Senators propose fee on alcohol companies
Trade groups question use of charge, warn of its impacts on industry
A bill set to be unveiled in the Colorado legislature would levy a new fee on businesses that produce alcoholic beverages, then direct tens of millions of dollars collected each year to addiction treatment and recovery programs.
Sen. Kevin Priola, a Democrat from Henderson, said he plans to introduce legislation today to create a “state enterprise” that would collect a fee from alcohol producers and wholesalers, with some exceptions for small companies.
The enterprise is expected to generate more than $100 million a year, and would funnel 80% of that money toward alcohol addiction treatment and recovery programs, according to the bill’s sponsors. Funds also would go toward prevention programs, harm reduction, impaired driving enforcement, or services for people born with fetal alcohol spectrum disorders, and to offset the cost of collecting the fee and doling out the grants.
Colorado consistently has one of the highest rates of deaths related to excessive drinking in the country, as The Denver Post illustrated in a four-part series earlier this year that examined alcohol’s impact on public health in the state.
By the most conservative count, which includes only deaths from organ damage by alcohol and complications of withdrawal, drinking killed 1,547 people in Colorado in 2022. That’s more than a 50% increase compared to 2018, and the actual toll may be twice as high, because drinking increases the risk of multiple cancers and heart problems.
About two-thirds of people seeking substance-use disorder treatment in Colorado list alcohol as either their primary problem or one drug among several that they misuse, Priola said.
“Not only is it one of the largest substance-use disorders Coloradans are struggling with, it’s growing,” he said.
The Colorado Brewers Guild said it couldn’t comment on pending legislation, but questioned funding addiction treatment through an alcohol fee, particularly since beer consumption has gradually declined in recent years.
“Hundreds of thousands of Coloradoans responsibly enjoy our craft beer as part of an active and social lifestyle,” the guild said in a statement.
The Distilled Spirits Council of the United States said it estimated that a new fee would reduce sales in Colorado by $220 million and cost 2,600 jobs, without reducing excessive alcohol use. In a statement, the group said it would support efforts to screen patients for alcohol misuse and to refer them to treatment.
“Penalizing responsible alcohol consumers and an already struggling hospitality industry while failing to address the actual problem makes no sense,” the statement said.
While many people do enjoy alcohol without negative effects, it is an addictive product and people who have been drinking excessively can’t always stop, Priola said. The fee would help offset some of the societal costs of unhealthy drinking, he said.
In 2010, the Centers for Disease Control and Prevention estimated that unhealthy alcohol use cost Colorado about $5 billion, mostly due to lost productivity.
“I would argue that this is personal responsibility for the industry,” he said.
State enterprises essentially allow the legislature to avoid the cumbersome process of asking voters for a tax increase as required by the Taxpayer Bill of Rights, within certain bounds. While they can receive some state and local revenue, enterprises act like government-owned businesses, charging fees for a service — though not always one that entities paying the fee can opt out of. For example, a state enterprise collects a fee on Colorado hospitals and uses that money to draw down federal funds for health care.
Usually, an enterprise would have to go on the ballot if it realistically could collect more than $100 million in its first five years, but the bill’s language would exempt the Alcohol Impact Enterprise Fund because it addresses an urgent public health need, said co-sponsor Sen. Chris Hansen, a Denver Democrat.
The model is similar to how the state mitigates the effects of other legal, but potentially addictive, industries, Hansen said.
“This is close to what we do with marijuana. It’s what we do with problem gambling,” he said.
Priola said he and others have been working on the idea for at least three years, but the timing finally seems right with federal COVID-19 relief funds drying up. The enterprise would continue indefinitely, unlike federal funds, and the legislature couldn’t take money from it to balance the general budget in difficult years, he said.
“We’re trying to create a sustainable funding source,” he said.
The bill lays out fees of 16 cents for every gallon of beer or hard cider; 15 cents for every liter of wine; and $1.21 for every liter of spirits. The enterprise’s board could vote to raise the fees every two years, based on the inflation rate, population growth and increases in alcohol consumption.
Assuming that manufacturers and wholesalers pass on the fee entirely, the combined excise taxes and fees on a typical can of beer would rise from about 0.7 cents to about 1.5 cents, Hansen said.
“For consumers, they are likely to not notice this at all,” he said.
Colorado would still be near the middle of the states on alcohol-specific taxes and fees, Priola said. The state currently has some of the lowest excise taxes on alcohol in the country. While higher taxes aren’t a guarantee that people will drink less, drunk driving accidents dropped the last time the federal government raised its taxes.
José Esquibel, a longtime member of the Colorado Substance Abuse Trend and Response Task Force who consulted with the senators, said the model they’re proposing has precedents in how states responded to the opioid crisis of the mid-2000s. Minnesota increased the licensing fees it requires of opioid manufacturers that sell their products in the state, and New York added a per-milligram tax on prescribed opioids.
The proposed increase is small enough that it isn’t likely to drive people to reduce their drinking, but it will give the state more resources to respond, Esquibel said. Coming up with a stable funding source is particularly important for services that health insurance doesn’t cover, like prevention programs and support for people in recovery, he said.
“People may go through a treatment program for a smaller amount of time,” he said. “They’re going to be in recovery for the rest of their lives.”