Congress Proposes Bipartisan Legislation to Revitalize America’s Craft Distilling Industry

Fermentation equipment at a distillery in Portland, Maine. (Photo: Edwin Remsberg / VWPics via AP Images)

Congress is mulling over a piece of bipartisan legislation that could provide a vital lifeline for the American craft spirits industry, which has struggled in recent years to keep pace with declining alcohol consumption, inflation and on-again, off-again trade tensions.

Last week, representatives Jeff Hurd (R-CO) and Jill Tokuda (D-HI) introduced the Supporting Producers Through Incentives from Rural Ingredients and Tax Relief Act, pointedly referred to as the SPIRIT Act.

The legislation would create a tax credit for qualifying small distillers that source at least 90% of their agricultural products domestically. If successful, the act would create a mutually beneficial ecosystem between the nation’s 2,000-some craft distillers and local barley, corn, rye and wheat farmers.

“Craft distillers are deeply connected to American agriculture and rural communities,” Hurd said in a statement shared by the American Craft Spirits Association. “This bipartisan legislation helps ensure small producers can continue investing in local farmers, creating jobs, and contributing to Colorado’s and America’s manufacturing economy. The SPIRIT Act provides targeted relief while strengthening domestic supply chains.”

The act would apply to distilleries that produce no more than 100,000 gallons of spirits per year, and would qualify them for a tax reduction of $2.35 per proof gallon.

For distillers in need, those numbers could add up fast. According to the most recently available data from the American Craft Spirits Association, craft spirits volumes slumped by 6.1% in 2024, while exports dipped by a dramatic 20.7% in the same time frame. Employment numbers also took a hit, dropping for the first time post-pandemic to a total of 28,628 full-time domestic employees.

Those numbers are well in line with declining performance in the larger spirits market. But while a conglomerate like Brown-Forman or Diageo might simply trim its staff or streamline its portfolio, craft distillers are often forced to wind down their operations entirely.

The number of active craft distillers in the US declined by 25.6% between August 2024 and August 2025, dropping from 3,069 to 2,282, per the ACSA.

“Craft spirits producers are among the most agriculture-dependent businesses in beverage alcohol. Every bottle represents a significant investment in American grain, specialty crops, manufacturing, tourism, and local jobs,” Emily Pennington, Chief Executive Officer of the American Craft Spirits Association, added.

“The SPIRIT Act recognizes that connection and provides meaningful relief to small distillers during a period of economic uncertainty and rising production costs.”