The proposal to collect millions in new fees on alcohol products — dollars to be earmarked for Colorado programs aimed at addressing the behavioral and physical health effects of alcohol abuse — died on Tuesday.

House Bill 1271 sought to create three separate “enterprises” and establish fees of $0.05 per gallon of beer and cider, $0.07 per liter of wine, and $0.35 per liter of spirits manufactured and distributed in Colorado. Each enterprise would have funded a different treatment aspect: prevention, community and jail-based services, and treatment programs.

A similar measure introduced in the Senate in 2024 passed through its first chamber but died in the House Finance Committee.

“Right now, BHA has a greater need than available funding, and we have to make the difficult decisions about which programs and services can continue and which cannot,” said Rep. Jennifer Bacon, D-Denver, referring to the Behavioral Health Agency.

Bacon sponsored the legislation, along with Rep. Jamie Jackson, D-Aurora.

The way the sponsors framed the issue, Colorado’s mental health providers are in dire need of mental health funding and the state is in no position to provide it, given the $850 million shortfall that legislators face.

That shortfall is driven by, among other factors, a sharp spike rise in Medicaid spending, which is under investigation by a congressional committee over reports of waste, fraud and abuse following stories outlining over-billing in transportation spending and alleged improper payments in autism services.

Jackson argued that the state already requires the tobacco and marijuana industries to help pay for prevention and treatment for harms associated with their products — and alcohol shouldn’t be any different.

“This bill creates dedicated industry fees to help support prevention, treatment, and recovery,” she said. “Ultimately, I think the decision you have in front of you is about your priorities. We can continue asking taxpayers to shoulder these costs alone, or we can ask a multibillion-dollar industry to be part of the solution.”

Dr. Bill Berman of Denver Health’s Public Health Institute said alcohol is the leading cause of premature illness and death in Colorado.

Alcohol consumption is also a major factor in many crimes and serious diseases, such as liver failure and cancer, he said.

“The situation is bad. It t’s getting worse quickly, and we’ve done nothing about it,” he said. “We know what can work, and we’re doing none of it.”

Lacey Hayes of Tribe Recovery Homes, a sober living facility in Denver, said about 80% of her clients struggle with alcohol abuse, which oftentimes occurs alongside another substance addiction.

Two years ago, Tribe served about 1,800 participants in one year. This year, due to financial issues, the facility is expecting to only serve 400.

“Our decrease in participants is not because there isn’t a need or an increase in alcohol use disorder. It is quite literally because our community partners are vanishing,” she said.

Representatives of the alcohol industry argued that the state should look for mental health care funding elsewhere.

Sam DeWitt of the Colorado Brewers Association said the alcohol industry is already struggling with the impacts of inflation and tariffs, as well as declining beer consumption. Lawmakers to consider other existing funding sources, rather than imposing more financial burdens on alcohol manufacturers and wholesalers, he argued.

“Adding a new tax would place additional strain on an industry that is already struggling to stay afloat,” he said.

The beer industry already pays over $1 billion in taxes to the state each year, and many producers already invest money to help treat and prevent alcohol use disorder, said Brian Crawford of the Beer Institute .

“The beer industry is a strong supporter of our Colorado communities and has invested billions of dollars to successfully reduce alcohol-related harm,” he said. “Our work not only nurtures the success of our vibrant industry, but also demonstrates brewers’ commitment to the well-being of our communities and to our consumers.”

Crawford also said the federal Substance Abuse and Mental Health Services Administration (SAMHSA) recently announced that it has provided over $14 million in block grants for mental health and substance use treatment in Colorado in the past year.

While all of the committee’s Republicans voted against the bill, several Democratic members were torn. Rep. Karen McCormick, D-Hygiene, agreed that the state is currently unable to fund additional prevention and treatment programs but was unsure about imposing additional fees on businesses.

Even an amendment exempting small businesses wasn’t enough to assuage those concerns.

“We’re struggling to find how to fund the things that we really need to fund, and I hate being in this position,” she said.

McCormick ultimately voted in opposition, as did two other Democrats — Reps. Katie Stewart, D-Durango, and Sheila Lieder, D-Littleton.

The bill failed on a 5-8 vote in the House Health and Human Services Committee.