Orlin Sorensen

Washington Distiller
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About Orlin Sorensen

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    Woodinville Whiskey

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  • Real Name
    Orlin Sorensen
  • Gender
  • Location
    Woodinville, WA
  • Distiller Status
    Licensed Distiller
  • DSP Number
  1. spirits stored in barrels

    The IFC has the barrel exception, but the IBC does not. Kent and Don/Dry Fly lobbied to have the legislation added to the IBC to be consistent with the IFC, but to date the IBC has not adopted it. Our municipality has ruled the IFC exemption cannot trump the IBC, so alcohol is alcohol whether it is in a barrel or tank. Once you're above 240 gallons you become H3 (hazardous) occupancy, hence our facility is now H3 compliant. The major things to be H3 compliant are a 1 hour fire rating for the entire room (with doors connected to fire alarms to auto shut), a very dense sprinkler system (6" main water line), and spill containment. Each municipality will interpret their own way, but we are hearing more and more taking this stance.
  2. From the LCB today: The Washington State Liquor Control Board approved withdrawing the following rulemakings: • Internet Sales and Delivery of Spirits by Distilleries and Craft Distilleries From Karen McCall: Yes, the board withdrew the rulemaking to allow internet sales and delivery of spirits by distilleries and craft distilleries. This activity would be in direct conflict with the “Granholm” decision. If the board were to allow this activity to instate distillers and craft distillers they would have to allow the same for out of state distillers. To allow out of state distillers to do this would require a license that would have to come from the legislature.
  3. Offering Help in Oregon listing process

    We worked with Todd in Oregon when we were with Southern down their. Good guy and knows the Oregon system really well.
  4. From DISCUS today:

    I have no idea how this bill is written, what the details are, or if it has any legs. I was simply posting it as an FYI which is why I did not comment on it. If you can show a bill is at least revenue neutral (net tax loss = net gain from income tax of more jobs, payroll taxes, increased production, etc.) then it has potential. I can't imagine DISCUS and their supporters would put time or energy into a lost cause. I do believe a small producer tax break would be much more probable (and frankly, more beneficial), but most crafts seem to be fighting at the state level. ADI has had something in the works for years, but it hasn't gotten anywhere because it shows a net revenue tax loss, among other issues.
  5. From DISCUS today:

    On the legislative front, we are pleased to report that Rep. Tom Reed (R-NY) has agreed to introduce the tax reduction bill for distillers shortly. The bill will have a different number and new language that sets the tax rate at $2.70. The introduction awaits the resolution of the larger budget issues between Congress and the White House. We are also in the process of securing an Senate sponsor for companion legislation. Once introduced, we will be looking for your assistance in securing additional sponsors.
  6. Raising the Craft Limit - From 2L to 3L

    I don't know that the contention is a quality issue. Every WA distillery relies heavily on the local card. Most all of us have built our businesses on this to some extent. And just about every distillery uses some reference to "local," "hand-crafted," "grain to glass," "produced by," "made in," etc... When these terms and the general assumptions that consumers have about a "local craft" distillery are exploited, it is damaging to the integrity of the industry. Not necessarily a product integrity issue. NGS as a base for a product that is significantly altered by the distiller (Gin, Absinthe, etc.) as Don states, or a raw material that is not available in our state, does not seem to be the major issue. It is the use of bulk, finished spirits, not being significantly altered ("significantly altered" being the key term here), and marketing it under a "local craft distillery" brand that is slight of hand and damaging to the integrity of all. By the very nature of a bottle that says "Acme, Washington Craft Distillery" it is reasonable to conclude that a consumer will believe the product is made by a local distillery, and that will influence the buying decision. When that consumer discovers that the product was not made by a local distillery, and the premium they paid for that product was false, that tarnishes that persons experience with the "local craft" brand as a whole.
  7. Raising the Craft Limit - From 2L to 3L

    The only three remaining major differences in the licenses (craft distiller/distiller) are the annual fee, 17%, and tastings are addressed. If we can agree distillers can taste, and crafts remain lower fee and 17% retail, I think those are the major hurdles. Don, to your 75% thoughts, I would offer that crafts be subsidized at some level for the amount of WA agriculture they use. Logistically, I don't see this credit at the alcohol taxation level, but I could see this in some for of B&O credit. Something similar to the fruit processor B&O credit currently in existence. The more you WA ag you use per quarter/year, the higher the credit. To the "merchant bottler" license - this also should address those making half/buying half to be in that category. The word on the two bills referenced, the specialty wine/beer shop bill is challenged since most believe it would amend 1183 and require a 2/3rd vote since it's less than 2 years old. Sounds like the 2L to 3L has legs. We're looking into if this can be amended to be on par with all retailers (24L), but as you know the 24L is also being aggressively challenged by retailers to be lifted. Had a long conversation about the word "produced" with the TTB and they were not empathetic. I don't know the LCB would be either. Here's the short of the long, verbatim: “Produced” has a very specific definition for wine but not so much for spirits."
  8. State lawmakers and the Governor have been working through the night to finalize a state budget which they completed and passed this morning. As part of that budget, Senate Bill 6655 was adopted by the legislature with a 2/3+ vote. In this bill there is an amendment to initiative 1183 that specifically exempts craft distillers from the 17% retail fee on tasting room sales. They also included an emergency clause which makes this law the day the Governor signs the bill or 20 days from today, whichever comes first. This was the only amendment to I-1183. I am told the efforts of those involved and this accomplishment is nothing short of amazing. We owe our lobbyist Trent House, attorney Jeremy Eckert, Senator Nick Harper of Everett, and Senator Larry Springer of Kirkland a debt of gratitude for working tirelessly to make this happen in the 11th hour. We (craft distillers) also had great support by the majority of lawmakers. Thanks to everyone statewide who supported us. We look forward to this change helping our industry continue to grow, employ and prosper. Here is a link to the language in the bill. The craft distillery piece is in “Part IV”, section 401. http://apps.leg.wa.gov/documents/billdocs/2011-12/Pdf/Bills/Senate%20Bills/6635.E.pdf Orlin & Brett
  9. New Distillery

    We're in Woodinville and that's about what we use per day, but our spent grain is spoken for at the time.
  10. LCB Meeting

    Hi Gang, This addresses the scenario of retailers acting as distributors - Diageo direct Costco direct XYZ bar/restaurant, potentially avoiding the 10% distribution fee (depending on how the WSLCB rules) and the shortfall (depending on how they rule as well). A distributor can deliver a container load to on or off premise retailers. If retailers are limited to 24L per day to another retailer (on or off premise), it limits the feasibility of retailers acting as distributors. Retailers acting as distributors puts the Washington based distributors (and those of us using one) at a disadvantage since they/we will be subject to these fees (absorbed into OUR product pricing as you've all seen in the proposed pricing models), while out of state direct shipments wouldn't be subject to these fees in their prices. If the board rules everyone who direct ships is subject to the 10% distribution fee and shortfall, then this is not so much of an issue since all products will experience the fees/shortfall somewhere in their pricing.
  11. The wine/beer/spirits buyer for Haggen/Top Foods 26 statewide stores has been gracious enough to be our guest speaker at the next guild meeting on February 12th at Oola. They are excited to feature Washington craft spirits in their stores and this will be a great time to get many questions answered from one of the larger retailers in the state. We hope to see everyone there!
  12. Special Orders Reinstated

    One of the issues discussed last Sunday evening was the termination of special orders by the liquor control board. Friday, everyone should have received the revised supplier buyback agreement which reinstates special orders of all products, with no case or bottle minimum, through April 6th. I have also confirmed that the board will accept new product special orders as well. Any inventory in the state stores will be shipped back to the distribution warehouse at a $9.41 per case fee, and the inventory must be purchased back from the state and picked up from the warehouse. The final agreement is due out on Wednesday 12/21, and all agreements must be executed by 12/28. This appears to be a satisfactory arrangement considering the circumstances. Please share your concerns or comments.
  13. 1183 Voice

    Hi All, Although we have met most of you, Brett and I wanted to formally introduce ourselves to the guild. After receiving the first specifics of 1183 on Tuesday night as I'm sure the rest of you did, we have grave concerns that we have been sorting through with our legal counsel and the liquor board over the past couple days. The board has interpreted that craft distillers are subject to the 10% distributor and 17% retailer "fees" when products of our own production are sold out of the distillery. The verbiage of 1183 states that these fees are due from "private retailers who get licenses to sell liquor" and "private distributors who get licenses to distribute liquor." This interpretation results in nearly a 30% increase in taxes and fees due to the board and DOR when compared to the current environment. I have attached a spreadsheet that the liquor board reviewed with us over the phone. They did give the disclaimer that it was not official, but unless something drastically changes in the next day or two, I believe this is what we will see publicly in the next couple of days. It is also how we will see pricing in the post 1183 world -- in addition to distributor and retailer markups. We feel the interpretation that craft distillers are subject to a 10% distributor fee and 17% retailer fee when products of their own production are sold out of the distillery is incorrect. Nowhere in the text of 1183 does it describe this, and the voter's intent of 1183 was not to add additional fees to craft distillers. It was to privatize liquor sales and distribution. Furthermore, if craft distillers are subject to the 17% retailer "fee," then we should also enjoy the privileges of a retailer and not be subject to a 2 liter per person, per day maximum, which was intended to reduce competition with state stores. I believe the intent of the craft distilling license was to make on site sales more lucrative for craft distillers so they may possibly run a viable business in a highly taxed environment. As it now stands, the only difference between a "craft distiller" and "distiller" license is the fee associated with the license and the ability to sample. I'm sure if you've spoken with anyone, liquor board and attorneys included, they have told you that 1183 is a very loosely written initiative. From the decisions being made to date, it appears the liquor control board is taking a very conservative approach when interpreting 1183, but those interpretations and decisions are proving to be very damaging to craft distillers - no special orders, no OTO's, being subject to these new "fees," many of which have nothing to do with 1183. When I spoke with DISCUS pre-election, their interpretation was that self distribution would not be subject the 10% distributor fee no matter where we sold. I believe this is still their opinion, and if we have enough distillers that are members, we may be able to get some guidance and help from them on this front as well. These are just a couple of the many issues that will have drastic impacts on us as craft distillers in Washington State for years to come. MAIN POINT: Over the next few months, the liquor board will be interpreting 1183 and putting it into law. We need a single, unified voice in Olympia for all craft distillers immediately as our path for the future is laid. I believe we need to remind the liquor control board that the voter's intent of 1183 was to privatize liquor, not raise taxes and fees on craft distillers and handcuff them from doing business in the state. Furthermore, the craft distilling license was created to provide certain privileges to those who operate under it. The board has the ability to interpret many of these issues at their discretion, but again, it appears they are taking the most conservative approach. I know 1183 is going to be discussed on Sunday and there was also some talk of a legislative committee. To date, we have spent quite a bit of our own time and money reviewing and consulting on these issues, but going forward I would like to immediately propose the following. Immediately create an I-1183 Legislative Committee. I am happy to spearhead this and be the voice of communication. Create a small legal fund. We have already dedicated quite a bit of our own time and money into this, and will continue to do so, but I believe there may be challenging issues that we will need representation from legal counsel on behalf of Washington distillers as a whole. Choose legal counsel. Establish a line of communication between liquor board decision makers and craft distillers. The board will be much more receptive to our concerns if we have one unified voice and one line of communication rather than a dozen emails here and there from across the state. Immediately address the issues of tax/fee structure and special orders for craft distillers. We can talk specifics on this Sunday night and go to them next week. I know you are all very busy as are we, but I am willing to do the work on this, I just need to be speaking on behalf of Washington craft distillers as a whole, not just a couple of us. We will get much more done as a unified voice. When you plug the numbers that the liquor control board has interpreted into long term projections, there is a massive impact. The decisions that have been made over the past couple weeks are setting a precedence for us for years to come and we feel strongly that we all need to move on this immediately. I have spoken with Dry Fly and they are on board to support our efforts on these issues as well, but we need every licensed craft distiller in the state to come together on this quickly. Please let me know if you have any thoughts or concerns. I look forward to seeing you on Sunday night. Orlin Sorensen Woodinville Whiskey Co. orlin@woodinvillewhiskeyco.com (425) 486-1199