2023 Leg Session, Exclusives, Featured, Gold Dome, Original Report, Politics, Sherrie Peif, TABOR, Taxes

Draft bill hammers Colorado liquor industry with new fees; includes end run around voters

DENVER — Hoisting a beer may get a lot more expensive in Colorado if State Senator Kevin Priola — a former Republican who last year switched party affiliation to join the Democrat majority — has his way.

Priola is the prime sponsor on a bill that will tack significant new costs on to all alcoholic beverages to fund alcohol abuse education as well as substance abuse treatment.

“Manufacturers and distributors of alcohol should bear some of the increased costs for alcohol use disorder prevention, early intervention, treatment , recovery, or harm reduction services” the bill reads.

The bill is still in the draft phase, meaning it has not yet been given a bill number, officially introduced into the legislature , or assigned to a committee in which to be heard. Complete Colorado acquired a copy of the unedited, unrevised redraft, dated March 1, 2023. A stakeholders meeting was held March 2, and those close to the bill say Priola has about a week left to introduce it.

Priola now serves in Senate District-13, which includes a large portion of Weld County, where voters never actually got to cast a ballot to elect him. Instead, Priola acquired the seat via the redistricting process in 2021 that drew him out of his previous, much more liberal district in Adams County. The state’s constitution says a sitting legislator cannot be drawn out of office and since former Sen. John Cooke, who was elected to represent SD13 in 2014, was term limited, Priola ended up as a Democrat senator in the heavily Republican district by default.

Under the draft bill, titled the “Colorado Alcohol Use Impact and Recovery Fee Act,” a new enterprise fund would be created with the mandate to collect fees from wholesalers who distribute beer, wine and liquor within Colorado.

The bill also creates a 22- member oversight board for the new fund.

Colorado courts have ruled that fees are not subject to voter approval under the Taxpayer’s Bill of Rights (TABOR) if, among other things, they are earmarked for a specific purpose and do not contribute to the state’s general fund.

In 2020 voters in Colorado passed Proposition 117 in an attempt to strengthen TABOR by requiring voter approval for new enterprise funds that would raise more $100 million in the first five years of existence.

There is no fiscal note yet, but Priola, who has consistently supported dismantling TABOR, worded this enterprise fund so that it stays just under the Prop 117 requirements by granting the enterprise board authority to lower the fees so that “the total amount of fee revenue does not exceed $100 million over the first five fiscal years of the enterprise’s existence.”

The enterprise board is also allowed to raise the fee without further legislative input so long as it gives wholesale alcohol distributors at least three months’ notice, but may only increase it once every two years.

In the 23-page draft bill, Priola justifies the new enterprise fund by claiming that Colorado’s current excise taxes on alcohol are among the lowest in the nation, and they don’t meet the need to cover costs of alcohol-related problems. Priola’s bill would double the amount wholesalers currently pay for beer and spirits and add an additional nearly three times more on the current tax on wine.

The current excise taxes are:

  • $0.08 on every gallon of beer.
  • $0.085 on every liter of wine.
  • $0.602 on every liter of spirituous liquor.

Under the bill, beginning July 1, 2024, the additional new “fees,” which appear to mirror an excise tax, are:

  • $0.107 on every gallon of beer manufactured and distributed in or distributed to Colorado.
  • $0.16 on every gallon of malt liquor and hard cider manufactured and distributed in or distributed to Colorado.
  • $0.212 on every liter of wine except hard cider manufactured and distributed in or distributed to Colorado (nearly three times the current excise tax)
  • $0.656 on every liter of spirituous liquor manufactured and distributed in or distributed to Colorado.

The money collected under the fund will go to establishing two grants programs, one to agencies to help cover treatment costs not covered by insurance of other means and one to agencies to help cover the cost of education programs.

The bill claims the fund is needed to reduce the alcohol related issues facing Colorado, saying:

“The excessive use and related harms of alcohol contribute detrimentally to public health and impose high financial costs to the state systems for physical health, behavioral health, social services, public safety, and education.”

The draft version of the bill does have a safety clause on it, meaning if it passes, it cannot be challenged through a referendum to the voters.


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