1. Business

Florida's craft distillers could get big boost if lawmakers ease restrictions on liquor sales

Kozuba & Sons Distillery in St. Petersburg. (Times)
Kozuba & Sons Distillery in St. Petersburg. (Times)
Published Mar. 29, 2019

Craft distilleries have popped up all over the state in recent years. They make white whiskey, apple pie moonshine, gin aged in bourbon barrels, and vodka for nearly any palate — honey, grapefruit, key lime, gluten free, organic.

Less than a decade ago, only a dozen or so distilleries operated in the state, including a couple large contract manufacturers. Now there's that many in Pinellas and Hillsborough counties alone. Aficionados can buy spirits from local startups like St. Petersburg Distillery, Cotherman Distilling, Twisted Sun Rum Co., American Freedom Distillery and Fat Dog Spirits.

A bill introduced in the state Legislature would provide the legal framework for the industry to take off, similar to how tweaks to the law allowed local beer makers to quickly expand. The legislation would ease rules about how distillers sell their product. It also increases how much they can produce before the state no longer considers them a craft maker.

"The changes would be a big deal for us," said Matthias Kozuba, a vice president at Kozuba & Sons Distillery in St. Petersburg. "We'd sell more, which means we'd invest more and hire more."

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Senate Bill 220 would make several changes. Top of the list for Kozuba: Craft distillers would be allowed to sell spirits by the glass. Right now, customers can taste the product at the distillery, but distillers cannot sell them a cocktail.

That single change might be lucrative enough to pay the rent on their building in the city's Warehouse Arts District, Kozuba said.

"It's really mind opening when you present customers with cocktail creations made by a variety of mixologists," he said. "The experience enhances the relationship, just like when a craft beer maker can sell a pint to a customer."

Distillers could also apply for licenses to sell direct to customers at up to eight additional locations. Currently, distillers must make face-to-face sales from a shop attached to the distillery. Otherwise, it has to contract with a distributor to provide its products to retailers, who sell to the public.

In addition, they could apply for short-term permits to sell spirits at fairs, trade shows, expositions and festivals around the state. The bill would also allow sales at airports and seaports.

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Customers could buy more, too. Currently, the law limits you to six bottles of any one label. If a distiller makes five different products, you could only buy six of each. That cap would be lifted.

Three other changes: Craft distillers could make 250,000 gallons a year, up from 75,000 gallons. They could also blend alcohol made by other distillers into their product, which would allow smaller distillers to produce more. And craft distillers could sell and ship their products to out-of-state consumers. They still won't be allowed to ship to customers in Florida.

"Tourists who buy our product when they visit St. Pete sometimes call and ask us to ship them another case," Kozuba said. "We'd be able to make them happy."

Attorney Richard Blau described the proposed changes as substantial but not as controversial as some previous alterations to alcohol laws.

"The craft distilling industry is on such a fast track and is producing many benefits in terms of employment, tax revenue and tourism," said Blau, who heads up the alcohol industry team at GrayRobinson, a prominent statewide law firm. "For those reasons, a lot of observers feel the bill will pass."

Not if Scott Ashley can help it. He's the president and general counsel for the Wine and Spirits Distributors of Florida.

For decades, the state has employed a three-tiered system for alcohol sales that keeps manufacturers, distributors and retailers at arms length. Proponents of the system say it has many benefits, including how it prevents large manufacturers from elbowing out smaller rivals by taking over the distribution channels.

But distributors won't be able to perform their valuable service if the Legislature keeps carving out exceptions that allow craft brewers and distillers to sell directly to customers, Ashley said.

"Every big brand was once a small brand, so we want them to succeed," said Ashley, who testified against the bill. "All we want to ensure is that we don't blow more holes in a system that has worked for years."

The bill, sponsored by St. Petersburg Republican Jeff Brandes, easily passed two committees, though it has stalled in recent weeks. Kozuba's fingers remain crossed that the Legislature votes in favor of the changes.

"This law would allow us and other distillers to really shine," he said.

Contact Graham Brink at Follow @GrahamBrink.


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