California passes bill to help craft liquor industry – The Desert Sun

The American craft beer movement started in Sonoma in 1977, when the first modern U.S. microbrewery began making its own brew. It was an anomaly in a country full of massive beer manufacturers, but it slowly picked up a following.

Almost four decades later, there are more than 550 operating breweries in California, the most of any state in the country. A recent study by the California Craft Brewers Association reported that California craft beer is a $6.5 billion industry. There are few industries that grew as quickly as this one did, and it led many to ask what would be next.

On Thursday, Gov. Jerry Brown signed a bill that granted craft liquor distilleries similar rights to craft breweries. If California has its way, AB 1295 will be the first step in what could be an exploding liquor market, one that will accomplish for California what craft breweries have done for the past 38 years.

Before this bill passed, California was one of just 10 states that didn’t allow craft distilleries to sell products directly to consumers. Customers could visit the tasting room and sample up to six quarter-ounce samples, but couldn’t actually buy the product from the business. They could purchase the liquor in a store if a craft distillery happened to be in business with a distributor, but without a developed customer base, those deals were hard to make.

Now, with the passing of AB 1295, a craft distillery that manufactures less than 100,000 gallons of spirits per year will be allowed to sell up to three 750 ml bottles per customer per day in their own tasting rooms starting Jan. 1, 2016. They will be allowed to hold ownership in on-site restaurants, potentially another avenue for expansion, and make cocktails or mixed drinks in their tasting rooms.

The bill is important enough that some within the industry are calling it the most significant piece of legislation since the repeal of Prohibition in 1934.

“Excitement is an understatement,” said Cris Steller, the executive director and one of the founding members of the California Artisanal Distillers Guild. “If it didn’t pass, I’d be looking for a day job. There are a lot of people in the same boat.”

According to a supervising agent from the California Department of Alcoholic Beverage Control, there are 133 distilled spirits manufacturers in California. The authors of AB 1295 say that 50 of those are craft distillers. Steller expects that number to double in the next 24 months, an obvious boom for the industry as well as local economies.

Steller and the Guild have been pushing hard for this bill for the past three years, but the fight has been raging for more than two decades. Distribution companies control the flow of product to consumers and didn’t want to be cut out of the process.

This version of the bill has specific language in it to hopefully rest those concerns, because the goal for craft liquor companies is not necessarily to sell all of their product in their own facilities. They’ll still need distribution companies to get their product into larger stores and restaurants. This just allows businesses to build their own brand and taste so that when it does come time to expand into stores with a distributor, there’s already a consumer following.

The Coachella Valley, a slow-starter to the craft beer scene, already has one liquor business ready to sell their product in January. Desert Distilling opened in September 2013, put about $300,000 into equipment, and has been financially stagnant since.

Like the craft breweries before them, Desert Distilling now, at the very least, has a chance.

Everett Cook covers food, spirits, and general human interest stories for The Desert Sun. He can be reached at everett.cook@desertsun.com and on Twitter @everettcook.