Great article in the Nashville City Paper about the proliferation of distilleries in Tennessee. Until just a few years ago, there were only two, Jack Daniels and George Dickel. Now there are about a dozen. Here’s why:
From the repeal of Prohibition in 1933 until the most recent law change, it was exceptionally difficult to get legal approval to distill spirits in the state of Tennessee. Only a few counties allowed the practice, and for a distillery to be approved it had to get a referendum on the ballot and then win a countywide vote. This made it nearly impossible for new producers to start up.
In 2009 all that changed. A bill was drafted that would permit distilleries in any county in Tennessee where there are both operating liquor stores and liquor by the drink, which opens up much of the state. But there was a moment where things didn’t look good for the bill.
“A state senator said to us at one point: ‘Wine is good because Jesus drank wine. But beer and whiskey are bad, because Jesus did not drink those,’ ” Darek Bell of Nashville-based Corsair Distillery recalled. “It felt like we had traveled back in time to Prohibition.”
“At one point it looked like the bill would fail,” Bell said. “An older representative got up and spoke. He said ‘I don’t know anything about this stuff. But if it will help the farmers in my community sell more corn, then I am all for it.’ And just like that, the opinion turned, and the bill seemed to sail through after that.”
But that doesn’t mean there still aren’t some daunting regulatory hurdles. The most asinine is probably the wholesaler/distributor laws, variations of which are common to many states. The only real purpose of these laws is to drive up the cost of booze in order to enrich people who run alcohol wholesaling businesses. Wholesalers are also licensed by the state, and usually given state-granted monopolies over large chunks of territories.
[T]o make it to the shelves, a distillery must sign on with a distributor, which is a very delicate aspect of the process. Tennessee liquor distribution, which also includes wine and higher-alcohol beer, is subject to what is known as a franchise law. This law was put in place to protect the franchisee, in this case, the wholesaler. According to local attorney Will Cheek, once a distiller enters into a contract with
a wholesaler, it is very, very difficult to terminate that contract. In fact, he couldn’t recall a single case of such a relationship being terminated.
So, hypothetically, were a distiller to ever get crossways with the distributor for whatever reason, leaving that relationship would be nearly impossible.
“It’s a harder choice than choosing your spouse. Getting divorced is far easier than breaking up with your distributor,” Cheek said.
This could prove especially difficult for microdistilleries, which might not get as much notice on a wholesaler’s radar. Cheek said the law is structured to protect the wholesalers from big, out-of-state competitors.
“From a distiller’s standpoint, the law is ridiculous. It offers every protection to the wholesaler and almost none for the distiller,” he said.
If you sat down and consciously tried to design a system prone to corruption and highly favorable to large, incumbent alcohol companies at the expense of upstarts, I don’t think you could do much better than this.
But the most beautiful example of regulatory nonsense can’t be blamed on Bible Belt temperance. It comes courtesyof the federal government. In order to get a federal permit for whiskey-makin’ . . .
. . . you have to be able to prove you know how to make whiskey but are not allowed to have actually made it . . .
Wonderful, isn’t it? It’s illegal to distill booze for any reason, even solely for personal consumption. So to get a federal permit, you really do have to swear to the feds that you know how to distill, but it’s illegal for you to ever have tried.*
Related: This Tennessee-distilled wonderfulness is the best bourbon I’ve ever had. Don’t be deterred by the chocolate. It’s delightfully subtle.
*A commenter points out that someone could conceivably have learned the art of distilling in another country. Good point! That also means that when it comes to whiskey-making, the feds are giving a huge advantage to . . . foreigners!