Extras on Excise: Will Virginia’s New Confectionery Law Serve as a Model for States Looking to Fatten Up State Revenues?


 

Ice Cream

Starting July 1, Virginia will begin regulating a newly created license category: “confectionery.” Senate Bill 61 provides for new state and local licensing for businesses that sell confectioneries containing five percent or less alcohol by volume for off-premises consumption. The bill’s sponsor, Virginia Sen. Barbara Favola (D), indicates that the new law is intended to help businesses “that bake alcohol infused confectionery products obtain an ABC license, so they may continue to grow their businesses.”

Besides the benefits to bakers looking to include alcohol in their sugary creations and expand their businesses, the new licenses could provide at least modest revenue to the state. A confectionery license will cost $100 at the state level and up to $20 at the local level. Confectionery license fees are on top of any other applicable state and local taxes or fees that would apply if the product was nonalcoholic. So, how much new revenue could be generated from the confectionery law? This likely depends on what kinds of products the new law defines as “confectionery.”

What Constitutes “Confectionery?

S.B. 61 doesn’t specifically identify the scope of what kinds of businesses are covered under the term “confectionery.” Instead, it provides that the Alcoholic Beverage Control Authority (ABC) will develop regulations defining the term.

Perhaps the Virginia ABC Board might look to the dictionary as a starting point. Merriam-Webster defines “confectionery” as “1. the confectioner’s art or business; 2. sweet foods (such as candy or pastry); 3. a confectioner’s shop.” How broadly or narrowly the ABC Board defines “confectionery” may have a large impact on how many businesses will apply for confectionery licenses when the law goes into effect. 

For instance, it’s arguable that Virginia’s confectionery law covers a growing new industry: ice cream parlors that spike their products. Boutique ice cream shops with alcoholic offerings appear to be springing up across America.

Aubi & Ramsa serves alcoholic ice cream in Miami’s Design District with flavors like “Agave Dulce de Leche” (tequila) and “Kentucky Crème Brûlée” (bourbon). Buzzed Bull Creamery in Cincinnati offers flavors like “Drunken Sailor” (spiced rum) and “Cosmopolitan” (triple sec and vodka). Tipsy Scoop in Manhattan has offerings likes Strawberry White Sangria Sorbet, Tequila Mexican “Hot” Chocolate, and Red Velvet Martini. And Freezology Craft Creamery in Patchogue, Long Island, will infuse the customer’s choice of alcohol into a variety of ice cream flavors.

In terms of whether businesses like these would fall under Virginia’s new “confectionery” regime, ice cream is certainly a “sweet food” such that it might qualify (satisfying Merriam-Webster at least). Other baked goods and sweet treats could likewise qualify as “confectionaries.”

Economic Implications for Virginia Unclear for Now

In the Fiscal Impact Statement for S.B. 61, the Department of Planning and Budget stated, “it is not possible to determine the fiscal impact of the legislation because ABC is unable to project how many establishments would apply for this new license type.” Will the availability of confectionery licenses cause existing bakeries and restaurants to make additional sales by offering something different in the form of alcoholic treats? Will the law encourage potential entrepreneurs to choose Virginia to start new businesses selling baked goods or frozen treats containing alcohol? Time will tell how much revenue will be generated from the new licenses.

Other states may want to watch Virginia to see how much revenue is generated from confectionery licenses and whether this is something that they may want to incorporate into their alcoholic beverage licensing regime. Virginia’s new confectionery law could provide a model for how other states implement similar licensing rules, especially if it proves lucrative for local businesses and state coffers.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Should other states follow Virginia’s example and expand their alcoholic beverage laws to include treats with alcohol?

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