March 24, 2021

Blumenauer and Wyden Introduce Legislation to Support Growing U.S. Kombucha Industry

The KOMBUCHA Act would prevent kombucha - a nonintoxicating beverage - from being unfairly subjected to alcohol beverage excise taxes

WASHINGTON, D.C. — Today, U.S. Rep. Earl Blumenauer (D-OR), a senior member of the Ways and Means Committee, and Senate Finance Chairman Ron Wyden (D-OR) reintroduced legislation to put a stop to unfair and outdated federal alcohol taxes on kombucha companies in Oregon and across the country. Specifically, the KOMBUCHA Act would ensure that kombucha beverages are exempt from excise taxes and regulations intended specifically for beer and other alcoholic beverages.

“The past year has been incredibly hard on businesses in Oregon and across the country, especially as supply chains have been disrupted. Still, kombucha is one the fastest growing beverage industries in the world,” Blumenauer said.  “There’s no reason why kombucha brewers and sellers should get taxed like beer. Our common sense legislation would eliminate this burden and support a burgeoning industry that has a major impact on Oregon’s food and beverage economy.”

“The growth of kombucha production in Oregon and nationwide creates jobs and a beverage folks enjoy,” Wyden said. “It’s been a particularly difficult year for small businesses, and our bill would modernize taxes and regulations so these businesses can continue to grow and sell their products in stores across the country.”

Kombucha, a nonintoxicating beverage made from a combination of tea, water, and a symbiotic culture of bacteria and yeast, has trace amounts of alcohol that can trigger federal excise taxes and regulations covering alcoholic beverages. This amount of alcohol in kombucha is usually less than 0.5 percent alcohol, but because of the natural process of fermentation, the alcohol content may occasionally increase slightly, especially during transport or handling by third parties.

Today, under the Internal Revenue Code, beverages with more than 0.5 percent alcohol-by-volume are subject to excise taxes intended for beer. But the reality is, consumers do not buy and drink kombucha because of its insignificant alcohol content. For example, a person would have to consume between five and 10 bottles of kombucha to equal the alcohol in just one beer.

The KOMBUCHA Act would amend the Internal Revenue Code of 1986 to increase the applicable alcohol-by-volume limit for kombucha from 0.5 percent to 1.25 percent. Kombucha would still have to meet the health and safety requirements generally applicable to nonalcoholic beverages as well as certain beverage alcohol labeling requirements. 

The common sense legislative fix would support the fast-growing U.S. kombucha industry. By 2025, the economic impact of the industry is projected to be $5.25 billion. Currently, more than 7,500 people work directly in the country’s kombucha industry.

A copy of the KOMBUCHA Act – also referred to as the Keeping Our Manufacturers From Being Unfairly Taxed While Championing Health Act – is available here.