In 2020, as bars and restaurants closed by the thousands, Illinois moved fast. I drafted legislation, and within weeks cocktails-to-go became law because everyone understood the stakes: a small change in the law could save businesses and the livelihoods that depend on them. Nobody called for a study commission. We saw the problem and fixed it.

That urgency is nowhere to be found for America’s small craft distillers.

In our industry, the urgency runs the other way. After the latest allegations against Southern Glazer’s Wine & Spirits, a refrain I keep hearing is that aggressive enforcement is too risky. The argument goes like this: RNDC is already in turmoil, so if Southern Glazer’s lost its state licenses too, the whole industry would suffer. Perhaps. But “too big to fail” was bad policy in 2008, and it is bad policy now. It rewards size, not conduct.

It also hides the real cost of consolidation. When two wholesalers’ control most of the nation’s spirits volume, every stumble at the top ripples down. When a giant shrinks, exits a state, or cuts its portfolio, the first brands dropped are the small ones. The system that protects the biggest players is the same one closing the door on everyone else. For craft distillers, that door was barely open to begin with.

According to a VinePair article[1], roughly 50 craft distilleries closed last year. The headwinds are real: declining alcohol consumption, tariffs that drive up costs, and a regulatory system that makes it nearly impossible for a small producer to reach customers beyond its home market.

I am asking for two changes.

First, open the market. A small winery can ship directly to consumers in nearly every state. In most states, a small distillery cannot. That might be tolerable if wholesalers filled the gap, but they rarely do. A distributor has little reason to carry a brand that moves a few hundred cases a year, and in a consolidating market it has even less. The three-tier door is effectively closed to small distillers, and the direct-to-consumer door doesn’t exist.

Wine has already shown the alternative works. In the two decades since Granholm, states have licensed out-of-state wineries to ship directly, collected their taxes, enforced age verification, and watched their wholesalers continue to thrive. Legislatures should extend the same permit to spirits producers, with the same volume limits, age checks, and tax remittance. Opponents will say spirits are different. The protections that keep a bottle of wine away from a minor work just as well for a bottle of whiskey: an adult signature at the door, a licensed shipper, and a state that knows who is shipping and can take that privilege away. No new regulatory model is required. States only need to copy the one that has worked for twenty years.

Second, give the smallest producers room to breathe. For distilleries producing 50,000 proof gallons or less, a one-year moratorium on excise tax should be considered. Some will call that a subsidy. It isn’t, because no one is writing a check. A distillery that closes pays nothing in excise, payroll, or income tax ever again. One that survives pays all three for years. Yes, some distilleries that would have made it anyway will benefit. That is the price of a policy simple enough to work, and it is small next to the tax base lost every time a distillery locks its doors.

Cocktails-to-go passed because lawmakers looked past the numbers and saw the people behind them. Small distillers deserve the same attention. Right now, the message from regulators and lawmakers is clear: grow big enough that your failure becomes everyone’s problem, and someone will protect you.

Small distillers don’t have that option. They just fail.

 

[1] https://vinepair.com/articles/bourbon-boom-leftover-whiskey/