Washington State

House of Representatives

Office of Program Research

BILL

ANALYSIS

Government Accountability & Oversight Committee

HB 2364

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Brief Summary of Bill

Increases the annual spirits production limit for craft distillers from 60,000 gallons to 100,000 gallons.
Eliminates the three liter per day per person limit on the sale of spirits by a craft distiller for off premises consumption.
Authorizes a craft distillery to charge customers a fee for spirits samples of one-half ounce or less served to them on premises.
Authorizes any licensed distillery to: sell spirits of its own production for consumption off the premises; contract with, and sell spirits to other licensed distillers and manufacturers; and provide for free, or for a charge, spirits samples of one-half ounce or less to customers on the premises, subject to a daily maximum of two ounces per person per day.
Requires a distillery that sells spirits for off premises consumption to comply with all laws and regulations applicable to liquor retailers.
Authorizes special occasion licensees to pay for spirits immediately following a special occasion event.
Authorizes a special occasion licensee to charge reasonable booth fees to a distillery participating in the event.

Background:

Distilleries and Craft Distilleries.

Individuals seeking to distill spirits in Washington must obtain a license from the Liquor Control Board (LCB). The annual fee for a distillery license is $2,000 and for a craft distillery the fee is $100. To qualify as a craft distillery, the distiller must produce no more than 60,000 gallons of spirits, with at least half of the raw materials used in the production grown in Washington. Craft distilleries can sell spirits of their own production for consumption off the premises in amounts up to three liters per person per day. They may also provide free spirits samples of one-half ounce or less, up to a maximum of two ounces per day per person, to persons on the distillery premises. Craft distilleries may not sell spirits directly to in-state retailers, distributors, or manufacturers.

Distilleries not licensed as a craft distillery may not sell spirits to the public for off premises consumption nor may they provide free samples of spirits to customers.

"Spirits" means any beverage which contains alcohol obtained by distillation, except flavored malt beverages, but including wines exceeding 24 percent of alcohol by volume.

Spirits Supplier Regulations.

A distiller producing less than 60,000 thousand gallons per year of spirits may not act as a spirits "supplier" and, therefore, cannot enter into distribution contracts with wholesale distributors. This prohibition also applies to authorized representatives of one or more distillers which, in the aggregate, produce less than 60,000 gallons of spirits per year.

Special Occasion Licensees.

Nonprofit organizations can currently be issued a retailer's special occasion license to sell spirits, beer, and wine by the individual serving for on-premises consumption at specified events. The date and place must be specified. The fee for a special occasion license is $60 per day. Sales are limited to no more than 12 calendar days per year for such events. Exceptions to the 12 calendar day limit are allowed for qualifying agricultural county and area fairs.

Summary of Bill:

Craft Distillery Regulations.

The annual spirits production limit for craft distillers is increased from 60,000 gallons to 100,000 gallons. Accordingly, to qualify as a craft distiller, a distiller must produce no more than one hundred thousand gallons of spirits annually, with at least half of the raw materials used in the production grown in Washington.

The three liter per day per person limit on the sale of spirits by a craft distiller for off premises consumption is eliminated. Therefore, sales of spirits to individuals by craft distillers for off premises consumption are no longer subject to limitations. In addition, a craft distillery may charge customers a fee for spirits samples of one-half ounce or less served to them on premises.

Regulations Applicable to all Distilleries.

Any licensed distillery may:

sell spirits of its own production for consumption off the premises;
contract with, and sell spirits to, other licensed distillers and manufacturers; and
provide for free, or for a charge, spirits samples of one-half ounce or less to customers on the premises, subject to a daily maximum of two ounces per person per day.

A distillery that sells spirits for off premises consumption must comply with all laws and regulations applicable to liquor retailers.

Distilleries and Special Occasion Licensees.

Special occasion licensees are authorized to pay for spirits immediately following the special occasion event. Also, a special occasion licensee is authorized to charge reasonable booth fees to a distillery participating in the event.