Kentucky is one step closer to getting a 4%-plus tax on all alcohol and THC beverages in the state under House Bill 9, formerly House Bill 612.
The bill would impose an additional 4% state regulatory license fee on gross receipts. Essentially, if passed, it would be an extra 4% fee on all alcohol sold in Kentucky, affecting restaurants, bars, liquor stores and convenience stores. A new addition to the bill, since it was filed, also includes the extra 4% fee on THC beverages.
Combined with Kentucky’s 6% sales tax, the consumer would effectively pay 10% on their alcohol purchases. A $100 purchase today would bring you $106 after the 6% sales tax. A $100 purchase under the bill would be $110.
In cities like Newport, customers already pay a 2% regulatory fee on alcohol sales. Meaning, if HB 9 passes, Newport customers would pay an extra 12% in fees.
“This proposal shifts a tax currently handled by roughly 300 distilleries and wholesalers onto nearly 10,000 retailers, bars, liquor stores and restaurants, many of whom lack the systems to implement it,” said Adam Blau, owner of The Gas Hole convenience store and The Liquor Box, a liquor store in Independence. “It adds costs, administrative burden and credit card fees, while exposing new taxes to consumers and hurting Kentucky’s competitiveness without clear benefit to retailers or, most importantly, consumers.”
The first 10 bill numbers (HB 1 through HB 10) in Kentucky signal priority legislation chosen by the majority party or house leadership, meaning the change from HB 612 to HB 9 shows it is a priority bill. HB 9 passed the House on March 10, 63-31, and now just needs to pass the Senate.
If passed, it would take effect on July 1, 2027.
“It’s [going to impact] the corner store on the west end of Newport, it’s Jeff Ruby’s in Lexington, it’s Pompilio’s in Newport, it’s One Stop Liquor, it’s Kroger, it’s everybody,” said Kentucky Restaurant Association 2026 Chairman and one of Pompilio’s owners, Joe Bristow, in February.
HB 9 is sponsored by Chair of House Applications and Revenue Committee Jason Petrie, a Republican from Elkton, Ky., Chair of the Licensing, Occupations and Administrative Regulations Committee Matthew Koch, a Republican from Paris, Ky. and Speaker of the House David Osborne, a Republican from Prospect, Ky.
Paul Kloeker manages and operates the One Stop Fuel Mart BP Gas Station, which is associated with Bellevue’s One Stop Liquor Store on Donnermeyer Drive.
Kloeker said he likes to call HB 9 the “Reverse Robin Hood” bill.
“If enacted, it steals from the poor (consumer) and gives to the rich (corporate conglomerates),” he said. “Please reach out to your Kentucky state senator and tell them you oppose HB 9. This will hurt any bars, restaurants and retail stores across the state. Think of those small businesses.”
Blau questioned the state’s ability to administer and enforce the change, such as who will collect the tax, track compliance and follow up with thousands of retailers.
“We are already seeing difficulties with the tobacco licensing platform, despite it being a system businesses have used for years, the state has had to extend deadlines because implementation has been so problematic,” he said.
Another issue he questioned is credit card processing fees.
Blau said distillers and wholesalers generally do not accept credit cards, so this cost does not affect them. Retailers like his businesses however, rely heavily on credit card transactions and typically pay around 3% in processing fees. Any additional tax collected at the register increases the transaction total and therefore increases the fees for retailers.
So, why is the bill being proposed? One idea is to help the state’s distillers.
Distillers are currently taxed on sales. Under the bill, those taxes would effectively be eliminated. That tax system would end July 1, 2027, and be replaced by a tax per milliliter of alcohol contained in the beverage applying to: wholesalers, distributors, distillers, wineries, direct shippers and microbreweries.
“When I have issues with my business, I adapt, and I don’t ask for relief,” Blau said. “It is not the consumer’s responsibility to absorb the consequences of distillers overestimating the bourbon boom and overinvesting in expansion.”
The state is calling the bill revenue-neutral, meaning it will not generate any revenue for them going forward, based on how they developed the formula, essentially shifting the responsibilities of where the taxes are coming from. However, that would rely on the manufacturer’s price to the wholesaler remaining the same, and then on the wholesaler’s price to the retailer remaining the same.