ORLANDO, Fla. — The future for distillers across the sunshine state currently hangs in the balance in Washington, D.C.
What You Need To Know
- A federal excise tax cut is set to expire at the end of the year
- The expiration could mean a 400% tax increase for craft distillers
- The provision is part of the COVID-19 relief bill being reviewed in D.C.
If lawmakers don’t act, a federal excise tax cut, enacted under the Trump administration, will expire at the end of the year. That amounts to a 400% tax increase for craft distillers.
"We’re crossing our fingers right now," said Doug McCormack, who said the tax cut has saved his small distillery $700 per month.
McCormack is a third generation Floridian, whose family transitioned from growing citrus to indoor foliage.
In 2000, McCormack moved his family from Apopka to Yalaha, Florida, after scoping out an affordable property that included good acreage and an early 20th century Craftsman home.
Seven years later, he started an organic blueberry farm, running a U-pick operation during the season from the end of March through June.
McCormack began to diversify his roadside stand, following his dream with the help of his two teenage daughters they offered up their homemade pies in addition to boiled peanuts, pickles, jams and jellies.
“Growing up, we’d go up and down 27 and 441 and find all these nice, little places," he said. “I try to check all the boxes for people of a roadside farm stand or attraction. Everybody’s going to find something they like here, I guarantee it.”
McCormack checked another box several years ago, as he turned leftover, end-of-season blueberries into mash and began producing moonshine.
At his Yalaha Bootlegging Co., they make six or seven varieties, at 80 to 100 proof.
At 500 square feet, though, his distillery is the second smallest in the state of Florida, he said.
“This is the American dream. It can be very rewarding, but it can also be very tough, especially with some of the laws and legislation in the state of Florida," he said.
Three years ago, one of the hurdles, a federal excise tax that distillers may pay on their spirits, was cut under the Trump administration.
For McCormack, that meant suddenly paying $2.70 a proof gallon instead of $13.50.
Despite a downturn in production as his distillery pivoted to making hand sanitizer during the pandemic, McCormack felt optimistic about the future of the industry. He splashed $6,000 - 50 percent down - for a new, larger still coming from Colorado.
That optimism waned in recent weeks, as McCormack eyed a looming deadline.
Yalaha Bootlegging Co. owner Doug McCormack explains hurdles distillers currently face
At the start of 2021, the federal excise tax cut would expire. His plans for expanding the operation and making more moonshine were precarious.
“Sometimes, you think they forgot the little guy. There’s a lot of us little guys who make the big guys," he said. “I was making hand sanitizer for people who didn’t have it during the pandemic. All of us craft distillers stepped up. Now I need something. Not asking for much, but a little bit of a tax break so I can continue to serve the people.”
On Sunday, McCormack found out that the provision, spearheaded by Congresswoman Stephanie Murphy, who serves on the Ways and Means Committee, and others, like Senators Marco Rubio and Rick Scott, was added to a larger COVID-19 relief package.
By Monday afternoon, the full text of the bill dropped, leaving lawmakers scrambling to comb through more than 5,000 pages and vote in both chambers.
Now, distillers are eyeing what happens in D.C. as for many, it changes the course of their future business plans.
“I hope this passes and goes forward, and it’s supposed to be permanent tax cuts, so I don’t have to worry about this anymore," he explained. "I can plan on the still coming in, expanding my building, expanding my help, possibly getting health benefits for my employees. This is a big deal to guys like me."