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Bill in Legislature could ease restrictions on wineries, distilleries

February 7, 2019

Wineries and distilleries could have more freedom to sell and promote their products under a bill being considered in the Indiana Legislature.

House Bill 1422, which is authored by New Albany Republican Ed Clere, would change some distribution restrictions to better align with what breweries are already allowed to do.

For example, one barrier for wineries and distilleries that include restaurants is that they are not allowed to take alcohol produced on their properties directly to their restaurants. Instead, they have to sell it to a distributor, the distributor has to take it to a warehouse and then return it and sell it back to the winery or distillery. Then the product can be sold in the restaurant.

“It’s just unnecessary,” Clere said.

Breweries are already allowed to have what’s known as a continuous flow, meaning beer can travel directly from the production facility to the restaurant either through a tap or in bottles.

“We’ve created some privileges for breweries that wineries and distilleries don’t have, and we’re trying to help them catch up,” Clere said.

The bill would also addresses the rules for wineries and distilleries at farmers markets. Wineries, which are already allowed to sell by the bottle at farmers markets, would now have permission to give samples without needing to obtain a special permit.

Distilleries would also be allowed to sell and provide tastings at farmers markets either in the county they are located in or a county adjacent to the one they are in.

Another benefit for distilleries in the legislation is the ability to ship directly to consumers. Some surrounding states already allow this, including Kentucky, so Indiana distillers are shipping to customers there.

Clere said this could help small distilleries that are unable to attract distributors grow their market base.

Several wineries and distilleries testified in support of the changes at the House Public Policy Committee hearing on Wednesday.

"The distribution system in the state of Indiana is broken," Wilbert Best from Best Vineyards said. 

The bill would also allow common ownership of multiple types of permits, like a three-way alcohol permit, which allows the sale of beer, wine and liquor, and a permit that allows production of wine or spirits.

It is specifically a problem for Huber’s Orchard and Winery in southern Indiana. In addition to making wine, Huber’s also distills spirits and has event space where it offers food and drinks.

Marcella Huber Hawk, executive assistant at Huber’s, said they received a variance in order to be able to have the three-way permit more than 20 years ago, but the Indiana Alcohol and Tobacco Commission has recently warned them that will no longer be allowed to continue.

The bill also addresses an issue with outdoor bars. Those that aren’t attached to the permitted bar aren’t allowed to sell directly to consumers; instead, patrons must order through a server. For example, the bar at the top of the hill at Ruoff Home Mortgage Music Center may not be in compliance with state law, Clere said.

“A lot of existing facilities are operating illegally,” Clere said.

Clere said that while the bill is literally about alcohol, but he hopes lawmakers can see beyond that.

“It’s primarily about agriculture, agri-tourism, economic revitalization, small business development--you know all of the things that are facilitated and bolstered by craft alcohol production,” Clere said. “These businesses are investing in communities and creating jobs, and that's what this is really about.”

The bill remains in the public policy committee and is expected to be amended next week.

The committee also discussed House Bill 1518, which would address a variety of issues in an attempt to make it easier for communities to attract restaurants, breweries and wineries, and for businesses like wine-and-canvas studios to serve wine. That legislation—authored by Rep. Ben Smaltz, R-Auburn—would also create a special food hall permit meant to benefit the $300 million Bottleworks development that is under construction at College and Massachusetts avenues.

HB 1518 also remains in the committee and is expected to return next week.

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