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Craft distillers hope to tweak state law to be able to charge for tastings and sell bottles – larger wholesalers oppose

In a 65,000-square-foot structure that once housed Navy fighter jets, Lance Winters of St. George Spirits makes popular Hangar One vodka, along with gin, bourbon, rum, whiskey, liqueurs and even absinthe.

Unlike vast distilleries in Kentucky and Tennessee that make and bottle hard liquor by the millions of barrels, Hangar One is produced by one of a growing breed of small-batch, craft distillers. There are already more than 30 of them in California, and — like wineries and microbreweries — they want to charge for tastings and sell bottles for their visitors to take home.

But in recent months, the craft distillers have run up against the powerful liquor lobby in Sacramento, led by wholesalers opposed to changing state law. A legislative hearing is set for next month, and the battle is on.

Fighting the powerful liquor distributors to tweak alcoholic beverage laws in Sacramento can be daunting, said Phillip Ung of California Common Cause, a watchdog group. “I can’t think of one example where the distributors haven’t gotten their way on alcohol issues.”

Offering labels such as Three Sheets Rum, TRU Organic Vodka and Botanivore Gin, these craft distillers are ready to test the odds. To them, spreading the gospel of organic liqueurs and old-time ryes is a matter of economic survival.

Opening more tasting rooms and selling their liquor there are crucial to the fledgling industry, said Melkon Khosrovian. He is head of Greenbar Collective in Los Angeles’ downtown arts district, where Greenbar makes organic whiskey, tequila, bitters and other spirits in an old garment sewing shop.

“Without these laws, we lose ground each year to more progressive states — like Washington, Colorado and New York — where distilleries can earn much more money from their tasting rooms and on-site sales and spend that money here to gain market share,” he said. “We need our elected officials to bring California’s laws up to par with the rest of the country’s so we can stay competitive, create jobs and support our state’s farmers and manufacturing trades.”

For now, artisanal spirit makers are prohibited from operating their tasting rooms for extended hours as do wineries. Instead they offer occasional scheduled tours at either no cost or for nominal fees.

After a recent Greenbar tasting of Slow Hand White Whiskey, Darby O’Neill, a film studio marketer from Glendale, was enthusiastic. She supports fixing “hiccups” in the law that ban liquor sales at distilleries. “It would have been neat to take one of the things we tasted home,” she said, “but we couldn’t do that.”

Greenbar also makes brands such as Bar Keep Organic Bitters, Crusoe Organic Rum and Fruitlab Organic Liqueurs. In San Diego, for instance, Ballast Point makes a Three Sheets Rum. Charbay Vodka comes from Domaine Charbay in St. Helena; Gin 209 is made by Distiller 209 in San Francisco, and Botanivore Gin is also produced by St. George Spirits. These craft liquors are served in some bars and sold in many liquor stores and supermarkets.

Greenbar and other new-breed spirits makers argue that their emphasis on California-grown ingredients, such as wheat, fruit, rye and sugar cane, puts them on the alcohol-laced leading edge of an eat-local and artisanal food movement first popularized by legendary chef Alice Waters at her Chez Panisse restaurant in Berkeley.

Using sugar cane from Imperial County, barley from Chico and rye from Shasta “helps benefit California at every stage from farm to glass,” said Winters, the president and master distiller at St. George Spirits in Alameda.

California’s craft distillers want to amend strict post-Prohibition laws that separate the three main aspects of the liquor business: production, distribution and retailing. The idea of those laws was to prevent the formation of oligopolies such as the big brewers in Britain that control the entire supply chain, down to the corner pub.

Opposition slowed the craft distiller’s push even before their bill, AB 933, was introduced Feb. 22. Distributors signaled through legislative staff and lobbyists that they didn’t want competition from distillers selling from their tasting rooms.

Liquor distributors have been major players in the Legislature for decades, particularly in the Assembly and Senate Governmental Organization committees. The panels deal with alcoholic beverages, gambling and horse racing. They’re known as “juice committees” in Capitol parlance because their members often get campaign contributions from industries they regulate.

Liquor wholesalers contributed more than $590,000 to lawmakers’ political kitties over the last four years, according to, an independent website that tracks money and politics.

“Our lobbyist advised us that he didn’t think direct sales were going to be one of those things that would be available to us this year,” said California Artisanal Distillers Guild President Arthur Hartunian, a Napa vodka maker. “He didn’t think we had a chance because there was too much opposition from the wholesalers.”

Historically, California liquor laws treat distilled spirits more strictly than wine, said Terrance Flanigan, a lobbyist for Southern Wine & Spirits of America Inc., one of the state’s two big wholesalers. “My client is comfortable with the current law,” he said.

Distributors warn that these new operations could be the equivalent of opening new liquor stores in unsuspecting neighborhoods, said Manuel Espinoza, the state’s former top alcoholic beverage regulator and the executive director of Wine & Spirits Wholesalers of California. Lawmakers should not “whittle down the concept of the three-tiered system” of producers, distributors and retailers, he said.

The distillers’ bill may have gotten off to a rough start by being watered down to deal only with tasting events. But its author, Assemblywoman Nancy Skinner (D-Berkeley), said she’s eager “to start the conversation” with distributors to help the small companies create new jobs and economic activity.

Artisanal distillers are looking to lawmakers to help spur California versions of “Distillery Row” in Portland, Ore. A handful of spirit makers banded together a few years ago to attract tourists and locals to the gentrifying Southeast neighborhood.

“I think there’s a market for that,” said Anne Stericker, a West Los Angeles personal concierge and blogger. “It’s not expensive. It’s something new that’s a little adventurous.”

Source: Los Angeles Times,0,7067682.story