LOUISVILLE, Ky. (WAVE) – A bill moving through the Kentucky legislature would impose a 4% state retail regulatory license fee on all sales of alcoholic beverages and cannabis-infused beverages sold in the state.

House Bill 9, sponsored by Representatives Jason Petrie and Matthew Koch, also calls for taxation by pure unit of alcohol regardless of the type of product. The bill includes an emergency clause, meaning most provisions could take effect immediately upon signing. The full tax overhaul would not take effect until July 1, 2027.

What the bill would do

In addition to the retail fee, the bill would establish state wholesale regulatory license fees on alcoholic and cannabis-infused products. For the first time, kratom, hemp-derived, and cannabinoid products would be brought into the formal tax structure.

The bill would repeal Kentucky’s existing excise and wholesale taxes on alcoholic and cannabis-infused beverages on July 1, 2027, replacing them with the new regulatory license fee system.

Under the bill, 0.5 percent of collected state retail regulatory license fees would be directed to the Alcohol Wellness and Responsibility Education Fund. The legislation would also create new public health laboratory and testing standards for cannabis-infused beverages, kratom, hemp, and cannabinoid products.

The bill also includes a permanent prohibition on retail licensees using a premises where alcohol was sold to minors three or more times within 24 months.

Industry raises concerns over added costs

Louisville Hospitality Association spokesperson Sean Vandevander said the Metro’s hospitality industry is on high alert as the bill continues to advance.

“This being so specific to the bar, restaurant, and hospitality industry, it’s certainly raised some alarms,” Vandevander said.

Vandevander said businesses would have to cover between $10,000 and $15,000 more per month in added expenses — costs he said many cannot absorb.

“What’s happening is we’re taxing the public for enjoying themselves,” he said. “So this 4% is going to have to be absorbed somewhere. Now every time you, me, or anybody else wants to go into a restaurant, bar, liquor store to grab some libations to enjoy themselves, they’re going to be taxed 4% more.”

Sponsors cite level playing field

Representative Koch said consistent taxation would create a level playing field for producers, distributors, and retailers.

The Louisville Hospitality Association disagrees with that position and has been contacting state lawmakers directly.

“There have been over 400 or 500 phone calls made to the Senate in the past 24 hours,” Vandevander said. “Everybody from owners to patrons, regulars at bars and restaurants, on down to the bartenders, waitresses, cocktailers, everybody’s calling those phone numbers, sending emails right now to their legislator.”

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