Retail Report | Alabama Retail Association

After a weeklong hiatus, the Legislature returned to Montgomery in full swing. Catch up on the latest below.

Bills to Cut Taxes Sail Through the House
A $192 million tax cut package sponsored by Rep. Danny Garrett, R-Trussville, received bipartisan support in the House of Representatives on Tuesday. This package includes four bills aimed at reducing the tax burden on residents:

HB386 reduces the state sales and use tax rate on groceries from 3% to 2%, effective September 1, 2025.
HB387 authorizes county and municipal governments to lower their own sales and use tax rates on groceries, removing previous restrictions on such reductions.
HB388 increases the exemption amount for taxable retirement income for individuals aged 65 or older from $6,000 to $12,000.
HB389 increases the optional standard deduction and expands the adjusted gross income range at which the state imposes individual income taxes.

The bills will now travel to the Senate for consideration.

Portable Benefits Bills Advance in the House
Bills aimed at providing health insurance and retirement benefits to independent contractors, commonly referred to as portable benefits, have been approved by the House Ways and Means Education Committee. Unlike traditional retirement or healthcare benefits, portable benefits are not linked to a specific job; instead, they are associated with workers who may be employed by multiple businesses as contract employees.

During the Committee meeting, members approved both HB142, sponsored by Rep. Neil Rafferty, D-Birmingham, and SB86, sponsored by Sen. Arthur Orr, R-Decatur. The Senate approved Sen. Orr’s bill earlier in the session.

New PBM Bill Introduced and Passed by the Senate
SB252 prohibits pharmacy benefit managers (PBMs) from paying independent pharmacies less than their costs for medications. The legislation, sponsored by Sen. Billy Beasley, D-Clayton, passed both the Senate Banking and Insurance Committee and the Senate Chamber this week. SB252 doesn’t explicitly mention a fee but says PBMs can’t reimburse independent pharmacies less than the amount paid by the Alabama Medicaid Agency – which currently stipulates a $10.64 per-prescription dispensing fee and actual acquisition cost of the drug. This legislation is a scaled-back version of earlier proposals, SB93 and SB99.

You can read more here.

Bills Introduced to Regulate Psychoactive Hemp
The Legislature continues to grapple with how to rein in regulations for psychoactive hemp products and beverages. SB132 and SB182 were introduced earlier in the session but have yet to receive votes. After receiving feedback from members and advocacy groups on his previous bill, Sen. Tim Melson, R-Florence, introduced SB237. A public hearing was held in the Senate Health Committee on Wednesday and the bill failed to garner enough support from members to pass.

Sen. Melson noted that the Committee will monitor actions taken on HB445 sponsored by Rep. Andy Whitt, R-Madison. HB445 authorizes the Alabama Alcoholic Beverage Control Board to regulate all consumable hemp products by licensing manufacturers, distributors and retailers. It also establishes labeling and testing requirements, limits the amount of THC allowed, and prohibits the sale of any consumable hemp product to individuals under 21 years of age.

House OKs Tax Exemption for Baby, Maternity and Menstrual Products
HB152 by Rep. Neil Rafferty, D-Birmingham, would exempt the purchase of certain baby supplies, baby formula, maternity clothing, and menstrual hygiene products for personal use from the state portion of sales and use tax. The legislation also allows local governments to adopt exemptions for these products. The bill passed the House Ways and Means Education Committee and House Chamber this week. Senator Arthur Orr, R-Decatur, is carrying similar legislation in the Senate.

New Ready-to-Drink Bill Introduced in the Senate
Sen. Bobby Singleton, D-Greensboro, has introduced legislation that defines a new category of ready-to-drink mixed liquor beverages. These beverages will contain no more than 7% alcohol by volume and will not exceed 16 ounces in size. This new category is called “mixed spirit beverages.”

The proposed retail license for selling mixed spirit beverages is set to cost $500. Further, it requires retailers to purchase mixed spirit beverages from the wholesaler designated by the manufacturer.

Amended Wire Transfer Bill Considered
Following substitution, HB297, which imposes a 4% fee on international wire transfers originating from Alabama, received a favorable report from the House Ways and Means Education Committee. The revised bill more clearly defines what constitutes a payment processor and exempts processors such as PayPal and Venmo from the fee. A portion of the revenue generated from this fee will be allocated to county sheriff’s offices and English Language Learners (ELL) programs in public schools. The bill has been re-referred to the Financial Services committee for further consideration.

The Legislature will be observing Spring Break March 24-28.
The next installment of the Capitol Retail Report will be posted on April 4.