Craft liquor may catch on quicker if Illinois changes law

Craft liquor may catch on quicker if Illinois changes law

Illinois House passes bill to open up opportunities for the craft distillery industry, freeing entrepreneurs to grow to meet growing demand.

Craft beer’s popularity is being joined by its distilled cousin to become the “next big thing,” and the Illinois House just passed an update to state liquor laws so Illinois doesn’t miss the party.

A bill removing major hurdles for craft distilleries passed the state House, 108-2. House Bill 2675 was backed by a bipartisan group of lawmakers including chief sponsor Rep. Tom Demmer, R-Dixon, chief cosponsors Rep. Mike Zalewski, D-Riverside, and Rep. Jonathan Carroll, D-Northbrook.

Last year former Gov. Bruce Rauner signed a bill that lifted some restrictions on craft breweries. HB 2675 seeks to give craft distilleries similar regulatory relief within the state’s “three-tier” liquor licensing system.

Although not as wildly popular as craft brewing, craft distilling has seen large growth in popularity across Illinois and the nation. Nationally, the industry has grown from fewer than 100 craft distilleries in 2005, to 1,835 in August 2018.

In Illinois, there are 34 federally licensed craft distilleries. That number may double if HB 2675 becomes law, Illinois Craft Distillers Association President Noelle DiPrizio told the Chicago Tribune. Craft distilleries would be allowed to more widely distribute their products themselves, broadening the customer base for fledgling businesses.

Under the Liquor Control Act of 1934, Illinois mandates a “three-tier” liquor distribution system that separates producers, distributors and retailers. This bundle of laws protects the middle-man and ensures the functions of each tier don’t mix. Lawmakers moved to allow limited self-distribution for smaller beer brewers in 2011, and HB 2675 has a similar aim for craft liquor.

The ability to self-distribute has been vital to the craft brewery boom across Illinois, and craft distillers hope HB 2675 will bring them the same opportunities.

The bill creates Class 1 and Class 2 licenses for craft distilleries, as well as a distilling pub license.

Class 1 licensed craft distillers would be able to manufacture up to 50,000 gallons of distilled spirits per year. A Class 1 license also allows a craft distiller to apply for a “self-distribution exemption,” which would allow the business to sell up to 5,000 gallons of its spirits to licensed retailers and distributors.

Class 2 licensed craft distillers would be able to manufacture up to 100,000 gallons of distilled spirits per year. Under a Class 2 license, the craft distiller would only be able to sell to distributors. However, Class 2 craft distillers may receive a permit for a distillery pub where they are able to serve up to 5,000 gallons in spirits for on- or off-premises consumption. They would gain the flexibility to transfer some of that between up to two other licensed nearby pubs owned by the same distillery. The pub license also allows the distillery to sell any type of alcohol at their location, which craft breweries were restricted from doing until last year. This  is especially important to small scale craft distilleries, where direct on-site sales make up 40% of total sales.

This move to lift regulatory hurdles would, “allow smaller manufacturers of spirits access to the marketplace in order to develop a customer base,” the bill reads. DiPrizio also said that HB 2675 would “make us one of the more favorable states to start a business,” bringing Illinois a step closer to fulfilling its potential to become the “country’s craft capital.”

HB 2675 is now before the Illinois Senate, where lawmakers should back the effort to allow craft distillers more freedom in how they operate and serve their customers. Lifting outdated restrictions could both foster an industry seeing increasing consumer interest and boost local economies across the state.

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