Colorado Lawmakers Advance Bills to Hike Alcohol Taxes for Mental Health Funding

Two bills under consideration in the Colorado Legislature this week aim to increase fees and taxes on alcohol producers to fund substance-abuse and mental-health treatment. The proposals come as the state faces an $850 million budget shortfall and as the alcohol industry, which generates $23.9 billion annually and supports more than 61,000 jobs, is experiencing declining sales and closures. In the past two years, 102 breweries have closed in Colorado.

House Bill 1271, scheduled for its first hearing in the House Health and Human Services Committee on Tuesday, would impose new fees on beer, wine, and spirits sales. The revenue would fund three new enterprises focused on prevention and treatment of alcohol-related harms. House Bill 1301, set for a hearing in the same committee on Wednesday, would ask voters in November to approve new taxes on alcohol and retail marijuana to finance a new mental-health hospital in Aurora.

According to legislative estimates, HB 1271 would raise $35.5 million in its first full year. HB 1301 is expected to generate about $44 million annually, according to its sponsor, Rep. Bob Marshall, D-Highlands Ranch. Together, the bills could bring in $79 million each year for prevention and treatment programs.

The proposed increases are significant for alcohol producers. The Colorado Beverage Coalition says HB 1271 alone would mean a 60% average increase over current state excise taxes for brewers, vintners, and distillers. If both bills pass and voters approve the tax hike, breweries would see a combined 154% increase in state taxes and fees; wineries would face a 205% increase; distilleries would pay 158% more.

Currently, brewers pay an excise tax of 8 cents per gallon, wineries pay 7.3 cents per liter, and distillers pay 60.26 cents per liter. HB 1271 proposes a new fee of 5 cents per gallon for beer and cider, 7 cents per liter for wine, and 35 cents per liter for spirits. HB 1301 would add another 7.3 cents per gallon for beer and cider, 8 cents per liter for wine, and 60.26 cents per liter for spirits.

Supporters of the bills argue that alcohol producers should help cover the costs of treating disorders linked to their products. Rep. Jamie Jackson, D-Aurora, said taxpayers currently bear these costs through healthcare spending and social services related to crime and family disruption caused by alcohol abuse.

Industry representatives counter that they already contribute $56 million annually in state excise taxes that lawmakers could allocate to prevention and treatment but largely do not. Shawnee Adelson, executive director of the Colorado Brewers Guild, said additional fees will likely be passed on to consumers through higher prices at every stage of distribution. She warned that this could further reduce demand at a time when breweries are already struggling with rising costs and declining sales.

Small producers say they will be hit especially hard. Carlin Walsh of Elevation Beer Co., one of Poncha Springs’ largest employers, estimated that HB 1271 alone would raise his annual state fees and taxes by $12,000—a cost he cannot fully pass along to customers without risking further sales declines or job cuts.

Wine producers also expressed concern about ripple effects on rural economies and tourism. Cassidee Shull of the Colorado Association for Viticulture & Enology said higher costs could limit what vintners can pay farmers or invest in attracting visitors to regions like Mesa County.

Proponents point out that Colorado’s alcohol excise taxes are among the lowest in the country—ranking 40th for wine, 46th for beer, and 47th for spirits according to the Tax Foundation—and argue that modest increases could raise needed revenue without harming consumers significantly.

However, industry leaders argue that low excise taxes do not reflect the full tax burden faced by producers due to high equipment costs, business property taxes, and other expenses unique to Colorado’s market conditions.

The bills also address gaps in treatment availability. Dr. Hannan Braun of Denver Health noted that less than 2% of people with alcohol-use disorder receive medication-assisted treatment in Colorado; fewer than 15% get any treatment at all. HB 1271 aims to expand access through public awareness campaigns, prevention programs, early intervention efforts, community outreach, detox services, and around-the-clock care.

HB 1301 would fund a new mental-health hospital with up to 70 beds at the Anschutz Medical Campus in Aurora—adding capacity to a system currently limited to about 400 beds statewide (down from roughly 2,000 in the 1960s). Sen. Judy Amabile, D-Boulder—who sponsors both bills—said long wait times at existing facilities sometimes force authorities to release people accused of crimes because there is no space available.

The proposals face skepticism from some lawmakers who question whether alcohol should be tied directly to funding mental-health services or whether such targeted revenue streams are appropriate for single projects. The Capital Development Committee voted unanimously not to recommend HB 1301 last week after hearing concerns about its approach.

As hearings begin this week in the House Health and Human Services Committee, legislators must weigh how much responsibility regulated industries should bear for health problems linked to their products—and how best to balance economic impacts with public health needs amid ongoing budget challenges.