Distillers in Houston, statewide team up to advocate for tax relief

By Laura Gillespie

– Reporter, Houston Business Journal

Jun 3, 2020, 2:39pm CDT

Distillers across the state are asking Texas' members of Congress to provide relief in light of the coronavirus pandemic, which has proved devastating to their businesses.

The Texas Distilled Spirits Association, the Texas Whiskey Association and the Distilled Spirits Council of the United States co-signed a letter asking the Texas congressional delegation to provide tax relief.

That includes providing federal excise tax relief, deferring federal excise taxes, suspending tariffs on distilled spirits and creating an industry stabilization fund.

Carlos de Aldecoa, CEO of Gulf Coast Distillers in Houston, chiefly wants to be treated the same as local breweries and wineries in terms of legislature. De Aldecoa cites a number of rules imposed upon distilleries that breweries and wineries don't have, like limiting the number of bottles they can sell per person per month.

“Why should distilleries be treated differently?” De Aldecoa said. “That’s really the biggest issue. It’s not a matter of wanting to reinvent the wheel; it’s really wanting to have a fair and level set of rules.”

De Aldecoa estimates his company has donated $800,000 of hand sanitizer to various organizations, including first responders, the Houston Zoo, nonprofits and oil and gas companies. Because of that, he believes his economic impact is worth acknowledging.

Michael Langan, head of distillery at Yellow Rose Distilling, also believes there’s a disparity in how breweries and wineries are treated versus distilleries.

“The parity between spirits, wine and beer, it just doesn’t exist,” Langan said. “There’s just a huge differential in how these things are looked at and assessed, very much to our disadvantage.”

His industry has been fighting federal excise taxes for five years, he said, and with revenue greatly reduced this year, paying those excise taxes could be devastating.

“Many distilleries fear that return to 'normal' operations will be closely followed by a scheduled tax increase at the end of the year, creating further financial turmoil,” the letter submitted to Congress said.

Both de Aldecoa and Langan have seen their businesses suffer due to Covid-19, though they’ve both pivoted into making and selling hand sanitizer. At Yellow Rose, half of the staff was working from home, orders had dried up, and there was no opportunity to offer the hospitality side of its business, such as tastings. Normally, this time of the year is very busy as it ramps up to the third quarter, Langan said.

De Aldecoa has seen his suppliers affected. He’s unable to get ingredients and materials from China or from shuttered local facilities.

"The whole supply chain, employee management and employee safety (issue) has been quite a challenge," de Aldecoa said.