The law is a funny thing. An optimist looks at the law and says if it’s not in there we can do it. A pessimist looks at the law and says if it’s not in there, you can’t do it. An old saying in Europe sums it up this way.
“In England everything that isn’t forbidden is allowed: in France everything that isn’t allowed is forbidden.”
In Kentucky, bourbon is an $8.9 billion economic engine for the Bluegrass State. When it comes to bourbon fans one of the best experiences you can have is the process of making a pilgrimage to your favorite distillery to pick out your own barrel of bourbon, often with one-on-one help from the distillery’s own master distiller.
The problem is the logistics of the Private Barrel Selection (PBS) process is mired in a flawed and inefficient regulatory process. Technically it’s the many steps that a consumer and the distillery go through to select and purchase a single barrel that unintentionally goes against the current laws.
Kentucky Senator Proposes HB 500 to Make Kentucky Bourbon Single Barrel Sales Legal
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Kentucky House Majority Whip Chad McCoy recently filed a bill to legalize private barrel selections at distilleries and boost Bourbon tourism with new programs to attract repeat visitors and enhance local communities.
“Bourbon is more than a cultural icon. It is a proven economic powerhouse for our Commonwealth,” said House Majority Whip Chad McCoy. “Even in the midst of a global pandemic, tourists are visiting the Kentucky Bourbon Trail, consumers are buying special releases, and distilleries are investing in their facilities. The provisions of this measure will help sustain the growth and introduce an additional draw for distilleries.”
HB 500 would establish a legal framework for the popular private barrel selection programs that distilleries have offered for years. The Kentucky Department of Alcoholic Beverage Control recently acknowledged that such programs need specific guidance in Kentucky law.
The way Kentucky Distillers’ Association – KDA President Eric Gregory explained it to DistilleryTrail was to say they are working with the Kentucky ABC (Alcohol Beverage Control) and the Kentucky legislature to make sure it is legal.
“The ABC is not against the sale of single barrels or private barrel selects,” said Gregory. “They just want to make sure that it is legally sound. They have worked with us on the bill and we appreciate their help.”
What’s the Problem with Selling Single Barrels of Bourbon?
Every distillery runs their single barrel selection and sales process slightly different. Some distilleries provide a consumer with as few as three barrels while others may offer as many as a dozen different barrels. One of the challenges is Kentucky limits consumers to a maximum of 1.75 oz. of bourbon for tasting per person per day. If you are investing thousands of dollars and sampling from 7 to 10 barrels of bourbon whiskey you are likely going to taste more than 1.75 oz.
This assumes the consumer is at the distillery to taste the whiskey. In some cases, though not as fun, consumers will not visit the distillery in person. In this case, the distillery will send out the samples in the mail for tasting. Sample sizes and Direct to Consumer shipping laws both come into play here.
Another hurdle is consumers are only allowed to purchase a maximum of 9 liters (two cases) per purchaser per day. A single 53-gallon barrel depending on its age and the loss to the Angel’s Share may yield less than 100 or as many as 240 bottles.
The 5 Key Components of HB 500 & SB 160
In addition to the ability to sell single barrels at the distillery the bill contains other key issues important to distilleries and their fans. There are actually two proposed new bills; HB 500 and SB 160. The full text of both is included below. They cover similar things.
- Private Barrel Selection (PBS) – Create a clear and legal understanding of the Private Barrel Selection process. This includes an exemption for sample sizes and the number of bottles sold per person per day for a private barrel selection event. Part of the proposal would allow a consumer to go through a retailer or directly to the distillery to purchase a private barrel selection.
- Distillery Exclusive Bottle Sales – Allow distilleries to sell exclusive bottles at the distillery. This is something that Kentucky breweries and wineries can do now. It is also legal in many other states.
- Distillery Satellite Tasting Rooms – Kentucky wineries and breweries can already have unlimited satellite experiences, but distilleries cannot. The current bill is asking to have one satellite tasting room for each DSP (Distilled Spirits Plant No.) a distillery owns. The offsite location would be able to offer samples, cocktails and bottle sales. Several other states already have satellite locations. For example, Ole Smoky Distillery in Tennessee has four locations. Between all locations Ole Smoky welcomed 5.7 million visitors in 2021. For comparison purposes the entire Kentucky Bourbon Trail welcomed 1.5 million guests in 2021.
- Barrel Aged & Batched Cocktails – Allow a retailer to keep distilled spirits or wine in a container for preparing barred-aged and batched cocktails. To be dispensed from the barrel or container at restaurants, bars and distilleries.
- Bottle Sales at Fairs, Festivals & Farmers Markets – Allow a special temporary license to allow distillers to offer samples and bottle sales at fairs, festivals and farmers markets. Wineries and breweries can already do this.
This last one is kind of interesting. With the proper license, distillers can offer cocktails at fairs, festivals and farmers markets today but they cannot offer straight or neat samples and they cannot sell bottles at these events.
According to Gregory, “The ability to sell at fairs and festivals can really help out consumers and distillers. If in the future, say the Kentucky Bourbon Festival wants to sell bottles at their event they will be able to.”
When you think about it from a consumers point of view it’s hard to understand why this isn’t legal today. Imagine you are at the Kentucky Bourbon Festival, you taste a special spirits made by a craft distiller whose home base is 50 miles away from the Festival. You sample it, you like it, you want to buy it and the distiller says, “Glad you like it but sorry, you cannot buy it here, please drive to the distillery and I’ll sell it to you.” This new law would help to fix this scenario and create a better consumer experience.
“This bill is the next step in our efforts to remove the barriers that the bourbon industry faces. We’re leveling the playing field and giving consumers and tourists what they want – a unique bourbon experience that they can’t get anywhere else in the world,” McCoy said. “It will also create jobs and generate investment without costing taxpayers a single penny.”
McCoy pointed to SB 11, legislation sponsored in 2016 by Senator John Schickel that allowed cocktail sales at distilleries. “That opened the door to world-class bars and restaurants at distilleries just like you have in Napa Valley,” McCoy said.
“Senate Bill 11 was directly responsible for hundreds of millions of dollars in investments by Kentucky distilleries and created good-paying jobs and valuable tax revenue for local communities. We need to keep that momentum rolling.”
Does the Single Barrel Sales Process Bypass the 3-Tier System?
McCoy said the bill requires retailers and wholesalers to purchase private barrel selection bottles through the three-tier system, protecting the integrity of that process.
Consumers and non-profit groups would have the option to purchase private barrel selections directly from distillery gift shops, have them shipped home or sent to an out-of-state retailer through the three-tier system.
McCoy added that Kentucky consumers have long sought the opportunity to buy private barrel bottles straight from the distillery instead of having to spend more and wait longer because of unnecessary regulatory burdens. Plus, he said wholesalers and retailers don’t carry craft brands in every state, effectively shutting out consumers and charitable groups nationally from boutique Kentucky distilleries offering private barrel selection opportunities.
“Other states like California are already doing these things, and the three-tier system is alive and well,” McCoy said. “I’m proud to sponsor HB 500 and look forward to discussing it with my colleagues as we move forward in the legislative process.”
In Case of Emergency Break Glass
SB 160 was created with an Emergency designation meaning that once the law is passed by legislators and signed by the state’s Governor it will become effective immediately and sales of Kentucky Bourbon Single Barrel Sales will be saved. And bourbon lovers, distilleries and retailers will rejoice.
And a warning to other states; pay close attention to this law. It is very likely every state will need to pass similar laws to keep single barrel sales on the up and up.