New Distillery Law Expected To Expand Craft Spirits Market in Montgomery County
Small distillers can seek license to distribute products directly to restaurants and bars throughout Maryland
Twin Valley Distillers owner Edgardo Zuniga stands in front of a wall he plans to tear down to expand his small-scale Rockville distillery's tasting room. He said a new law that went into effect this month will help his business.
Updated – 5 p.m. – Diners may soon see more craft liquor products served in Montgomery County bars and restaurants.
A state law that went into effect Saturday allows small-scale distillers to self-distribute their products directly to alcohol license holders in the state and regional spirits producers say the change will help them break into the county market.
“Montgomery County, I’ll say, should be one of the best craft liquor markets in the state given the demographics and the proximity to Washington, D.C., and we’ll see in a couple of months if it comes to fruition,” Kevin Atticks, executive director of the Maryland Distillers Guild, said Tuesday.
The law allows distillers that produce less than 100,000 gallons of alcohol annually to obtain a $100 special state license. That license will allow them to sell their products directly to local restaurants and bars without having to go through a distributor such as the county’s Department of Liquor Control (DLC) or to obtain a much more expensive $1,750 state wholesalers’ license.
The law does limit who can self-distribute spirits under the new license. Only distillers who produce less than 100,000 gallons of liquor per year can obtain the license, and they’re limited to self-distributing less than 27,500 gallons per year. The surplus would need to be distributed by a wholesaler with a different license. However, Atticks said the 27,500-gallon self-distribution limit shouldn’t impact small distillers because distributing that amount requires a significant amount of capital investment in trucks and other logistics, and these distillers most likely would be looking to secure a deal with a larger distributor once they hit the cap.
“It really gives them a jump start into the market so they can build their brand at their own pace,” Atticks said. “Then they can send their book of accounts to a distributor who can really expand the market.”In Montgomery, the DLC controls the wholesale distribution of all liquor as well as most beer and wine products. A similar state law change two years ago allowed craft breweries to distribute directly to retail stores and restaurants and was credited with leading to more craft breweries opening in the county. However, the new law will not allow distilleries to sell to the county’s privately owned beer and wine stores because they are not licensed to sell liquor; only the 25 county-owned stores can do so.
Atticks said most of the dozen or so Maryland craft distilleries located outside of the county have been using the $1,750 wholesalers' license to self-distribute their products to retail stores and restaurants elsewhere in the state. However, due to the DLC’s unique alcohol monopoly, the distillers were not allowed to self-distribute in the county and instead had to sell their products to the DLC, which would then decide whether to sell the liquor in its stores and take orders for them from restaurants.
Edgardo Zuniga, who owns Twin Valley Distillers in Rockville, the only distillery in operation in the county, said he didn’t believe the DLC was making an effort to market his products to county restaurants and he noticed that some of products weren’t regularly stocked in the county’s stores.
“That’s why I feel I cannot put my business in the hands of the county,” Zuniga, who lobbied for the new law when it was being debated during the 2016 General Assembly, said. “I have three different bourbons, but the county liquor stores don’t carry them. Now I can go to restaurants and sell them directly.”
A county spokesman said the DLC does not market any products to any restaurant or store in the county, however, it plans to order one case of each of his products per county store to start and allow Zuniga to do in-store tastings.
Twin Valley Distillers' whiskeys and the barrel room where they are aged in Rockville. Credit: Andrew Metcalf
Zuniga obtained the first license issued under the new law in the state last week.
Under the law, distilleries such as Lyon Distilling Co. in St. Michaels will be able to approach county restaurant owners and bar managers directly. The DLC supported the legislation as it made its way through the General Assembly earlier this year.
Jamie Windon, owner of Lyon Distilling, said Tuesday it took nearly a year for the DLC to agree to carry her company’s products after she filled out paperwork for them to do so, even though the business held the more expensive state wholesaling license. The business is known for its dark rum and it was the first to distill rum in Maryland in at least 50 years, Windon said. She’s applying for the new permit so her business can self-distribute its products in Montgomery County.
“It’s really exciting for us,” Windon said. “This law is making it easier for local restaurants and bars to support local distilleries. Plus, I’m willing to do the legwork, we want to go into more restaurants.”
Zuniga said his business has generated most of its revenue from selling directly to consumers at farmers markets or at its distillery on East Gude Drive. One of his new products, a coffee liquor called Black Joe that he makes using cold brewed coffee from Mayorga Organics, a coffee roaster also based on East Gude Drive, has been popular at the markets and his distillery, where he says he has sold 600 bottles. The DLC has sold only 24, he says.
Zuniga said he expects the new law to significantly increase his business. He’s already planning to add an addition measuring more than 1,000 square feet to the distillery, where he’ll expand his tasting room and barreling capacity.
The new law also has the potential to expand the craft distillery business throughout the state, as well as in Montgomery County, Atticks said.
“I really expect to see the industry grow a lot in the next five years,” Atticks said.
The law also allows small distributors outside the state to apply for the new license and self-distribute in the state and county as well.