Although Prohibition ended in 1933, its effects are still being felt today – particularly in the distilling industry. Certain U.S. states still prohibit the purchase of alcohol on Sundays and many still contain “dry” counties or towns (areas that prohibit alcohol sales all together). However, what can be more damaging to distilleries is strict statewide control over how and when their liquor can be distributed and sold to consumers.
There are currently 17 states that control the sale of distilled spirits and, in some cases, wine at the wholesale level. Out of those jurisdictions, 13 also exercise control over retail sales for consumption off site, either through government-operated stores or designated agents. This means that distilleries have long been caught in the crossfire – not allowed to sell direct to consumer on site, not allowed to provide tastings on site, and not allowed to select their own retailers or distributers. However, with the number of craft distilleries growing throughout the U.S., these Prohibition-era rules are slowly being rewritten – and are accompanying advances in many other areas of the industry as well.
For example, the Georgia Craft Brewers Guild and the Department of Revenue compromised in 2016 to allow distilleries to advertise products to consumers. The California Artisanal Distillers Guild successfully lobbied to give distilleries in California the option to operate tasting rooms, host private events, serve cocktails, run a restaurant, and sell directly to consumers on site. The Distilled Spirits Council of the United States even met with legislators this year to discuss the budget for the Treasury Department’s Alcohol and Tobacco Tax & Trade Bureau in the hopes of speeding up the processing of label and formula applications and permits for importers, wholesalers, distilleries.
But laws and regulations aren’t the only area where modern distilleries are making changes. Take the ones revolutionizing the aging process or others incorporating unique ingredients into their spirits. Ironclad Distillery, now accepting investments via First Democracy VC, has even introduced a new BarrelTag program. When a barrel is emptied after being used to age Ironclad’s bourbon, Ironclad creates a unique ID for each bottle filled using that barrel. Purchasers can then register on the Ironclad website to track the barrel to see whether it ends up in a brewery, is used to age other spirits like rum, or becomes furniture in someone’s home. Ironclad also plans to expand its warehouse in Virginia to house a tasting room and possibly even purchase more efficient, higher capacity distilling equipment.