Tasting room fee could be lifted for distilleries

spirits: State may end 17%-per-bottle charge for makers

MELISSA ALLISON; The Seattle TimesApril 15, 2012 

Washington’s craft distilleries caught a break last week from the Legislature, which passed an amendment that exempts them from paying a 17 percent retail fee on every bottle they sell from their tasting rooms.

The fee break does not extend to craft spirits sold by retailers such as Safeway, which can start selling liquor in Washington on June 1. Under a voter initiative passed last fall, the state’s liquor business will be privatized by then.

“The majority of our sales come through retailers, so (the break) is not massive, but every little bit helps,” said Steven Stone, president of the Washington Distillers Guild and founder and head distiller of Sound Spirits in Seattle. “For some people, it’ll be huge if they do more business out of their tasting rooms.”

Stone expects prices on his and other medium- to high-end spirits to increase by 20 percent to 30 percent beginning June 1. Under the initiative, bars and restaurants already can buy directly from distilleries, but most are waiting until the state’s supply is depleted, he said, with the expectation that they can fetch higher prices in a privatized market.

Distilleries, meanwhile, are suffering through a couple of months with little or no sales to the state as it phases out the business and no sales allowed to retailers to make up for it.

“Hopefully, everything will come back and we’ll have a price increase, but everyone will be pleased because of more availability and ease of shopping for their food and a bottle of something,” Stone said.

Sen. Nick Harper, D-Everett, sponsored the amendment, which is aimed at protecting a fledgling industry in Washington. After decades of having few or no distilleries, the Legislature passed a craft-distillery law in 2008, allowing small distilleries to open tasting rooms and sell limited amounts of liquor from them.

In less than four years, the number of craft distilleries zoomed from zero to 40.

Distilleries are among the small businesses worried about the way Washington is privatizing its liquor business. In addition to imposing new fees on retailers, the law limits how many retailers can sell spirits by requiring that their stores measure at least 10,000 square feet unless they run existing state stores.

Some small distilleries worry that they could have trouble getting onto shelves at large chain stores, which typically do not offer the same variety as specialty shops.

Sen. Harper said craft spirits in Washington could replicate the success of the state’s wine industry, which he said employs 19,000 people and contributed more than $3 billion to the economy during the past three years.

His amendment awaits the governor’s signature.

Melissa Allison: 206-464-3312 mallison@seattletimes.com

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