MLive: Proposed tax cut for small distilleries could help Michigan's spirit business grow

MACKINAC ISLAND — A tax cut for small distilleries might help Michigan grow from the Great Beer State to the Great Alcohol State by lowering costs for new businesses.

U.S. Sen. Gary Peters, fresh off a tour of craft distilleries in the Traverse City area, is part of a bipartisan group of senators who introduced a bill to lower the excise tax on distilled spirits. The bill would lower the excise tax rate on distilled spirits from $13.50 per proof gallon to $2.70 for the first 100,000 gallons produced per year.

Michigan, already the country's leader in microbreweries, has the third-most microdistillers in the country with about 40 operating now. About 40 to 50 more are waiting for license approval, Peters said.

In an interview with MLive on Wednesday, Peters said this would help small distilleries get off the ground.

"If you're making whiskey, you need to distill it. You need a still, which is very expensive," he said. "Then, you need to put it in a barrel for three to four years before you can sell it. So that's a lot of capital you need to invest in; you need to have workers, you need to have a building, but you don't really see any revenue for a period of time."

As distilleries produce more booze, they would pay more in excise tax, Peters said.