Retail Report | Alabama Retail Association

Bill to Cut Sales Tax on Groceries Sent to Governor
On Tuesday, the Senate passed HB386 which reduces the state sales and use tax rate on groceries from 3% to 2%, effective September 1, 2025. The bill was amended in Committee to incorporate language that gives local municipalities the authority to lower their local sales tax on groceries by resolution or ordinance and without legislative approval. The House concurred with the Senate changes, and the bill now awaits Gov. Kay Ivey’s signature. The bill is expected to save Alabamians about $122 million annually.

Bill to Eliminate Tax on Baby, Maternity and Menstrual Products Sent to Governor
A bill that exempts the purchase of certain baby supplies, baby formula, maternity clothing, and menstrual hygiene products for personal use from the state’s 4% sales tax received final approval from the Senate on Tuesday. This legislation also allows local governments to adopt their own exemptions for these products. Sponsored by Rep. Neil Rafferty, D-Birmingham, and Sen. Arthur Orr, R-Decatur, the bill will take effect on September 1, 2025, if signed by the Governor.

Bill to Reign in Regulation and Sale of Hemp Products Approved by Legislature
In a closely contested vote of 19-13 margin, the Senate approved legislation that authorizes the Alcohol Beverage Control Board to regulate all consumable hemp products by licensing manufacturers, wholesale distributors and retailers. Notably, the legislation restricts sales to people over 21 and limits retail establishments that sell consumable hemp products to existing liquor stores or other locations that minors may not access. An amendment by Sen. Bobby Singleton, D-Greensboro, added an exception allowing grocery stores to sell hemp-infused beverage products. The legislation narrowly defines a “retail food store” and stipulates that at least 75% of the store’s selling area, with a minimum of 14,000 square feet, must be dedicated to food items.

The Alabama Retail Association collaborated with the bill’s sponsor to ensure that seeds or seed-derived ingredients generally recognized as safe by the United States Food and Drug Administration—such as hemp milk and hemp seeds—are excluded from the requirements of this bill. The House concurred with the Senate’s changes. If signed by the Governor, the bill will take effect on January 1, 2026.

Restriction on Vape Products Approved and Sent to Governor
Rep. Barbara Drummond’s, D-Mobile, legislation to expand the regulation of tobacco and electronic nicotine systems by the Alcoholic Beverage Control Board and increase the age to purchase vaping products from 19 to 21 received final approval.

HB8 increases penalties for violation of tobacco retail laws and requires retailers of electronic delivery systems to display new signage warning of the dangers of vaping devices. Originally, the bill prohibited product sales outside of vape stores and specialty shops. However, an amendment proposed by Sen. Bobby Singleton, D-Greensboro, allows grocery stores and gas stations to continue selling these products under the new regulations. This amendment passed narrowly with an 18-16 vote.

The amended bill was approved by the Senate with a 28-5 vote and subsequently passed the House, which concurred with the Senate’s changes, by a 52-43 vote. The bill now awaits consideration from Gov. Kay Ivey.

Board of Pharmacy Sunset Bill Approved by Conference Committee and Sent to Governor
A sunset bill addressing reforms and oversight for the Alabama Board of Pharmacy was sent to a conference committee following nonconcurrence by the House. Sponsored by Rep. Kerry Underwood, R-Tuscumbia, HB123 extends the Board’s existence until October 1, 2026. It also expands the Board’s membership and clarifies its authority to impose fines.

The Senate made changes to the House version, including removing the requirement that each congressional district must be represented by a board member and changing the appointment date from October 1, 2025, to January 1, 2026. Following conference, the House concurred with the Senate’s changes, and the bill now awaits the Governor’s signature.

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