George Washington may be the father of America’s craft distilling industry, but his home state isn’t making it easy for entrepreneurs trying to follow in his footsteps.
Around the country, craft distilling is hopping. Last year alone, more than 300 craft distilleries opened.
Craft distilling is growing here in the commonwealth too, but the fledgling industry is being strangled by red tape. Thanks to the efforts of special interests and the Virginia Department of Alcohol Beverage Control — the agency in charge of alcohol regulation — distilling rules are stuck in the Prohibition era.
Dumb Rules and Dumber Regulations
In Virginia, bottled liquor can be sold only by the ABC, which applies an automatic 69 percent markup, then collects an eye-popping share of the purchase price—over half, according to the Washington Post. That’s more than five times what neighboring D.C. and Maryland get.
Because of this absurd system, the price of a bottle of whiskey is the same whether you’re in Loudoun County—where the median household income exceeds $100,000—or Lee County, where families make around $30,000 a year.
It gets dumber. Because only the government can sell liquor, distilleries who want to sell bottles at their facilities have to become agents of the ABC. Distillers have to send all proceeds from sales to the government and wait for ABC to send them their paltry share of the revenue.
On top of that, distillers are hampered by countless other regulations that make doing business in the commonwealth almost impossible. Distillers are limited to a handful of half-ounce servings for customers in their on-site tasting rooms.
Local breweries and wineries have to contend with their own assortment of pointless and outdated regulations. But they’re exempt from the most burdensome rules that distilleries face. Beer and wine aren’t sold by ABC, and there’s no serving cap on tasting rooms at breweries and wineries.
The unfair treatment puts distillers at a serious disadvantage.
With regulations like these, it’s not surprising that aspiring distillers are looking outside the commonwealth. Silverback Distillery announced last year that they would set up a production facility in Pennsylvania instead of expanding their current operation in Virginia.
Why do our liquor laws still look like they were crafted by someone who likes to dance the Charleston and watch silent movies at the Nickelodeon in their free time?
Unsurprisingly, special interests and bloated bureaucracies are the main culprits. Many of the regulations are used to protect existing businesses at the expense of aspiring small business owners trying to live out lifelong dreams.
Restaurant lobbying groups whose members make money from alcohol sales go to war every time legislation is introduced that would make it easier for distillers to sell their own products.
Lawmakers are also reluctant to undo the red tape because ABC is a huge cash cow for the commonwealth. Last year, the agency did nearly $1 billion in sales that generated more than $171 million in profits. An ABC official once even called the agency “the golden goose of the commonwealth.”
Time for an Overhaul
ABC reform is long overdue. The archaic structure isn’t doing customers or businesses any favors. Instead of encouraging economic growth, Virginia is punishing entrepreneurs while making it harder for residents to support local businesses.
The agency doesn’t have a good track record of putting Virginians first, either. Power-drunk agents have repeatedly tried to play Jack Bauer, body-slamming UVA students and chasing down women buying La Croix.
This legislative session, several bills have been introduced to roll back some of the most restrictive regulations, allowing distillers to provide more tastings and letting them keep more of their hard-earned money.
We need to overhaul Virginia’s ABC laws. Send an email to your lawmakers telling them it’s time to get their heads out of the 1930s and modernize our liquor laws.