Justin Stiefel

Washington Distiller
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About Justin Stiefel

  • Rank
    Heritage Distilling Company

Profile Information

  • Real Name
    Justin Stiefel
  • Gender
    Male
  • Location
    United States
  • Distiller Status
    In licensing process
  • DSP Number
    DSP-WA-21003
  • Interests
    Business, Engineering, Law, Legislation, Regulations
  1. 2015 mixed drinks in tasting room legislation!

    This is not a true statement. The bill language would allow our same size samples to be mixed with non-alcoholic mixers to show customers what it tastes like. It is not the creation of a bar type offering. We are getting lots of push back from the Restaurant Association and some folks in the legislature who think this is a backdoor entree to cocktails. We should not be giving them ammo by going out there and saying "the cocktails are coming, the cocktails are coming". So, we should be reaching out to our legislators to encourage them to support the language that allows us to offer these types of samples, but let's not be discussing cocktails please. The session is moving very fast in Olympia for folks who are interested in this and other topics should contact their members now.
  2. Craft Cocktail Sales in Tasting Rooms - when will it start?

    The statutes that authorize the craft and non craft licenses state that they are subject to the same rules as retailers, thus that seems why WSLCB applied the 17% fee on distillers. That 17% fee was eliminated in the negotiations with the legislature for craft license holders two years ago.
  3. Craft Cocktail Sales in Tasting Rooms - when will it start?

    We are compiling the list of other states that allow cocktail sales in the tasting rooms. As for the 17% fee issue, recall that trade off was because of the requirement to use 51% or more WA grown ingredients by craft distilleries. Non-craft distilleries have no requirement for sourcing ingredients, and waiving that fee will generate a fiscal note possibly requiring a budgetary offset in the budget. Since the new law going into effect this summer gets rid of bottle sales caps and allows non-craft distilleries to do tastings in the tasting rooms the only distinction left between craft and non-craft is the 51% home grown requirement and the nominal difference in the annual fee structure for the licenses. Waiving the 17% fee for non-craft licensees means there is no point in getting a craft license and that craft license might as well be taken off the books. My reading talking to people in Olympia is that going down that route opens up the door for using less WA grown materials, which they won't support. And I would prefer personally not to muddy the issues again. If someone wants to put together a separate bill on the 17% fee issue be my guest. But when it comes time in Olympia to play the "you get one or the other" game, getting the in-tasting room cocktail privilege and multiple tasting rooms, farmer markets, etc equity with wineries and breweries will generate more money for the state (and we don't have to worry about budgetary offsets) and for all distilleries compared to how much the 17% fee waiver will save for the smaller number of non-craft distilleries. That's just the math.
  4. Craft Cocktail Sales in Tasting Rooms - when will it start?

    Plus the cost of the grease traps/interceptors, the chilled food requirements (fridges/freezers), the commercial dishwasher equipment, food grade chemical cleaners, pest control, dishes, plates, extra staff and time, etc. From the WSLCB MAST training class question 20: "Which of the following will help an intoxicated person get sober?" Answer is "D"...Time. "While a number of things go into absorption only one thing works for all individuals in ridding the body of alcohol and that is time.To help ensure no ones gets intoxicated in a short amount of time and consequently sobers at a faster rate the introduction of food during the absorption/metabolizing phases can assist in these goals but only in combination with time." And yet, the breweries and wineries have no food requirements when they serve pints or wine by the glass, even though WSLCB says only time solves intoxication, and again, since the WSLCB says 12 oz beer = 5 oz wine = 1.5 oz spirits we all could be making servings just like the breweries and wineries, with much higher margins compared to bottle sales. As for wrapping in the wineries and breweries, etc I fear going down a rabbit hole that draws in the wine commission and beer commission. Wineries and breweries can already sell by the glass without a food requirement, it's just that we distilleries can't. Plus the issue of multiple off site tasting rooms, farmers markets, etc, all of which the breweries and wineries can take advantage of while we distilleries can't.
  5. Craft Cocktail Sales in Tasting Rooms - when will it start?

    We shouldn't limit ourselves artificially from the beginning by saying only product made on premises can be put in the cocktail. Again, I don't want to have to distill vermouth just to make a Manhattan. We should put the package together and then start gathering feedback, but not negotiate ourselves out of the room before the talks even start. Just my two cents. As I said earlier, I have started putting a comprehensive package together to get feedback.
  6. In looking over the local distillery landscape one thing is becoming clear to me: with 100 distilleries in WA (soon to be 100) there is not enough retail shelf space for all the Washington-made brands, and the volume of movement through bars and restaurants on the back bar won't sustain the current numbers of WA distilleries. We either remove the artificial barriers that cap the ability of distilleries to maximize multiple revenue streams or we get ready to see cheap equipment on the market in the coming years. How do wineries and microbreweries get their financial start? They sell wine by the glass and pints of beer in their tasting rooms. Sure, they sell growlers to go and bottles to go, and they give out samples, but the highest margin item is that item you sell in the smallest quantity (5 oz glass of wine or a pint of beer). The wineries and breweries do this until they get to the point where they get demand for their products outside their tasting rooms. Then they start selling kegs. Don't get me wrong, selling a bottle of vodka for $25 in the tasting room is great. But selling 18 cocktails made with that same 750 ml bottle at $8 per cocktail would generate $144 in revenue in the tasting room, with little additional costs involved. I say making $144 is better than $25. Distilleries carry the same liquor insurance as wineries, breweries and bars. All people pouring and selling must have MAST 12 permits. We all abide by the same service observations, yet the distilleries are treated differently than the wineries and breweries, which puts an artificial cap on sales. Even WSLCB training states all servings are equivalent: 1.5 oz spirits = 5 oz wine = 12 oz beer. WSLCB training also says the only thing that overcomes intoxication is time, not food. So why would we need to have a commercial kitchen to sell a cocktail when no food is needed to well a glass of wine at a brewery or a 16 oz pint at a brewery. If the state says its all the same then a serving should be treated the same. We have all invested enough in our equipment to make the spirits that we shouldn't have to also invest in the equipment and staff to run a commercial kitchen just to get the right to sell a cocktail. Several states allow for tied cocktail sales in or next to the distillery, such as New York, Chicago, Oregon, South Carolina, Colorado, Idaho, and now soon Alaska. Here is the link to the latest legislative action in Alaska which will allow distilleries up there to sell a cocktail in the tasting room in addition to giving out samples - http://akdemocrats.org/rep_tuck/2014/04/17/news-legislature-approves-craft-distillery-local-sales/. I have started to put together a comprehensive legislative package to remove the equitable imbalances between wineries, breweries and distilleries to allow us (distilleries) full access to the market, just as the wineries and breweries enjoy. This would include limited drinks by the glass so long as the majority of the cocktail is comprised of products produced by the distillery (after all I don't want to have to start also making vermouth), samples and sales at qualified farmers markets, the ability to sell WA made wine and beer in the tasting room (not everyone likes spirits, and again, find more ways to generate revenue), sell guest spirits (bottles made by other WA distilleries), additional off-site tasting rooms just like wineries and breweries, etc. Anyone else say its time?
  7. Hello from Seabeck Spirits

    Welcome to the Guild and the industry. Looking forward to trying your products.
  8. Raising the Craft Limit - From 2L to 3L

    This bill was just reported out of the committee, so now it is on to the next step in the House process. In watching the testimony online it appears the purpose of moving from 2L to 3L was to take into account the reality that the 2L limit meant you could not sell 3 750 ml bottles since that would barely edge you over the 2L limit. Moving to the 3L limit means up to 4 750 ml bottles can be sold per person for an even 3L of product. The committee members kept referring to this bill as correcting a "math issue" for the craft distillers in their tasting rooms. Justin Heritage Distilling Company, Inc. Gig Harbor, WA
  9. Congrats to the crew at Sidetrack Distillery on winning the Gold Medal for their Raspberry Liquor in the category of "Fruit Infusions" at the recent American Distilling Institute national meeting!
  10. April 15th, 2012 Guild Meeting

    April 8 is Easter Sunday. Isn't it possible many folks will be busy with family dinners?
  11. 1183 Legal Challenge

    I just received word from one of the lead attorney's for the State/Costco teams that the Cowlitz judge reversed his previous ruling and has now ruled that I-1183 was constitutional in its entirety. There will almost assuredly be an appeal to the state Supreme Court on the part of the original plaintiffs, but for now 1183 moves forward fully in tact. I read the filings last week and, based on my professional legal review, it looked like the Costco team, et al, had their arguments well researched and the bulk of the law on their side. I personally do not see the Supreme Court overturning this decision based on the case law cited and I am moving forward with our business model assuming 1183 will be fully implemented on or before June 1. Good luck to everyone.
  12. I-1183 & 17% Retailers Fee

    If you parse the sentence: "Any distiller licensed under this title may act as a [retailer].....of spirits of its own production" that opens the door to what definition of "retailer" is to be applied, which includes the ability to sell drinks by the glass. In other words, this language appears to allow you to "act as a retailer", and "as a distributor" or "as a distributor" of "spirits of its own production". As for your other point about the Class H license, frankly forcing distillers or brewers or wineries to open restaurants in order to sell spirits by the glass only punishes distillers. Wineries can sell their products by the glass in their tasting rooms and they can charge tasting fees and waive the tasting fees if a customer buys a bottle or more. Microbreweries can also sell beer by the pint on site - in fact they even get a second off site tap room not connected to their production facility. And wineries and breweries can do this without the cost of setting up a restaurant - which is even more expensive than setting up a distillery. (Last I checked the restaurant business had even lower margins than running a distillery!) So that leaves the gaping hole of restricting the distiller's ability to sell even a single drink or two by the glass - while still also having to pay the tax on the samples....samples that can't be charged for in order to even recover the cost of the product plus the tax paid on it. I've been trying to think of another industry in America where a manufacturer is told that as a matter of law they can provide customers' samples but they cannot charge for the samples and they must pay tax on the samples they provide. Perhaps in the pharma industry....but I don't know. Regardless, plenty of issues to work on as this industry grows...
  13. I-1183 & 17% Retailers Fee

    Agreed that new powers are bestowed upon craft distillers and all distillers. My point only dealt with the application of the 17% fee. To your point, do you read the language of section 206 to mean that distillers can now sell at the retail level for consumption on premises - including selling drinks by the glass?
  14. I-1183 & 17% Retailers Fee

    Greetings. I am a new member to the Guild. If things go according to plan I will be submitting my DSP next month for my facility. I look forward to meeting other Guild members and getting involved with the Guild. I was tracking the specific language of I-1183 once it was cleared to be on the ballot. Since I-1183's passage I saw the draft rules the liquor board is proposing for the 10% and 17% license fees contained in I-1183. I believe a strict reading of the actual language of I-1183 shows that craft distillers are not subject to the 17% retailer fee. I submitted a public comment to this effect. Application of this 17% fee on craft distillers is a big hit to the bottom line that was not intended by the drafting of I-1183. I got a response back from the board that they were taking my comments into consideration. You can see my comments and the staff's response at the bottom of this email. Other craft distillers who agree with this reading of I-1183 may desire to submit their own comments for the record and for the board's consideration on this matter. In the rule making process the regulatory bodies must take into account public comments and they must square those comments up with the text of the legislation. I believe it would be useful and instructive for the board if other craft distillers who share this opinion supply comments during the rule making process. Comments are to be directed to: rules@liq.wa.gov Under the current rule making process all comments must be submitted to the board by Jan 7, 2012. Looking forward to meeting you all. Thanks very much. Justin Stiefel Gig Harbor, WA ---------------------------------------------------------- From: Stiefel, Justin Sent: Thursday, December 15, 2011 5:06 PM To: rules Subject: Public Comment - Pre-proposal #11-12 This is a comment on the proposed rules for the implementation of I-1183. This comment is based on a review of the Washington State Liquor Control Board’s Letter to Craft Distillery Licensees that appears to be in response to the passage of I-1183 and resulting in Emergency Rules WAC 314-02, 314-23 and 314-28. In that letter to distillers, again, based partially on the Emergency Rules, the board states: “Beginning on December 8, 2011, when selling directly to retail customers, you must pay both a 10% distributor license fee and a 17% retail spirits license fee based on gross spirits sales.” Based on a careful read of the specific and detailed language contained in I-1183 and the Revised Code of Washington it appears the application of the 17% retailer licensee fee for direct sales to consumers is improper. Here is why: Based on the language of I-1183 and the current Revised Code of Washington: - Holding a craft distiller’s license provides an automatic right to sell directly to consumers at the retail level without the need to secure any other type of license beyond the basic craft distiller’s license to manufacture and operate a tasting room (RCW 66.24.145). - The clear and specific language of I-1183 states that craft distillers are to be treated as distributors (the new Section 120(4) to be implemented by I-1183), as follows: “A distiller holding a license or certificate of compliance as a distiller under this title may act as a distributor….” Nothing in this section or any other section of I-1183 states that a craft distiller must secure a retail license or be a “retail licensee”. - When a distiller applies for or holds a distillery license they do not specifically apply for and hold a retail license. The actual retail license created by I-1183 is reserved for other types of licensees – i.e. bars, restaurants, retail stores, etc. Based on the specific drafting of both current law and the new clear language contained in I-1183 a distillery does not need to apply for a retail license. The ability to sell at the retail level is both implied and explicitly allowed for under the law without the need for a retail license. Section 103(4) states “Each spirits retail licensee must pay to the board, for deposit into the liquor revolving fund, a license issuance fee equivalent to seventeen percent of all spirits sales revenues under the license.” (Emphasis Added). Craft distilleries do not apply for, nor do they need to hold, a retail license to sell their product directly to consumers at the retail level. As stated previously, a license to operate as a craft distillery provides an automatic right to sell directly to consumers WITHOUT needing to secure a retail license. Requiring a craft distillery to apply for and secure a retail license goes beyond the authority of what the current RCW and the language of I-1183 provide. For the above stated reasons the Board should reconsider its position taken in the letter to craft distillers that they must pay the 17% retail fee for products they sell directly to consumers. While to some people it may appear to be “equitable” to charge craft distillers this 17% retail fee for retail sales, if it is not supported by the statutory authority guiding the Board, especially the language adopted by nearly 60% of the voters on I-1183, then it would not be appropriate to apply it to craft distillers. As such, requiring a craft distiller to secure a retail license, to become a “retail licensee” or to be treated as anything other than a “distributor” with other specific rights for purposes of the act could be construed as a decision exceeding the Board’s authority. Thank you Justin Stiefel 6405 115th St Ct NW Gig Harbor, WA 98332