Every bottle of whiskey made the old-fashioned way starts with grain. In Shattuck, out in northwest Oklahoma, Rock Creek Distillery grows the wheat for its bourbon and rye on its own farm and sells the finished product in more than 400 locations across the state. It’s a perfect illustration of the connection between Oklahoma grain growers and distillers, and it’s the kind of business our laws should support rather than undercut.

Oklahoma growers have plenty of grain to offer. USDA figures show that our state produced more than 60 million bushels of corn and about 23.5 million bushels of sorghum in 2025, and wheat remains a cornerstone of the rural economy. When a distiller buys local grain to make whiskey, that money makes its way into small towns that badly need it. For the landowners and agribusiness owners the Oklahoma Rural Association represents, every additional grain buyer matters.

That is why a little-known provision of the federal tax code, Section 5010, should concern anyone who cares about farm-to-bottle businesses. Spirits are taxed on their alcohol content, at $13.50 per proof gallon. Under 5010, a producer who blends in wine or alcoholic flavorings receives a credit that reduces the tax on that portion of the bottle. The alcohol a distiller makes from grain gets no comparable break. In effect, the law taxes the farm-grown product at full price and discounts the blended-in alternative. If you ask me, those incentives are totally backward.

Oklahoma distillers are up against massive national and international brands. A grain-to-glass distillery like Rock Creek is left competing with a conglomerate that benefits both from massive production scale and tax breaks for additives.

The Section 5010 credit has earned itself a nickname: the foreign liquor loophole. This is because enforcement favors big international producers. Agents from the Alcohol and Tobacco Tax and Trade Bureau are tasked with visiting production facilities to confirm the ingredients being used for tax purposes, but they can only do this at American distilleries. On top of that, some foreign countries allow more of these additives than the U.S. does, further slanting the benefits toward overseas conglomerates.

There is a lot of talk in Washington about eliminating waste, fraud, and abuse. I think the foreign liquor loophole is a perfect target. Federal estimates put the credit’s cost at about $219 million this year, climbing to $2.5 billion over the next decade. If that cost was helping small craft distillers in Oklahoma, maybe there would be an argument for it. But, in reality, it’s doing just the opposite.

The Oklahoma Rural Association is committed to making sure rural voices are heard in Washington. From Tulsa to the Panhandle, Oklahomans who grow the grains for American spirits deserve a tax code that treats them fairly. I urge Oklahoma’s congressional delegation to support repeal of Section 5010.

About: Monica Collison is an attorney, Founder and Executive Director of the Oklahoma Rural Association.