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State struggles to revise microdistillery laws

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Next month, the Montana Department of Revenue will host a public hearing on proposed amendments to how the state's booming microdistilling industry conducts business. It marks the first hard look officials have taken at the law since establishing the Montana Microdistilling Act in 2005, and, if approved, the revisions would dramatically alter what craft distillers are allowed to sell in tasting rooms.

State Liquor Control Administrator Shauna Helfert says part of the motivation to revisit the language was to clear up ambiguities regarding what qualifies as liquor produced on premise. As the industry has grown, some in-state microdistilleries have turned to sourcing spirits from other distilleries to craft certain beverages. For example, Willie's Distillery in Ennis uses sourced spirits in its chokecherry liqueur. Co-owner Robin Blazer explains the company does so out of necessity, since it cannot produce the appropriate alcohol with its own small-batch whiskey and brandy still.

Under the new amendment, which requires that 90 percent of the liquor sold in a microdistillery's tasting room be distilled on site, Willie's would no longer be allowed to sell the liqueur at its own location. The proposed revisions would do nothing to limit what distilleries can produce for sale through state liquor stores or out-of-state distributors.

Missoula Independent news
  • Cathrine L. Walters
  • The Montana Department of Revenue has proposed revisions to the state‚Äôs microdistillery laws, and not all craft distillers are happy about it.

The issue is hardly exclusive to Montana. As the craft distilling industry has taken off nationwide, many start-ups have turned to sourced spirits as a raw ingredient for some or all of their liquors. Others are purchasing sourced bourbon and either blending it with their own, as Willie's does, or simply re-barreling and bottling it under their own label. Indiana-based MGP Ingredients, one of the nation's leading suppliers of beverage alcohol, noted this fall that increasing sales of its premium bourbons and whiskeys "continue to have a positive impact on profitability."

Federal regulations are strict regarding how such products are labeleda measure designed to offer some transparency for consumers. But the use of sourced spirits has caused friction among distillers in Montana, with some asking the state to step in.

"If you're going to do it, you should label it, and you should have to tell people. You shouldn't be able to lie about it," says Carl Bock, owner and operator of Steel Toe Distillery near Potomac, which produces what Bock calls an all-Montana "Prohibition-style whiskey" (read: moonshine). "There should be transparency there. If you're pimping yourself as a Montana product, you should be a Montana product."

Montana law does allow for use of sourced spirits. Ryan Montgomery, co-founder of Missoula's Montgomery Distillery, isn't bothered by the pratice itself. Like most critics, he's concerned about the level of transparency with which those distillers operate.

"Really now, the whole movement behind craft, whether it's craft brewing or craft distilling or craft cheesemaking, is we offer something different than the large corporations can offer," Montgomery says. "When something bills itself as craft and is simply buying something from these large corporations and bottling it, I think it damages the whole brand of craft."

Blazer says her company's use of sourced spirits is "as transparent as the day is long. All you have to do is turn the bottle over, ask the question." With the Montana Wild Chokecherry Liqueur, the label reads "produced by" and not "distilled by," in accordance with federal law. Willie's website, however, makes no mention of ingredients from outside Montana.

Blazer likens sourced spirits to one of the base ingredients in a pie.

"I'm a pie-maker," she says, "but I don't make my own butter, and I don't grind my own cinnamon or go find my own vanilla. I purchase those individual ingredients, I put it together and I make it into my own recipe that's mine. Then it's mine. It's my pie, I made it."

Blazer adds that crafting the base spirit, essentially vodka, is the "easiest part" of the distilling process. If people don't believe the end product is truly theirs, she says, "they're wrong."

Willie's isn't the only distillery concerned about the impact of the proposed amendments. Headframe Spirits in Butte would similarly be banned from selling its popular Orphan Girl Bourbon Cream Liqueur in its tasting room. Co-owner John McKee explains that the base cream used in the recipe has alcohol mixed into it at the dairy to make it shelf stable. Since his distillery is not a registered dairy, he would be unable to produce that cream himself. McKee and Blazer both see the new regulations as indicative of a broader lack of understanding about how complex the liquor world really is, particularly among state regulators.

"It unfortunately doesn't call into account how distilled spirits are actually made," McKee says. "It calls into account how one classification is made, but not how all distilled spirits are made."

Despite the differences of opinion among Montana's distillers, McKee believes it's time for those in the industry to band together. Everyone can agree that rules need to evolve as craft distilling grows, he says, but there are bigger concerns out therenamely, the fact that the proposed regulations appear to favor the Montana Tavern Association, which has taken significant issue with microbrewery and microdistillery tasting rooms over the years.

"A rising tide lifts all ships," McKee says. "All of us together expressing our opinions and coming to a plan together is ultimately going to be the best plan."

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