Part III of the Whiskey Rebels excerpt series focuses on advocacy and education. Craft visionaries like Westward’s Tom Mooney and ADI founder Bill Owens organized a collective of craft producers to make their voices heard in the halls of congress and teach each other the art of making fine spirits. Here is how it went down.
Prior to founding ADI, Bill Owens led the counterculture lifestyle many envy but few have the guts to pursue.
Owens joined the Peace Corps as a young man before hitchhiking around the world and later becoming a celebrated photographer who once sold a collection of his work to Sir Elton John and famously captured the violence that erupted during the infamous 1969 Rolling Stones concert at the Altamont Speedway Free Festival in California.
Years later, Owens launched the country’s first brewpub, along with American Brewer magazine. Owens published a directory of US breweries and distilleries in the magazine, spending three months touring virtually all of them in 2003. Along the way, he became convinced that there was a future in craft distilling and decided he would help make it happen. When he returned to San Francisco, Owens marched to the courthouse and founded the American Distilling Institute, the first major trade association for the craft industry.
ADI wasn’t a nonprofit; it was how Bill Owens would make a living. To that end, Owens became a resource for aspiring distillers looking to set up shop. If you were in the market for a six-figure copper still hand-built by the world’s finest craftsmen, or a 200-liter, German-made eau-de-vie still for $25,000, Owens was the man who could make that happen.
But Owens’s greatest impact on the growing craft industry were the early ADI meetings. This was the only game in town for like-minded distillers to share their challenges, solutions, and ideas. There were few universities or websites where you could learn this stuff—no infrastructure at all. Through ADI, distilleries began to unify and ideas cross-pollinated and spread like wildfire. Contacts were exchanged, and friendships were forged. A community began to form. And as this community grew, it created hope that this craft movement could really become something.
The Emergence Of The American Craft Spirits Association
In 2012, ADI subscribers were agitating for change.
Members’ priorities began to diverge from what Bill Owens was offering as a for-profit organization, and many small companies felt DISCUS was too concerned with its own problems to worry about theirs. They wanted a nonprofit organization that would be solely dedicated to their small business needs. Sixteen distillers attempted to acquire ADI from Bill Owens and shape it into a non-profit. When negotiations fell through, members voted to organize, pool resources, and become their own trade group: the America Craft Distillers Association (ACDA), established in 2013. Tom Mooney, CEO of Westward distillery, was elected the organization’s first president.
At first, like ADI, the group was for distillers only; blenders needed not apply. But some members, like Westward’s Christian Krogstad, argued against the segregation. In the end, the group compromised. Blenders who sourced spirits would be permitted to join the club, but only distillers could be voting members. Thus, they changed their name to the American Craft Spirits Association (ACSA) in 2014.
Back at DISCUS, Peter Cressy and Frank Coleman were arguing to its members that the craft community had something that the giants of the industry did not: strength in numbers.
Maximizing firepower on Capitol Hill requires broad representation across as many states as possible. The growing craft community was a potential army of small distillers across the nation. This would be useful in opening markets and achieving favorable tax decisions for the entire industry. It took almost five years, but in 2010, the Distilled Spirits Council Small Distiller Advisory Group was established with Fritz Maytag as the first chairman. Craft distillers now had a nonprofit organization with a network of lobbyists in 40 states and a team of lawyers ready to assist with tricky things like understanding regulations and staying in compliance.
There was another hidden benefit to the Small Distiller Advisory Group. The United States Department of Agriculture (USDA) Market Access Program (MAP), which Coleman also comanaged, is an arm of the USDA dedicated to assisting exporters, like distillers, gain access to foreign markets. The USDA has a proclivity toward promoting American goods, especially agricultural goods produced by small- and mid-sized companies. DISCUS, in tandem with the USDA, began planning events that allowed small producers to present their American “craft” spirits all over Europe, Asia, and South America. By 2014, what had started as a band of about 50 random small producers became a national industry over 1,000 strong. The DISCUS council agreed to allow an elected advisory “small batch” council. The little guys finally had a seat at the big boy table. When Maytag stepped back from his business, Ted Huber of Starlight in Indiana succeeded him and became chairman.
In order to compete in the industry, distillers required two things: a communication support network and representation in Congress.
The community quickly made it a top priority to establish a framework where members are supported through education in every aspect of the spirits business. Quality craft spirits speak well to the entire industry, but producers making lesser-quality spirits can bring the reputation of the entire industry down. Consumers who gamble on one craft product and get burned are less likely to try another. For this reason, the ACSA is focused on providing resources and teaching community members to make the best possible product.
On the legal side, the ACSA’s business is broken into two camps: regulation and legislation. In the United States, alcohol regulation is managed by the Alcohol and Tobacco Tax and Trade Bureau (TTB), a federal government agency dealing with regulation, changes, and collecting taxes. The legislative side of the business, meanwhile, plays out on Capitol Hill. Here, ACSA lobbyists jockey for the attention of members of Congress who can introduce bills into law. In 2017, for instance, the ACSA was championing the Craft Beverage Modernization and Tax Reform Act. Inside the bill was a wish list of things that would help the budding industry flourish. Despite the full force of both ACSA and DISCUS, the Modernization Act was not brought to vote in Congress, but the provision dealing with craft producers’ largest concern—federal excise tax relief—was picked up under President Trump’s Tax Cuts and Jobs Act.
As the trend in microbreweries and family-run wineries caught on in the ’90s, brewers and winemakers successfully petitioned the federal government to change how they were charged excise tax. The relaxed regulations allowed small producers to pay only 20 percent of what the big producers pay. But these rules never applied to spirits, and craft producers who have a similar business model to small wineries and breweries were on the hook for the full excise tax. The tax bill President Trump signed into law in December 2017 reduced the FET for all alcohol producers, regardless of scale, to $2.70 per proof-gallon for the first 100,000 gallons. This put up to $1,100,000 per year into all spirits producers’ pockets. This helps many craft companies pay salaries, upgrade equipment, and keep on the lights.
While the ACSA scored a significant victory in securing these tax cuts, new rules came with a two-year “sunset clause,” meaning the benefits expired in 2019. DISCUS and ACSA lobbied for a one-year extension, and at the time of writing, they are on Capitol Hill fighting to make FET relief permanent. Until this happens, small businesses and their employees are braced for a brutal financial hit. For producers relying on the current FET to stay afloat, it can mean the difference between life and death for their business.
Meet the Whiskey Rebels.
When I was chatting with Nicole Austin, master distiller at Cascade Hollow (formerly George Dickel), she had this to say about the craft movement: “This movement is still happening. But I look back, and craft has come a long way already.” Austin is right. This craft revolution is still happening, and we are witnessing a new chapter in American whiskey history being written. Finally, we are starting to see the unbelievable potential of what American whiskey makers can do once they have the right tools.
The people and the companies featured in the following pages are only a few of the many in this community who have worked together to create a whole new whiskey landscape in the United States—the ones who risked so much because they believed in the potential for craft whiskey, and they believed in themselves. They are the modern Jim Beams, Jack Daniels, and E.H. Taylors. Rooted in innovation and transparency, they fight for fair regulations and compete with industry giants to carve out a place for themselves in the whiskey universe. This book tells their stories.
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John McCarthy is a spirit, travel, and lifestyle journalist, managing editor, and author of The Modern Gentleman and Whiskey Rebels. McCarthy is also Director of Judging for the John Barleycorn International Spirits Competition and editor of Barleycorn Drinks.
