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February 17, 2013

State may loosen rules for micro-distilleries

Bill could help small entrepreneurs capitalize on growing demand for ‘locally grown’ drink.

INDIANAPOLIS — The Indiana General Assembly isn’t ready to let Hoosiers buy booze at a grocery store on Sundays, but lawmakers may be willing to loosen up the state’s tight alcohol laws for artisans who craft beer, wine and spirits.

Legislation to allow Sunday sales of carryout alcohol from retail stores died in the House last week. But several other alcohol-related bills are making their way through the legislature, all aimed at helping small entrepreneurs capitalize on the growing demand for “locally grown” drink.

They include a bill that would allow farm wineries to sell their products directly to retailers and a bill that would let the makers of craft beers sell their products at farmer’s markets and trade shows.

There’s also legislation aimed at relaxing Indiana liquor laws to allow the creation of micro-distilleries that would specialize in producing small batches of bourbons, whiskey, vodkas and gins.

Following the model of farm wineries and microbreweries that have sprung up around the state, visitors to the micro-distilleries would be able to sample the product or buy it by the glass or bottle.

Backers of the bill see it a tool for tourism and economic development, and cite the success of neighboring states that allow small distilleries to sell their product on site. In Indiana, the handful of distilleries that now exist can only produce hard liquor for wholesale distribution to retailers.

“This is an industry whose potential for growth is greatly limited by statute here in Indiana,” said Rep. Ed Clere, a New Albany Republican who authored what’s known as the “artisan distillery” bill.

Clere’s legislation passed out of the House with a big margin of votes, after it cleared the House public policy committee where the Sunday alcohol-sales bill died last week.

The committee’s conservative Republican chairman, Rep. Bill Davis of Jay County, had blocked Clere’s bill in past sessions by refusing to hold a hearing on it. This time around, Davis let the bill get through, even though he voted against it.

Davis said the limits built into the bill helped changed his mind. The bill restricts distilleries to selling 10,000 gallons of alcohol a year, and to making the product locally. It also allows permits to be issued only if the applicant has been operating a winery or brewery for at least three years. Other applicants would have to apply for a distillery permit and then wait three years.

“We’re not talking about a big expansion of liquor-making in Indiana,” Davis said. “We’re talking about small operations, many of them family-owned, with very limited production capacity.”

Ted Huber, whose family operates Huber’s Orchard, Vineyard and Winery on a 600-acre farm in Starlight, is already distilling small batches of brandy, made from fruit grown on his farm. He’s ready to expand into hard spirits, including whiskey that could be made with Indiana-grown corn.

“The whole micro-distillery movement is progressing fast around the U.S.,” Huber said. “There is a huge demand for high-end, hand-crafted, small-batch spirits.”

The artisan distillery bill may have the legs to get through the Senate. Its sponsors include Sen. Jim Banks of Columbia City and a fellow Republican, Senate Public Policy Committee Chairman Ron Alting of Lafayette.

Banks is also author of a bill that’s already passed the Senate that would let microbreweries sell bottles and growlers of beer at farmer’s markets and trade shows. He’s seen the number of microbreweries grow to more than 60 in Indiana, creating more than 1,000 jobs along the way.

He sees the same potential for the micro-distilleries: Locally grown businesses started by job-creating entrepreneurs. “These are the type of businesses we want to support,” Banks said.

Maureen Hayden covers the Statehouse for the CNHI newspapers in Indiana. She can be reached at maureen.hayden@indianamediagroup.com.

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