,573.83.
Total annual loss would be $1,680, 288.88 - $534,573.83. = $1,145,715.05. Additionally, staff indicates their would be a loss in bailment fees for these products of about $73,532 per year (assuming no growth). Thus, total loss per year based on 2025 numbers would be $1,219,297.05, assuming no growth (over 10 years potentially $12,192,970).
Further in 2030 liquor rebid may be devalued by the loss of low proof spirits rights to retail liquor outlets. In 2020, the bid generated all in (bids, financing and license fees) about $53 million dollars. Predicting the amount of the rebid in 2030 is difficult, but this change may affect the amount of money potential licenses may be willing to bid for those future licenses.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
The bill’s language addresses treating the low-proof distilled spirits like beer, but it is not clear if that would require franchise agreements that would lock up distilleries in contracts for perpetuity. The bill is silent to this issue, leaving this to be resolved via rulemaking.
The WVABCA would need to be given time to sell out its current inventory as the agency typically maintains a 12-week inventory supply for most products, which would be problematic given a 90-day effective date in the bill.
There could be additional beer barrel tax and wine liter tax revenue impact with any increased sales of low-proof distilled spirits at the expense of beer and wine products sales.
Person submitting Fiscal Note: Anoop Bhasin, General Counsel on behalf of WVABCA
Email Address: anoop.k.bhasin@wv.gov