States Hope Hard Liquor Will Help Fix Their Economies

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The lineup of Tuthilltown Distillery whiskeys is displayed at the Tuthilltown Distillery store in Gardiner, New York. The micro-distillers are determined to make a product that tastes like its ingredients: corn whiskey that tastes like corn.

States are still grappling with the recession‘s fallout on their budgets, and it’s driving some to drink. Last week, New York governor Andrew Cuomo signed a bill into law that lets microdistillers sell their wares at farmer’s markets and fairs, something both microbreweries and wineries are already allowed to do. It’s only the latest in a series of initiatives states have undertaken in recent months that make it easier for craft distilleries to set up shop. The wine industry brings tourists and taxes to rural areas from New York to Washington, and state lawmakers are hoping small-batch aged whiskey, vodka and even moonshine will do the same.

In many ways, the microdistillery trend is the natural next step after the proliferation of craft breweries and wineries. The same foodie sensibility that prizes locally-grown and handcrafted goodies translates to spirits, even if the end result packs a bit more of a punch than locally cultivated carrots or Chardonnay. At the beginning of the decade, there were only about 50 small distilleries in the country. Today, that number has exploded fivefold, and there are now craft distilleries in all but a handful of states.

The New York Daily News says, “Mom-and-pop moonshiners gained new legal status in 2010, when the state created a new class of licenses for ‘farm distilleries’ whose products are made almost entirely from New York farm products.” They’re allowed to have tasting rooms and retail stores, just like wineries and microbreweries. In the two years since the law was passed, nearly 30 microdistilleries have opened.

In Ohio, a law that went into effect in March abolished a cap on licenses and opened the floodgates for upscale would-be moonshiners. “The commerce department has received about a dozen applications for the new small-distillery tasting-and-sales license, and more are expected, a department spokeswoman said,” the Springfield News-Sun reported about a month after the law was passed. Many of the new ventures are family-run, some producing spirits like rye and bourbon from recipes handed down over the generations.

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In Tennessee, where distilling whiskey is practically an institution, state lawmakers passed a law permitting microdistilleries back in 2009, but there were holdouts. Officials in Cocke County implemented legislation just this February that makes them legal — after decades of battling a reputation as the nation’s top producer of moonshine.

The family of Marvin “Popcorn” Sutton, a famous local moonshiner who was featured in a History Channel documentary, is now brewing the family recipe on the right side of the law. According to the New York Times, Sutton — who died in 2009 — was arrested as recently as 2008 for selling moonshine to an undercover officer. “We’ve had such a bad reputation for so long… why not turn it around and make some money off it?” a family friend told the newspaper.

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In Washington, a state better known for Pinot Noir than whiskey, the state legislature passed a law in April that exempts craft distilleries from a hefty 17% fee they would have had to pay on all of their tasting room bottle sales. Washington, which passed a law permitting microdistilleries to open tasting rooms and stores four years ago, now has around 40 producers. “For some people it’ll be huge, if they do more business out of their tasting rooms,” Steven Stone, president of the Washington Distillers Guild and founder and head distiller of Sound Spirits in Seattle, told the Seattle Times.

All of these little mom-and-pop businesses could add big bucks to state coffers, if other artisan alcohol industries are any indication. Last year, craft breweries contributed $3 billion to the state of California’s economy. California’s Napa Valley, which is home to 391 wineries, has a $9.5 billion economic impact in the state. In New York, breweries are responsible for about 3,000 jobs, while wineries contribute $1 billion in economic impact and 5,000 jobs.