Tasting Room

Washington State Craft Distillers Plea for More Tasting Room Flexibility

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In Washington State, distillers are currently allowed to operate only one on-site tasting room with serving limits of 2 oz. per customer. Crosscut.com recently ran a feature on the push among distillers in the Evergreen State to expand their flexibility in order to survive:

[P]roducers of Washington’s craft spirits say they’re not sure their industry has a future if they don’t get help from the state Legislature this year.

A proposal at the state Capitol would allow craft liquor distillers like Hembree to open two additional off-site tasting rooms, which they say would allow them to reach more customers. Unlike the single tasting room allowed under current rules, the two new tasting rooms would not be attached to a distillery’s main production center, allowing the business to expand to new locations.

Senate Bill 5549 also would allow craft distilleries more freedom to serve sample cocktails, so they can show customers how to use local spirits in mixed drinks at home…

Right now, the state’s craft liquor rules allow distilleries to serve half-ounce samples, which can be mixed with other spirits only if those, too, are produced on site. Under the bill, Washington’s craft distillers would be allowed to serve some craft spirits made by other local distilleries, expanding the variety of drink samples they can make.

Current law also sets a serving limit of 2 ounces of samples per person, per day. Senate Bill 5549 would keep that limit in place for straight alcohol, but abolish it for mixed drinks…

Read the while piece here.


A (Small) Step Forward For Virginia Distilleries

Silverback Distillery CEO Christine Riggleman.

Silverback Distillery CEO Christine Riggleman.

Virginia distillers continue to labor under some of the worst distilling laws in America, but their outlook is set to get (at least slightly) better. Virginia has the the 3rd highest distilled spirits taxes in the country, requires all liquor sales to take place through government-run liquor stores, and restricts the amount of tastings and servings a distillery can provide to on-premise visitors to a mere 3 oz. of spirits.

Even worse, the state’s notorious “NET 30” payment scheme requires distillers who sell their own bottles in their tasting rooms to send 100% of the proceeds of the sale to the Virginia Alcoholic Beverage Control Authority (ABC). Then, only 30-45 days later, ABC sends back the distiller’s portion (which amounts to a mere 46% of the sale price after Virginia’s high mark-ups and taxes are factored in).

Unsurprisingly, this antiquated process creates tremendous cash flow problems for craft distilleries since they are not even able to touch the money they derived from bottles sales until over a month later. To add insult to injury, the state also charges distilleries handling fees even for bottles sold inside the distillery (and thus handled exclusively by the distillery’s own employees).

Despite these burdensome rules, the state legislature has been resistant to even small changes to the law. Finally, this year, a modest step forward was achieved. An effort led by Silverback Distillery CEO and Founder Christine Riggleman resulted in Virginia lawmakers passing legislation that ends the NET 30 payment scheme and eliminates on-site handling fees (although the law doesn’t take effect until 2020). The DrinksReform.org team reached out to Riggleman, whose distillery is located in Afton, Virginia, to get her reaction to the news.

“[The legislation] allows us to have the working capital on-hand to meet demand,” Riggleman said. “With the flow of tourism and customers, you can’t predict always what the demand for the products will be, so you need the funds on-hand to be able to gear up for busier times.” Riggleman specifically cited the need to have adequate cash flow to invest in bottles and labels in preparation for periods of heightened sales, like around the holidays—something that is hard to do when the Virginia ABC holds their sale proceeds for over a month.

While Riggleman was relieved that her efforts resulted in real change, she was quick to note that more work remained to bring Virginia’s laws on distilled spirits in line with how it treats beer and wine. “This is just a band-aid; I still want full parity [with beer and wine],” Riggleman said. “We’re still hemorrhaging every month in Virginia trying keep up with customer demand as well as all the laws.”

In fact, Silverback Distillery recently opened a new production facility in Pennsylvania rather than expanding in its home state of Virginia. Riggleman noted that, in contrast to Virginia, Pennsylvania has no on-premise tasting limits and even allows distilleries to serve beer and wine.

Ultimately, Virginia will need to continue to grapple with the fact that its many Prohibition era laws are continuing to hamstring a promising growth industry. Hopefully Riggleman’s efforts will lead to more Virginia distillers joining the push for reform.

(R Street’s Jarrett Dieterle has previously profiled Christine Riggleman and her family’s experiences dealing with Virginia alcohol laws).