Recently, the General Assembly passed the elimination of the Kentucky bourbon barrel tax over time, causing some counties where barrels are aged to rethink their commitment to the bourbon industry. Nelson County and other counties are exploring halting all permits for building new bourbon distilleries.
The counties where the barrel tax is generated enjoy getting a local share that goes into their budgets. As the industry has boomed over the past two decades, the number of barrels aging has swollen and created nice cash flows those counties wanted to keep.
If Kentucky counties enact a moratorium on building distilleries out of spite, it could affect the state’s current bourbon industry and other counties, too. They might find a strategy to get other counties to join them.
On the one hand, a moratorium could limit the number of new distilleries being built in the state, which could potentially restrict competition and help to protect existing distilleries. A moratorium could benefit the more prominent and established distilleries, as they would compete less with newer and smaller Kentucky distilleries.
Far worse, it could persuade the industry our state is not the best place to do business and hard the “Kentucky bourbon” brand. Other states would like to take our dominant market share of bourbon operations.
If the moratorium movement got traction, it could also limit economic growth in counties hoping to attract new distilleries and associated businesses. Distilleries can be significant employers and attract tourism, which can be an essential source of revenue for local businesses.
Furthermore, creating moratoriums could decrease revenue for the state government, as new distilleries are a source of other tax revenue. This tax elimination could impact the state’s ability to fund various important programs and services.
Overall, the effects of a moratorium on building distilleries in Kentucky would depend on various factors, including the duration of the moratorium, the reasons behind its implementation, and the specific economic conditions in each county.
Kentucky is known for bourbon, and for counties that thrived off the industry to do a 180 and want to halt new growth is just wrong.
Kentucky counties cannot turn their back on this billion-dollar industry.
