Hawaii lawmakers are teeing up a major rewrite of the state liquor tax, shifting to a charge based on alcohol strength instead of product type and bumping rates across several categories. The change - advanced this week by the House Commerce and Consumer Protection Committee - has local brewers warning that an alcohol-by-volume system could squeeze small, island-based operations. With the measure now headed to the House Finance Committee, brewery owners and legislators are already haggling over carve-outs and revenue forecasts.
What the bill would do
House Bill 1991 would scrap Hawaii's existing beverage categories and replace them with alcohol-by-volume tiers, while resetting gallonage rates to account for inflation dating back to 1998. The bill sets proposed tax rates of $1.00 per gallon for beverages up to 9.9% ABV, $1.75 for 10–15% ABV, $6.00 for 16–40% ABV and $6.50 for beverages above 40% ABV, with the overhaul scheduled to take effect July 1, 2026. As written, the measure frames the changes as a long overdue update to decades-old rates; the full language is available via LegiScan.
Brewers say smaller producers would be hit
The committee voted unanimously to recommend HB 1991, but that procedural win did little to calm the state's craft beer sector. Steve Haumschild, co-founder of Lanikai Brewing, told lawmakers the bill could be "an industry killer" for smaller brewers and argued that Hawaii already has steep beverage taxes. Garrett Marrero, CEO of Maui Brewing, called the alcohol-by-volume shift a "wild shift" that could saddle island producers with new testing and compliance costs, as reported by Aloha State Daily.
The numbers behind the push
State tax records show residents bought more than 25 million gallons of non-draft beer between July 2020 and June 2021 and spent nearly $260 million. At current rates, those sales generated about $23 million in tax receipts, according to Hawaii Department of Taxation data. Supporters of higher alcohol taxes point to modeling from a 2022 University of Hawaiʻi paper, summarized by local prevention groups, that estimated a flat 10-cent liquor tax increase could boost the state's annual tax haul by around $57 million while reducing overall consumption by roughly 6.9%. Those numbers are now at the center of the tug-of-war between lawmakers and brewers over whether the public health gains are worth the hit to local industry.
Small-producer carve-out and competing bill
Industry leaders urged legislators to carve out exemptions or lower rates for island-based producers, and senators responded with a companion bill that tries to do just that. Senate Bill 2912 would create a lower-tax category for qualifying "small craft producer pub licensees," offering reduced gallonage rates and higher production limits for those operations; more details are available through LegiScan. Committee discussion reportedly floated a 60,000-barrel production cutoff as one option, while other amendments under consideration would sharply increase the top tier for very high-ABV spirits to as much as $13 per gallon, according to Aloha State Daily.
What’s next
With a green light from the Commerce and Consumer Protection panel, HB 1991 now heads to the House Finance Committee for deeper scrutiny and possible revisions. Lawmakers will have to balance projected revenue gains against craft-industry worries about compliance costs, competitiveness and the survival of small island producers. Expect packed hearings and plenty of last-minute horse-trading as breweries, health advocates and tax officials all push for carve-outs, technical tweaks and clearer rules before any final vote.
