California Distillers Finally Allowed To Operate Tasting Rooms

Photo from vistavision

When news broke that a new California law would allow the state's craft distillers to open their own tasting rooms, two immediate reactions crossed my mind: (1) "Hooray for California distillers!" and (2) "Why on earth couldn't California distillers have tasting rooms already?"

To find the answer to the second question, one must turn the clock all the way back to December 5th, 1933, the day President Franklin Delano Roosevelt signed the 21st Amendment to the U.S. Constitution into law, getting rid of that pesky 18th Amendment and officially ending the failed experiment of American Prohibition.

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"Prohibition pushed the reset button on a lot of stuff when it came to alcohol," says Lance Winters, master distiller for St. George Spirits in Alameda. "And when the laws were rewritten, there were some special interests group around, like always, to write the laws."

Breweries and wineries were back to business as usual, making their liquors on site, holding grand tasting events to promote their latest batches, selling them directly to interested consumers. The distillers, however, weren't so lucky. Anyone trying to make vodka, whiskey, rum, or any of the other permutations that come from the ancient alchemic process weren't allowed to hold tastings or sell directly to the consumer. With one notable exception, that is: Brandy manufacturers.

"We're lucky," says Ansley Coale, president of Mendocino Country's Germain-Robin Brandy. "Back when they put the legislation through in the '30s, apparently the brandy people had an in."

Which meant that non-brandy distillers had to spend their off-hours playing politics with the fat cats in double-breasted suits to get the liquor laws changed. State by state, the walls between wineries/breweries and distillers slowly began to come down. Except in California. "A lot of states outside of California have seen the potential for these distilleries to add not just tax revenue, but local pride," says Winters. "At this point, there are 42 states that have already allowed paid tasting rooms."

The "paid" is a big distinction. In California, before the new law was written, distillers were allowed to open their own tasting rooms, but couldn't charge consumers to enter and use them. This meant that if they were going to hold tastings, the distillers -- many of them small businesses already teetering on the edge of financial collapse -- would have to foot the bill to operate the rooms on their own. Instead, most simply just forgot about tastings entirely and closed their doors to the public.

But finally, after years of fighting -- and, most importantly, greasing the correct wheels in Sacramento -- the state's distillers finally have their paid tasting rooms.

(However, this being California and all, that isn't to say this new freedom comes without a catch: While consumers may now be charged for tastings, they will only be allowed to taste six products. "Before, people could taste everything that we made," says Winters. "But it's a hit we were willing to take." If you've ever walked into a brewery or winery, you know this limit doesn't apply there.)

But despite the new law, there's still a huge difference between what's allowed to occur in distilleries compared to their brewery/winery brethren down the block, one that has me re-thinking my initial "Hooray for distillers!" sentiment: It is still illegal for distillers to sell their own product to the consumer directly.

"Right now, Utah is more progressive than California in its spirit laws," says Winters. "You could ski into High West Distillery in Utah. You could have lunch there, because they can operate a restaurant. You can have cocktails in their restaurant. Then, you could buy a bottle there and ski out of it."

In California? Not so much. Because of the continuing existence of those initial post-Prohibition laws, the sales of a distillery's product can only take place through a third-party distributor. As you'd imagine, this keeps a large chunk of change from being collected by the distillery itself. "If you're selling through a distributor, you're selling it at less than 50% of the retail price," says Coale. "The margin is enormous to be selling it directly to the consumer. They get hundreds of visitors a month, and it would mean a lot of money." As far as who's making sure these arcane laws continue to be on the books? It doesn't take Lieutenant Columbo to figure this one out.

"The word is that the big distributors just don't want [the change in law] to happen," says Coale.

It makes sense. Distributors are classic "middle men" in business parlance, their job existing merely to take products from the manufacturers and transport them to the buyers. If they can keep the producers from selling directly to the consumers, they can maintain their footing in the business. Perhaps this isn't the best long-term business strategy on a micro level ("If you can taste and sell at the point of production," contends Winters, "consumers will no doubt be more apt to purchase those products when they see them at the liquor store"), but why mess with success on the macro by changing a far-reaching law? Who knows what the ramifications would be?

So, the fight in California continues, simultaneously between distillers and wineries/breweries for equality, and between distillers and distributors for selling power. And until it's resolved, California will continue to have the distinction of being less progressive with their liquor laws than Utah.

Utah, people. Utah.

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