There’s a microdistillery boom going on, with more and more homemade booze being produced across the United States. But these specialty liquor makers don’t have to run from revenooers a la Snuffy Smith. In fact these still owners are thriving with the tax collector’s blessing. According to a story in today’s New York Times, “some of the latest and quirkiest entrants to the industry are in places like Iowa, Indiana, Illinois, Michigan and Mr. Fox’s barn.”
Since Prohibition ended, states have regulated sale and distribution of alcohol, in conjunction with some federal requirements. A lot of places took stances that were barely looser than the bootleg era laws. Now, reports the Times, “small steps have been taken toward loosening state regulation — moves that probably have as much to do with bringing in revenue as anything going on with consumer tastes.”
“Distilled spirits are a bonanza from a tax standpoint,” Michigan State professor and microdistilling expert Kris A. Berglund told the paper. “I guess somebody sat down and looked at the math and said, Holy cow! We’re cutting ourselves out of the action, not to mention tourism dollars.” The Tax Foundation keeps track of key state taxes, including alcohol.
Southern U.S. distillery to legally sell moonshine
Unidentified moonshiners are pictured near Glassy Mountain Township in the Dark Corner of South Carolina, in this photograph taken in the mid-1920s and released on July 28, 2011.
Credit: Reuters/Courtesy of Dean Campbell
By Harriet McLeod
CHARLESTON, South Carolina | Fri Jul 29, 2011 12:46pm EDT
(Reuters) – Two entrepreneurs are taking advantage of new micro-distillery laws in South Carolina to make moonshine whiskey legally for the first time in the southern state.
The Dark Corner Distillery will open next month in Greenville, where engineer Joe Fenten, 27, and longtime home beer brewer Richard Wenger will produce and sell small batches of 100-proof moonshine from a custom-made copper still.
The distillery, housed in a 1925 building, will also include a tasting bar and a museum dedicated to the history of the Dark Corner, the local mountains that were once full of moonshiners, feud and mayhem, Fenten told Reuters.
The area was settled, along with the nearby Smoky Mountains of Tennessee and Blue Ridge Mountains of North Carolina, by Scots, Irish and Welsh who migrated down through the Appalachian mountain chain from Pennsylvania in the 1700s.
“They thought it was their inalienable, God-given right to make whiskey,” said Fenten, a Dark Corner native. “It was a hard life. If you could make an extra 10 cents more for a gallon of whiskey than you could for a bushel of corn, then why not?”
Moonshine traditionally was the term used to describe illegally distilled corn whiskey often made covertly by the light of the moon. The product made at the new distillery will be un-aged corn whiskey, but will be taxed and regulated.
The area came to be called the Dark Corner in 1832 by South Carolina politicians seeking to nullify federal law and who cursed the people of the mountains as Unionists, said Dean Campbell, a Dark Corner native who is the distillery’s official historian.
Whiskey taxes after the Civil War and then Prohibition in the 20th century made the place more lawless, Campbell said.
News accounts in the 1920s called the Dark Corner “a little Chicago” because of federal agents’ raids on stills, killings, and gun and knife fights that broke out after church, he said.
Illegal moonshine is still being made there, Campbell said. In June, sheriff’s deputies busted a still in Landrum, South Carolina, and confiscated 2,000 gallons of illegal white liquor along with $150,000 in cash.
State lawmakers in 2009 altered existing liquor laws in a way that lessened the financial burden on small distilleries, paving the way for the Dark Corner Distillery to set up shop.
Despite the drink’s reputation, legal moonshine makers also have popped up in other states, including Oregon, Wisconsin, Montana, Missouri, Kentucky, Tennessee, Virginia, New York and North Carolina.
Contact your Congress member regarding Bill #777 !
Find your Congress member through the website http://www.house.gov/. The site is relatively easy to use and will help you figure out which member of Congress to contact to request support for H.R. 777. ___________________________________________________________________________
The Bill on which we have all been working so hard has finally been introduced to Congress and assigned #777. Please contact your local Congressman and Senators requesting their support of this very important Bill.
For your convenience we have prepared a letter (below) that could be used when reaching out to your representatives. Feel free to use the letter as written, specific excerpts, or your own wording entirely.
If you believe tax parity with vinters and brewers is an important force for job creation, tourism, and agricultural development, please use this letter as a draft and send it to the members of the House Ways and Means Committee listed below.
-ADI Legislative Committee
The United States is in the midst of a resurgence in distilling, a craft that began with our founding fathers, George Washington, Thomas Jefferson, and others whose early 19th Century whiskey production helped revitalize the colonial economy following the Revolutionary War.
Prohibition drove hundreds of distillers out of business or underground in the 1920s, and following reppeal, only a few smaller operations were able to reestablish viable businesses in the face of competition from larger U.S. and international distillers. That situation has changed dramatically in recent years. Americans have built more than 150 craft distilleries in 40 states, learning the lost art forms, producing some of the world’s finest spirits, and complementing other regional small businesses.
Many small distillers are now building distribution networks with licensed wholesalers throughout the nation. One of the biggest impediments to our ability to grow and succeed is the federal excise tax on distilled spirits, currently at $13.50 per proof gallon. This regressive tax dates back to the second bill enacted by the U.S. Congress, which levied taxes on domestic and imported alcohol beverages. The tax applies to distillers of all size regardless of their profitability, making it a tremendous challenge for startup companies with limited capital and high initial costs for equipment, ingredients, and other business necessities.
To provide some relief to this new class of American entrepreneurs, Congressman Hinchey of NY State has introduced H.R. #777, a bill that would reduce the federal distilled spirits excise tax rate to $2.70 per proof gallon for distillers that produce fewer than 65,000 gallons annually. This discounted tier structure mirrors what the small beer and wine producers have enjoyed for decades and how that’s helped micro brewers and small wineries to flourish throughout the country.
This tax reduction will create parity for craft distillers with existing tax legislation for vintners and brewers and will enable these small distilleries to invest in new equipment and provide new, high-quality and sustainable jobs in communities across the United States.
We urge you to support HR 777. This bill is good for America.
Moonshine conjures images of backwoods stills, the Duke boys, clandestine deliveries of hooch in jelly jars that’s just as likely to causeblindness
as get you drunk. But that’ll soon change if modern distillers have anything to say about it. They’re now distilling spirits “in the tradition of America’s moonshiners” — white whiskeys. And with white whiskey becoming more common on shelves and whiskey fans eager for something new snapping it up by the jug, this so-called moonshine is poised for a revival the likes of which haven’t been seen since Prohibition.
Whether it’s actually moonshine or not, white whiskey is whiskey that has never seen the inside of an oak barrel. While that means it hasn’t had a chance to take on any of the nuance or complexity that aged whiskeys gain inside an oak barrel, it’s also an opportunity to get a taste of the raw spirit. These young whiskeys are similar to many of the better moonshines, often called “white dogs,” still being made in moonshine stills across the country and provide an opportunity for whiskey fans to taste the elements the spirits are made of. It offers a feel for the true differences between the different spirit bases — from rye to corn or even wheat in some cases.
Whiskey drinkers, being a rabidly loyal group, are glad to have a new way to enjoy their favorite spirit. It’s still a relatively small segment of the market, but growing fast as more and more companies bring out their own ‘shine. It’s no surprise, since from a distiller’s perspective it’s a thrill to sell unaged spirits at a premium. It means no sitting on inventory for months on end waiting for the proper time to sell — especially at the prices these bottles are commanding.
“Washington already allows people to make their own beer and wine, so I think allowing them to produce, consume and even sell modest quantities of distilled spirits should also be allowed,” Sen. Marr said.
The bill 6292 creates a new entity, “Craft distillery”. According to the bill, a “Craft distillery” means an establishment that produces within Washington twenty thousand gallons or less of spirits per year using a pot still and in which more than fifty percent of the raw materials used in the production are grown in Washington.
The license is $100, which should make it very easy to open a craft distillery. While the bill introduced by Sen. Marr does not apply to homebrewers, it might open the doors for home distillation in the future.
The bill also states the “use of purchased neutral grain spirits shall be prohibited by a craft distillery unless those neutral grain spirits are made in Washington state”. The purpose of the bill is to encourage the use of local agricultural products.
The first thing to appreciate is that the law on home distillation is based on a completely false premise, a false premise resulting from misinformation fed to politicians and civil servants. They are seldom chemists, biotechnicians or chemical engineers and cannot be expected to be knowledgeable on a technical subject, so they simply parrot what has been handed down to them by previous generations. However, the advent of the Internet enable you and millions of people like you worldwide to understand the subject of distillation so well that you can no longer be fobbed off with myth, folklore and childish superstition.
What is this mythology and folklore and what are the facts? We’ll deal with them individually and in point order.
Myth Distillation makes a particularly strong and virulent type of alcohol so must be controlled.
Fact Distillation doesn’t make alcohol. It never has, never will, and is incapable of doing so. This is worth repeating distillation doesn’t make alcohol.Alcohol is made by fermentation, a perfectly harmless pursuit as millions of beer- and wine-makers will testify.
Myth Distillation produces stronger alcohol (this is true), and the stronger the alcohol the more likely it is to affect your health and lead to drunkenness and unruly behavior (this is the myth). Therefore it must be controlled.
Fact Alcohol strength is irrelevant. It is the quantity of alcohol consumed which matters, witness the fact that 85% of people pulled over for drinking and driving have been drinking beer, not spirits. The same goes for the hooliganism at sporting events so common in Europe —the fans drink can-after-can-after-can-after-can of 5% beer until the quantity consumed adds up to a large amount of alcohol. (This is not meant as a criticism of beer-drinkers, we love beer,—–it merely points to the irrelevancy of alcohol strength.
Myth Making it legal for amateurs to distill spirits at home would lead to a loss of sales by commercial distillers, the laying-off of employees, and loss of tax revenue to the government.
Fact To be cynical about it, a potential loss of tax revenue is a very powerful motivating force with governments and the most likely reason for the ban on home distilling. The fact is that in New Zealand, in the years leading up to the lifting of the ban (1996) sales of spirits had been steadily declining. The same is true of many other countries. But in New Zealand, as.soon as amateurs were free to distill their own spirits there was an immediate rise in commercial sales. (And also a rise in tax revenues of course).
The reason for this surprising turn of events is attributed to the upsurge in interest in spirits which occurred as soon as it became a hobby. It was no longer a remote commercial enterprise but something for fun-loving youth and hobbyists to get their teeth into.