Posted on June 01, 2022
California’s Small Craft Distilleries are Fighting for Their Survival
A pending state bill would allow these locally-owned businesses to ship to their California customers. But, lobbyists for giant out-of-state liquor corporations are trying to kill the effort. Failure to pass the bill would put the future of craft distilling in jeopardy.
June 1, 2022 (Sacramento, Calif.) – California’s craft distillers – the same small businesses that produced and donated hand sanitizer to local hospitals and first responders during the pandemic – are fighting to secure the simple right that has long been afforded to wineries: to ship directly to their in-state customers.
State Senate Bill 620 (SB-620) was written by Sens. Bill Dodd and Ben Allen and is currently in committee. If passed it would allow craft distilleries to ship directly to California customers who are 21 and over. It would also increase the number of bottles a distillery can sell a customer per day. As it is now, craft distilleries can’t sell more than 2.5 liters per day to a customer.
“Today, when I have a customer in my tasting room or online, and she wants to buy four 750ml bottles of our bourbon and have them shipped directly to her home in California, I have to explain both of those requests are illegal,” says Alex Villicana, President of the California Artisanal Distillers Guild (CADG) who owns RE:FIND Distillery and Villicana Winery in Paso Robles, Calif. “That’s a huge hurdle for making sales and building a customer base.”
However, Villicana can walk a few steps to his winery next door and sell the same customer multiple cases of his wine and have them delivered overnight to her door.
What further frustrates Villicana, and the nearly 200 other craft distillers in California, is a recent “test-run” of shipping spirits has already proven safe and successful. For 21 months during the pandemic, the state allowed craft distilleries to ship to of-age customers in California. That emergency provision expired in March 2022.
“For almost two years, California distilleries were able to grow their small businesses, expand e-commerce, retain and even create jobs during a pandemic, and through alcohol-based hand sanitizer give back to their local communities,” says Cris Steller, CADG Executive Director and Founder of Amador & Dry Diggings Distillery in El Dorado Hills, Calif.
“In this day in age, especially with e-commerce, we need an even playing field with California wineries and other West Coast states like Oregon, Arizona and Washington that allow craft distilleries to ship in-state,” says Steller. “The fate of our industry depends on it.”
Aaron Bergh, President and Founder of Calwise Spirits Co. in Templeton, Calif. agrees.
“Since the pandemic there has been massive consolidation in liquor store distribution, so I lost 95% of my business that I will never see again. This bill is essential to our survival,” says Bergh. “Craft distilleries like mine are family owned and operated so we aren’t just small businesses, we’re active members of our communities.”
A California craft distillery is one that produces fewer than 150,000 gallons per year. For reference, Austin, Texas-based Tito’s Handmade Vodka produced more than 24 million gallons in 2020. Giant spirit corporations have a stranglehold on liquor store chain shelves and do not want small California-owned distilleries to cut into their market share with direct-to-consumer shipping. Lobbyists that represent these out-of-state and international corporations are currently pressuring state lawmakers to kill SB-620.
“Put another way,” says Bergh, “liquor conglomerates want to limit the choices California consumers have on what they drink by forcing them to the store shelves where they have leverage.”
Bergh, Steller, Villicana and other supporters of the bill, including California’s wholesale alcohol distributors, strongly believe leveling the playing field for shipping will not save the industry but prove to be a huge boost for the state as a whole. Their example: the California wine industry’s meteoric growth since 1986 – the year the state first allowed wineries to ship within California.
In 1986, there were 700 wineries producing $5.5 billion of wine in California. Today, there are 4,000 wineries in the state producing close to $40 billion of wine. Wineries employ 325,000 Californians, and generated $7.9 billion in local taxes. And last year, California wine’s total economic impact – which includes an array of beneficiaries, from tourism to cork suppliers – was $57.6 billion.
“Direct shipping legislation for wineries created a financial boom for all stakeholders while positioning California as the leader in the US wine industry,” says Villicana. “With the passage of SB-620, the same can happen with the craft distilling industry.”
Small craft distilleries need your help. If you support the right for these small businesses to ship directly to their California customers who are 21 and over – just as wineries have done since 1986 – please take the time to write your state representatives and Gov. Gavin Newsom. An easy-to-email form letter, and more information on the issue, can be found here: www.myspiritsnow.com/take-action.php