Local craft distillers were given a last-minute reprieve Thursday as a state agency extended an executive order that will allow them to continue to ship directly to consumers as part of a temporary economic relief measure during the pandemic.
The order was slated to expire on Jan. 1 and small distillery owners across California had been lobbying Gov. Gavin Newsom for an extension.
On Thursday, the state Department of Alcoholic Beverage Control granted another extension for those with a craft distilling license through March 31, said Russ Heimerich, spokesman for the agency.
The distillers had argued the emergency order has been a crucial financial lifeline, helping them to handle the uncertainty of the coronavirus pandemic, which has limited their availability to sell their spirits on-site.
They contended it should not be allowed to expire just as omicron, another virulent COVID-19 variant, takes hold.
“A simple extension of what’s being done right now would have a huge benefit for myself,” said Adam Spiegel, founder of Corning and Co., which makes premium whiskey under the Sonoma Distilling Co. brand out of its Rohnert Park distillery.
Spiegel was forced to close the on-site tasting room as a result of the pandemic but has been buoyed by online sales through his business’s whiskey club, for which he has been able to do virtual tastings.
The revenue is slightly less than 10% of overall sales, but it has allowed him to establish a new source of income that he wouldn’t necessarily have developed beyond what is sold in stores through traditional wholesale channels.
“We spent considerable dollars to build up infrastructure internally to be able to receive orders electronically and ship them,” he said before hearing about the March 31 extension. “Basically, not knowing that if we are going to continue in the new year, we are in the process of shutting that down.”
There are about 20 small distillers in the local area, Spiegel said, and many others like him were in the same situation.
For those that do direct-to-consumer orders, such sales can now represent 25% to 30% of their overall revenue, said Ryan Friesen, head distiller for Blinking Owl in Santa Ana and the outgoing president of the California Artisanal Distillers Guild.
“What it represents is a full-time employee or a future capital investment or a grain purchase for a California farmer,” Friesen said.
The push comes as the state Legislature has already taken action to help alleviate the concerns of restaurants during the pandemic by passing legislation that allows them to sell to-go cocktails along with a meal for the next five years and made permanent a temporary order that allowed outdoor parklet seating with the ability to serve alcohol.
The extension does not mean the debate is over. Distillers are backing legislation that would make such direct-to-consumer shipments permanent, but contend that they would need an extra year to allow the bill to be passed and enacted.
Fifteen lawmakers, including state Assemblymembers Marc Levine, D-San Rafael, and Cecilia Aguiar-Curry, D-Davis, wrote to Newsom earlier this month to ask for a one-year extension to give them time to provide a more permanent solution.
“Wineries have been safely shipping wine to consumers since 1986. This bill will be essential for California’s craft distillers that cannot attract distributors since they produce such small amounts of product or be financially viable without direct access to consumers,” they wrote in their Dec. 3 letter.
Friesen said the legislation has encountered some resistance from wholesalers who fear a loss of market share, which would be the same debate that occurred over an earlier battle to allow distillers to sell their spirits on-site. That eventually resulted in a 2015 law that gave them the ability to sell on-site up to three 750 ml bottles per customer, per day.