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ESDI: S.236 Senate bill will significantly reduce alcohol excise taxes on spirits, beer and wine. ESDI is expected to benefit!

By Ian Gilson, PhD, CFA


The Craft Beverage Modernization and Tax Reform Act of 2017, commonly known as S.236, now has 52 US Senators signed on as co-sponsors. Together with the 281 co-sponsors of the companion bill, H.R. 747, in the House it ensures the passage of tax reform for all three of the major alcoholic groups, spirits, wine and beer.
Effective December 2018 the bill reduces excise taxes on spirits (as produced by Eastside Distilling) to $2.70 per proof gallon (100% alcohol) on the first 100,000 gallons of distilled spirits. This equates to 250,000 gallons of 80 proof spirits. or 1,261,655 bottles of 750 ml. The tax per case will be reduced to $2.43 a case on 100 proof spirits. Eastside Distilling has paid $36 a case or more in the past (average proof is not reported).
So, all of ESDI's (NASDAQ:ESDI) production in the foreseeable future will be taxed at the lower rate. Also the tax is applied to product sold and excludes product aging.
This equates to an estimated reduction in payments (expenses) by ESDI of at least $1 million in 2019 as compared to what it would have been under the old regulations. It does not change our estimates of net sales.
The new Burnside Bourbon is now available for sale throughout Oregon including the company's tasting rooms.


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