UTSA researcher brews up business plan for Texas distilleries

JANUARY 30, 2020 — The craft-distilling industry is booming in Texas. Now, a newly released UTSA study explains how distilleries impact the Texas economy from creating new jobs to the production of agricultural products and their innovative uses. Thomas Tunstall, professor and director of research at the UTSA Institute for Economic Development is leading the study, which will help distillery owners in Texas raise their production limits and receive a tax break on their sales, aiding in increasing the number of craft-distilled spirit companies. 

“Quantifying the fiscal contributions helps to highlight the potential for economic growth that the opportunity represents,” said Tunstall. 

The study, to be released in February, will provide an in-depth analysis on the economic contributions of distilled spirits in 2017, including the number of agricultural products the distilleries use and the economic impact of the average economic sector. Reports show the number of distilleries in Texas increased from 127 in 2017 to 162 in 2019. 

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Distilleries in Texas are producing a great variety of spirits made out of a wide range of agricultural products from peaches, cherries, grapefruit and absinthium, which is a bitter herb. 

Tunstall explained distilleries are a growing industry in Texas and there is a vast array of agricultural growers that benefit from product sales, including corn, rye, barley, wheat, sorghum, jalapeño pepper, prickly pear, wheat, juniper berries, sugar cane, black-eyed peas, lavender, spoon cactus and yeast. 

“Small distilleries in Texas receive a favorable tax treatment, but it’s a way for small distillers to get a foothold in the market because right now they are limited as to what they can sell,” Tunstall added. 

Findings of the report will be presented during the next legislative session, in May 2021, with a goal of a permanent extension of the Craft Beverage Modernization and Tax Reform Act. The act consists of a temporary extension in a federal budget bill that President Donald Trump signed in December 2019. 

Mike Cameron, president of the Texas Distilled Spirits Association stated that the entire industry was affected by the taxes that continued to increase. 

“There was no tax relief up until 2017. When the bill passed to reduce the tax, companies were free to invest capital in other important areas, such as expanding operations and creating new jobs, purchase of new equipment as well as investing in marketing and innovations,” Cameron said. 

Tunstall added, “An increase on this tax break will provide these companies with more opportunities to sell their product at a significant value, not only nationally but internationally as well.”

— Ingrid Wright

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