New Bill Could Reduce the Price of Popular Ready-To-Drink Cocktails

As the price of ready-to-drink cocktails skyrockets nationwide, some states are taking it into their own hands to even the playing field. (Photo: The Image Party/Shutterstock)

North Dakota is the latest state to propose a bill that would reduce the disproportionately high taxes on ready-to-drink cocktails like High Noon.

As canned alcoholic beverages have exploded in popularity nationwide, consumers have begun to notice that some are inexplicably more expensive than others.

The critical issue lies in categorization.

Historically, the market has been dominated by malt-based hard seltzers like White Claw and Truly.

Recent trends have favored ready-to-drink (RTD) cocktails made with distilled spirits; canned beverages like High Noon, Cutwater Spirits, and Skinnygirl which typically have the same ABV as hard seltzers.

But federal law views these two types of drinks quite differently; the federal excise tax for a 12oz, 6% ABV RTD is 5 cents for a malt-based product, but 15 cents for a spirits-based product.

(Photo: Craft Brewing Business)

On the state level, those taxes can add up further.

“Unfortunately, North Dakota consumers are forced to pay much higher taxes for spirits-based RTD products even if the product has the exact same or similar ABV as a malt-, sugar- or wine-based RTD,” said Adam Smith, vice president of state public policy for the Distilled Spirit Council of the United States.

“At 5 percent ABV, the North Dakota tax rate on spirits-based RTDs is more than 15 times the malt- and sugar-based RTD state tax rate.”

Joining states like Michigan and Nebraska, North Dakota is now pushing for a bill that would define RTDs separately from hard spirits.

But it’s an uphill battle; RTD prices have often remained high even in states which have successfully passed tax reforms.

Increasingly, manufacturers are taking it upon themselves to underhandedly avoid these taxes.

Lime-A-Rita and Dos Equis Ranch Water — two drinks that many assumed contained tequila — recently got hit with class action lawsuits alleging that they contain only malt liquor.

Similarly, Fireball Cinnamon was recently sued for misleading advertising. A mainstay at gas stations and convenience stores, Fireball Cinnamon is a malt beverage that contains no whiskey.

Here at The Daily Pour, we do more than write about current events in spirit. We are the only media property reviewing spirits and aggregating the scores and reviews of other significant voices in the spirit world in one place. If you’re interested in getting a shot of spirit in your morning email, sign up for our Whiskey Deal of the Day Newsletter