HONOLULU — If your idea of a good time is to white knuckle a White Claw, knock down a berry-tinged seltzer the hard way or get otherwise Truly (mildly) inebriated, are you even a beer drinker?

What You Need To Know

  • SB 2331 would redefine what beer is and specifically include so-called hard seltzers as a type of beer
  • Alcoholic seltzers reached nearly $5 billion in sales last year

  • Supporters say the bill would bring Hawaii in line with the rest of the country

  • Local brewers say the bill would allow them to develop new products

If supporters of a Senate Bill 2331 get their way, the answer is a resounding, tax-lightening yes.

The bill, which passed the Senate judiciary this week, would rewrite the Hawaii Revised Statutes section on alcoholic beverages to define “beer” as any alcoholic beverage “containing no less than 0.5% alcohol by volume obtained by the fermentation or any infusion or decoction of malt, wholly or in part … including grain of any kind, bran, glucose, sugar or molasses.”

The proposed amendments to the statute would also list alcoholic seltzer beverages among ale, porter, stout, lager and other traditional forms of beer (but would continue to exclude sake). The revision removes mention of barley, hops and water among the fermentation elements. 

Alcoholic seltzers, also called hard seltzers, are fizzy, cooler-like beverages with an alcohol content generally in the 5% range. Marketed as a supposedly healthier, gender-neutral alternative to beer, the beverages gained mainstream traction in 2018 and peaked during the pandemic, increasing in sales by estimated 160% from 2019 to 2020 and reaching nearly $5 billion in sales in 2021, according to data from Information Resources Inc. 

And while sales have since leveled due in part to market saturation, the beverages remain popular enough to merit scrutiny from legislative bodies.

As the Tax Foundation of Hawaii noted in its comments to the Senate judiciary committee, “the apparent purpose of the bill is to allow seltzer beverages to qualify for the lower tax rate ($0.85 per wine gallon) for ‘cooler beverages,’ as opposed to the higher tax rate ($5.98 per wine gallon) on distilled spirits.”

The Foundation said the proposed re-definition of beer is consistent with the federal definition, although its specific inclusion among types of beer is not present in federal code.

The bill has drawn support from local brewers and the Maui Chamber of Commerce.

“The current definition of beer does not properly fit today’s needs as new fermented beverages such as gluten-free beer, non-alcoholic beer, seltzers fermented from malt or sugar and more,” said Maui chamber president Pamela Tumpap. 

Tumpap said hard seltzers are recognized as beer by the Alcohol and Tobacco Tax and Trade Bureau and the Internal Revenue Service as well as the other 49 states. 

“We need to bring Hawaii up to par with the rest of the country in definition of these beverages,” she said.

Steve Haumschild, chief executive officer and brewmaster for Lanikai Brewing Company, pointed to the economic benefits of updating the state’s definition of beer.

“The addition of sugar-based hard seltzers, consistent with federal regulations, allows our local manufacturers to meet current demands of the market with lower calorie and gluten-free products,” he said. “This also allows local manufacturers to grow their product line, further creating more revenue and therefore tax revenue for the state of Hawaii.”

Garrett Marrero, CEO and founder of Maui Brewing Company, rejected an earlier argument that SB 2331 is a “tax-reduction” bill that would have a negative impact on tax collection in the state because seltzers are made from spirits. 

“This is not accurate,” he said. “Seltzer can be made from a fermented base of malt or sugar, or from distilled spirits. How it is made and what it is made from would dictate how (the seltzer) is taxed.”

The bill unanimously passed the committee without amendment.