Maryland’s current tax structure places small distilleries like hers at a severe disadvantage in the fast-growing RTD market, Monica Pearce, co-founder of Tenth Ward Distilling Company in Frederick, Md., told the Maryland House Ways and Means Committee.“Our RTDs range from 5 to 7.5 percent ABV, while many beers exceed 8 to 10 percent ABV and yet are taxed far less.”

Pearce also emphasized the broader economic pressures facing Maryland distillers and the urgent need for relief.

“This past year has been one of the most economically challenging our industry has ever faced,” Pearce said. “Consumer spending has slowed, costs of goods and labor have risen, and many craft producers across the state are struggling simply to stay open. Now more than ever, small businesses need relief — not barriers that make survival harder.”

She was testifying in support of a bill that would lower the tax rate on spirits-based RTDs to $0.60 per gallon from $1.50 per gallon, better aligning the tax with products of similar alcohol content.

Emily Smith, vice president-state public policy for the Distilled Spirits Council of the United States, testified that while the ready‑to‑drink category has evolved rapidly and now offers consumers a wide range of options, state tax laws continue to fail the craft distillers who make these products and hamper their growth in Maryland.

“Lowering the tax on low‑ABV spirits-based RTDs isn’t about special treatment—it’s about a more rational and balanced tax policy,” Smith said. “HB 736 would strengthen state revenues, support Maryland jobs and expand consumer choice. There is no public policy rationale for maintaining policies that stifle innovation and prevent competition.”

Maryland is one of several states reevaluating the taxation of spirits-based RTDs to ensure fair treatment for producers and equal access for consumers. Twenty-five states already apply lower tax rates to lower-ABV spirits-based products.