Over the last decade the number of micro or craft distillers in the U.S. has gone up by almost 30 percent a year, going from just 50 in 2005 to more than 600 in 2013, according to the industry group the American Distilling Institute (ADI). Washington is a leader in this growing industry. The state boasts 83 distillers, more than any other state in the nation. Yet despite this remarkable growth, it is difficult for distilleries, especially small ones, to survive. Startup costs are often extremely high and zoning regulations can be cumbersome to navigate. In addition, most state laws restrict craft distilleries from selling spirits directly to retailers and consumers, and from charging for on-premises samples.
However, the Washington legislature recently passed a bill–SB 6226–that seeks to help distillers overcome some of these hurdles. The bill, originally sponsored by Senators Holmquist Newbry, King, Conway, Hewitt, and Kohl-Welles aims at removing burdensome restrictions on distillery operations and supporting the state’s emerging craft-distillery industry by accomplishing the following:
- Increasing the annual spirits production limit for craft distillers from 60,000 gallons to 150,000 gallons.
- Eliminating the 3 liter per day per person limit on the sale of spirits by a craft distiller for off-premises consumption.
- Authorizing a craft distillery to charge customers a fee for spirits samples of 0.5 ounce or less served to them on-premises.
- Authorizing any licensed distillery to: 1.) sell spirits of its own production for consumption off the premises; 2.) contract with, and sell spirits to, other licensed distillers and manufacturers; and, 3.) provide for free, or for a charge, spirits samples of 0.5 ounce or less to customers on the premises, subject to a daily maximum of 2 ounces per person per day.
Importantly, craft distilleries and distilleries that opt to sell spirits from their premises must be aware that they are required to comply with the applicable laws that relate to retail liquor licensees, such as responsible alcohol sales, as well as the state and federal requirements that apply to distilleries.
In a statement by the primary sponsor of the bill, Senator Holmquist Newbry said, “By giving our craft and general distillers many of the same tools already enjoyed by our wineries and brewers, we’re not only helping support that industry, we’re also supporting all of those farmers and ancillary businesses along the supply chain. Passage of this bill is a win for distillers; it’s a win for those Washingtonians looking for work; it’s a win for our agricultural community; and it’s ultimately a win for the consumer.”
On March 12, 2014, the bill was delivered to Governor Jay Inslee for his signature.
Stoel Rives extends congratulations to all of the Washington craft distiller and distiller clients we have had had the privilege of working with who spent endless hours testifying to the merits of these changes during committee hearings in the recent legislative session.
Susan Johnson, Stephanie Meier and Claire Mitchell are following and will continue to report on SB 6226 developments.