While craft wineries and breweries have been flourishing in Ohio, craft distillers have had a tougher road. Strict regulations on liquor manufacturing in the state have, until recently, kept most distillers from expanding or making a profit. Even now that Ohio has eased up on some of those restrictions, members of the Ohio Distiller’s Guild believe more needs to be done.
The Guild was created in 2012 to advocate on behalf of craft distilleries throughout the state. The necessity for such a guild is highlighted by the fact that until 2012, only two micro-distilleries in Ohio were able to have a retail operation on-site.
Micro-distillers thrive on something called an A-3a permit. An A-3a allows a distillery that produces less than ten thousand gallons a year to sell bottles of liquor to consumers at the distillery in order to generate much-needed revenue. Prior to 2012, however, an A-3a permit could only be obtained by one distillery in each county with a population of 800,000 or more, which in Ohio means Franklin, Cuyahoga and Hamilton.
Dave Rigo and Greg Lehman started Watershed Distillery in Columbus after some dissatisfying time in the corporate world. Unfortunately, by the time Watershed was up and running, Franklin County’s A-3a permit had already been taken by Middle West Spirits in the Short North.
“When we first started we did all these tours and actually couldn’t sell a bottle from our distillery,” said Rigo. “Thankfully, Middle West was actually on our side to get the law changed.”
In 2012, House Bill 243 was passed and removed the limitations on the number of A-3a permits issued for micro-distilleries in the state. By the end of 2012, 14 A-3a distilleries had sprung up in the state. Today there are 24.
“The fact that there was a cap on three companies in the state was a very cautious approach to the situation that was coming, which was the explosion of micro-distilleries in the US,” said Ryan Lang. Lang is the co-owner and head distiller at Middle West. He is also president of the Ohio Distiller’s Guild.
The removal of the cap on permits was undoubtedly helpful, but Lang said Ohio is still behind when it comes to craft distilling. The Guild has 8 member distilleries right now and Lang expects that number will grow to about 15 within the next couple of years. At the same time, the Guild is working to change laws they believe still limit the industry’s potential.
Firstly, Lang said, “We want the ability to serve on site by the glass,” just like a brewery or winery. Lang calls this the “ultimate imparity” and that allowing distilleries to attach pubs onto their establishments would create a “level playing field with people in other industries.”
Other adjustments the Guild would like to see are to the state mark-up, which Lang said is “a big problem for competing with out-of-state competitors.” Lang said that for every $30 dollar bottle a distiller sells, nearly $15 goes to the state of Ohio in some sort of mark up or state tax. Usually a distiller must also hire a broker and sales managers, as well as pay the federal excise tax.
In the end, “you are left with about 35 percent of your bottle sold price at retail,” said Lang. “That is a problem.”
One particular challenge that Lang and the Guild are facing is that JobsOhio is funded by state liquor sales, and attempts to return some of the profit margin to Ohio distillers can be seen as detrimental to the nonprofit economic development group. That is not the case, said Lang, and part of what the Guild hopes to do is to work with JobsOhio, the Department of Commerce and the Division of Liquor Control, “without upsetting the apple cart.”
“We certainly don’t want to be at odds with JobsOhio or Director [Andre] Porter” said Lang.
The Guild has been working closely with Commerce and Liquor Control, and Lang said Commerce Director Porter and Liquor Control Superintendent Bruce Stevenson have been very responsive and helpful.
“They have really been working hard to help Ohio craft distilleries,” said Lang.
The Guild will continue to seek out legislation that will return some of the profit margin to the micro-distilleries without harming JobsOhio’s revenue, as well as other changes that will put micro-distilleries in the same robust position as Ohio breweries and wineries.
“It’s been good for us to form this guild and get everybody talking at the same pace,” said Lang.
For more information about the Distiller’s Guild, visit www.ohiodistillersguild.org.
Columbus Underground is Celebrating Sprits & Wine Week from September 1st to 7th, brought to you by Ohio Wines. Visit www.ohiowinesvip.com to learn more about Ohio’s fruit of the vine.