2021 was a challenging year for California distillers, but it's ending with some good news. Yesterday the state's Alcoholic Beverage Commission (ABC) extended emergency regulatory relief for distillers that will allow them to continue shipping spirits directly to consumers, a measure that was set to expire on January 1. The new extension will last until March 31, 2022.
As Reason reported on Tuesday, liberalization of direct shipping rules has helped California distillers offset sales lost in other channels during the pandemic, such as tasting room visits and in-store tastings. Along with legalizing to-go cocktails and relaxing restrictions on outdoor dining and drinking, these rule changes helped small businesses survive the pandemic. But while these latter two changes have been extended, direct shipping of spirits was stuck in regulatory limbo: The state legislature is considering a bill to legalize it permanently, but a vote wouldn't be expected until months after the emergency order expired.
A coalition of state senators, California distillers, and trade groups urged Democratic Gov. Gavin Newsom and the state ABC to extend direct shipping long enough for the legislature to take up the question. Senate bill S.B. 620 would allow California distilleries and some other entities to make direct shipping to consumers a part of their business for the long term. It would also put California distillers on even footing with wineries and breweries, who already enjoy this privilege.
"I'm relieved that I'm not getting cut off from a huge portion of my customer base," says Aaron Bergh, president and distiller at Calwise Spirits in Paso Robles, California. "But we haven't cleared the hurdles yet and could find ourselves back in a precarious position in three months if we don't make our voices heard. I hope the legislature ultimately votes to pass S.B. 620 so we can continue to run our businesses responsibly and foster consumer choice, marketplace competition, and safety."
"We appreciate the governor and ABC giving California small distillers some breathing room to keep our businesses afloat as we work this legislation through the process," says Alex Villicana of Re:Find Distillery, also in Paso Robles. "Craft distillers have dedicated a lot of human and financial resources to this issue and we hope to gain parity with wineries on direct to consumer shipping in the upcoming months."
If passed, California will join nine other states that have legalized direct shipping of spirits, along with 46 others in which direct shipping of wine is permitted. The pandemic response has vastly accelerated liberalization of alcohol laws despite opposition from temperance groups concerned about easier access to drink. Long term, these changes promise to expand access to the longtail of niche spirits, many of which are inconvenient or impossible to purchase due to requirements to sell through a three-tier system in which distributors act as a mandatory middleman between producers and consumers.