Small craft spirits producers like the Wishkah River Distillery in Aberdeen could quite literally dry up if legislation to allow the expansion of retail offerings dies in Olympia, said co-owner and master distiller Josh Mayr.
Mayr and the Washington Distiller’s Guild have been promoting legislation for the last two years to allow distilleries the same sort of tasting room opportunities already available to wineries and breweries, which would boost retail sales.
“We’re not asking for money. We’re just asking for a way to allow our businesses to grow organically,” said Mayr.
Senate Bill 5549 and its companion bill House Bill 1411 — prime sponsored by Rep. Brian Blake, D-Aberdeen — have had a rough road in the Legislature. The House bill died in the Commerce and Gaming Committee. The Senate bill, with only days left in the current session, is mired in the Senate Ways and Means Committee and has not made it onto the floor for a vote.
“Frankly, we need this bill passed or many, many Washington craft distilleries go bankrupt in short order,” said Mayr.
The legislation calls for:
• Two additional off-site tasting room licenses, consistent with wineries
• Removal of the 2 ounce tasting service limit, consistent with wineries and breweries
• Cross-selling other Washington spirit products in their tasting rooms. That means offering up to 25 percent of stock that is provided by other distilleries. To compare to a brewery, if there are eight taps, two of them can be beers from another brewer.
• Ability to sell mixed drinks for on-premise consumption, consistent with serving rules for wineries and breweries
As it stands, distilleries can only offer tastings of their product at the distillery site. In the case of Wishkah River, that site is on the Port Industrial Road, high traffic in terms of cargo vehicles but not a main hub for tourist travel. A good day in the tasting room might be two or three couples. A very good day is four. A bad day is zero, said Mayr.
Because of the product made from start to finish at a distillery, a flammable liquid, distilleries typically have to be in an industrial area, like the Port property where Wishkah River sets. Mayr said allowing for tasting facilities in, say, downtown Aberdeen or even on the coast, could drastically improve retail sales for his and other distilleries. The legislation would allow for the two off-site tasting room licenses at the cost of $2,000 apiece.
The 2-ounce limit and the inability to serve cocktails is another hindrance.
“We want to make it a more social atmosphere,” said Mayr. Wine and brewery tasting rooms do not have such limitations, which encourages visitors to stay longer and an opportunity to sample a wider range of product, which is better for on-site sales, which drive the craft distillery industry.
Mayr used the example of a home brewer. He or she, usually as a hobby, brews a beer. The brewer’s friends sample it, and like it. He gets a license and can now sell his beer at $7 a pint. Word spreads and the bar down the street wants to have it on tap: he sells them a keg. Word spreads and soon bars in the next town, the next county and beyond want his product.
Regulations as they are for craft distilleries don’t allow for that kind of organic growth, said Mayr. Allowing distilleries to sell mixed drinks featuring their products would.
A change to the proposed legislation came in the form of an amendment prohibiting anyone younger than 21 “from entering or remaining on the distillery’s premises in an area where alcohol is sampled, sold, or served, or on the premises of an off-site tasting room.”
Craft distilleries tend to be small family run affairs. Mayr himself has a wife and two young children. Occasionally, the kids may come by to hang out when the schedules of husband and wife collide. Winery and brewery tasting rooms currently allow minors on the premises, which encourages more frequent and longer visits.
Mayr said for the smaller family operated distilleries the prohibition of minors onsite could be the final straw that runs them out of business. Plus, the issue divides the guild of distilleries and makes for a bill the guild cannot fully support.
The average craft distillery in the state brings in about $57,000 in annual revenue, “nothing more than a hobby,” said Mayr. “Craft distilleries in Washington collect a paltry $16 million in annual gross revenue as a whole state industry. That’s out of about $2 billion in annual spirit sales in Washington.
“We’re a drop in the proverbial bucket,” said Mayr.
Mayr feels it’s lobbying efforts by beer interests that are killing the distillery bills.
“We feel we are being shoved off the table here by Big Beer behind closed doors,” he said. “The distillers of this state deserve some answers from their representatives.”
The legislation pursued by Washington distillers “didn’t just appear from nowhere,” said Mayr. It’s based on distillery legislation in other states that has passed and caused a boon in the profitability and sustainability of distillery businesses in those states.
Mayr said the Washington guild has included the Liquor Control Board in the drafting of the legislation. While the state board has been a part of the process, he said it remains neutral on the bill, said Mayr.
Exactly why the legislation continues to stall in the Legislature has never been sufficiently explained to Mayr, who said his efforts to keep the craft distillery industry alive and allowing it to thrive have dominated his time the past several years.
“We struggle on a daily basis. At some point I wonder, am I Don Quixote? Am I searching for the lost city of gold I’ll never find?
“If nothing else it’s been a lot of fun the last seven years, and the loyalty shown by my customers is humbling,” said Mayr. “But I can’t continue to go to my investors and ask them to put money into this thing with no light at the end of the tunnel.”