California’s weird liquor laws hurt small distilleries. Will lawmakers help? | Opinion

It’s a tough time to be in the adult beverage business.

Doctors are warning that drinking even a little alcohol is risky. Tariffs are rattling the industry, and inflated grocery prices have some consumers foregoing luxuries like high-end wines and spirits.

The outlook is even grimmer for California’s small craft distillers, who make everything from whiskey and rye to limoncello and juniper-smoked gin.

Beginning next year, they may no longer be able to ship alcohol directly to customers — a practice that’s been allowed since 2020, when state lawmakers loosened restrictions to help struggling businesses survive the COVID pandemic.

That legislation is due to expire at the end of 2025, however, and unless lawmakers vote to make direct-to-consumer shipping permanent, small craft distilleries will once again be limited to selling to customers who visit their tasting rooms.

Another point-of-sale — big supermarkets and liquor stores — isn’t an option. That would require going through wholesalers, and according to craft distillers, major wholesalers just aren’t interested.

“They don’t want anything to do with the small craft distilleries,” said Alex Villicana, the owner of Re:Find distillery in Paso Robles.

Treat distilleries more like wineries

Banning direct-to-consumer shipments would be a big step backward for a growing industry that creates jobs, supports local agriculture and generates tourism. And it’s unfair when you consider that wineries are allowed to ship their products.

Another difference: While wineries are permitted to sell unlimited bottles to customers, distilleries are limited to selling 2.25 liters — three standard-sized bottles — per customer per day.

Customers who want to purchase more — maybe they’re hosting a special event or are buying holiday gifts — are stuck returning multiple times or enlisting friends to buy bottles on their behalf.

“It’s ridiculous,” said Chris Steller, who runs Amador and Dry Diggings distilleries in El Dorado Hills. “It’s treating people like 5-year-olds.”

Sen. John Laird: ‘This proposal is unlikely to gain the necessary support’

Craft distillers are trying to persuade state lawmakers to lighten up on regulations by permanently enshrining their ability to ship and by doubling the amount of spirits customers are allowed to buy per visit.

They believe they have a shot at increasing the limit, but face an uphill battle when it comes to shipping. That’s because wholesalers adamantly oppose direct-to-consumer shipments, and they hold many of the cards.

State Sen. John Laird, whose Central Coast district includes several craft distilleries, has been a strong proponent of the industry, but he agrees that permanent, direct-to-consumer shipping would be a heavy lift.

“Until an agreement is reached among all parties involved, while I want to support the craft distillers, this proposal is unlikely to gain the necessary support to move forward,” he told the Santa Cruz Lookout, an online news site.

That’s not the only hurdle; the state is facing a court challenge from a Tennessee distillery that claims California is discriminating against out-of-state distilleries by not allowing them to ship directly to their California customers.

East Tennessee Distillery has a good chance of winning its lawsuit, since the U.S. Supreme Court found for the plaintiffs in a similar case, Granholm v. Heald, in 2005.

If California wants to allow in-state distilleries to ship directly to consumers, it will have to offer that same opportunity to out-of-state businesses as well.

Some California distillers are fine with that, but again, the wholesalers are not.

Among other arguments, they claim DTC shipping makes it easier for underage drinkers to get their hands on alcohol.

Alcohol Beverage Control — the California agency that enforces drinking laws — says that was a problem during COVID, but minors were mostly ordering from services like DoorDash and Postmates.

Decoy operations conducted in 2022 showed fewer violations. Besides, are teenagers likely to order high-end spirits from boutique distilleries, plus pay a hefty shipping fee? Probably not.

Paso distillery estimates 30% decline in business

Villicana, the Paso Robles distiller, estimates that he’ll lose 30% of his business if he’s no longer able to ship to his customers and will have to reduce production and layoff employees. He also will cut back on the ingredients he buys from local growers, including lemons, barley and cucumbers.

Distillers hope the Legislature will intervene, yet lawmakers appear to be throwing up their hands.

This should not have to be so hard.

Others states are ahead of California in allowing direct-to-consumer shipping.

New York, for example, passed legislation last year that allows direct shipment of distilled spirits, cider and mead.

Why not California?

If the system has been working for the past five years, why can’t it continue? And if major wholesalers aren’t interested in dealing with small distilleries, why not allow them to continue to ship directly to customers?

Consider the alternative: Distilleries will be one of the few businesses in California that will be unable to deliver their product directly to their customers — a throwback to the pre-internet days when brick-and-mortar shopping was the sole option. Distilleries in out-of-the-way locations will find it especially tough. Remoteness is part of their charm, but it also means it’s much easier to hop in the car and drive to BevMo.

The state’s craft distillery industry has the potential to grow — but not under such restrictive conditions.

It’s time lawmakers revised California’s antiquated laws that are stifling the growth of an industry that has a right to thrive.

This story was originally published April 3, 2025 at 5:00 AM with the headline "California’s weird liquor laws hurt small distilleries. Will lawmakers help? | Opinion."