The Spirit is Willing: Craft distillers proliferate despite headwinds

It’s a crisp, midwinter afternoon and I’m hammering north through the rolling hills of rural Harford County. About a mile before I’d run out of Maryland real estate and crash headlong into York County, Pennsylvania, I hang a quick right toward Fiore Winery. But I’m not here for wine. I’ve come here to sample the first Maryland-made straight rye whiskey—which is to say, it was aged in new oak barrels for at least two years—since Pikesville’s stills fell silent during the Nixon administration.

Yes, you read that right: winery.

I knew the Italian-American winery also had a distilling license but I was under the impression Fiore only used it to make grappa and limoncello. But last October, Fiore quietly rolled out its Maryland Straight Rye Whiskey.

Tony Fiore, a soft-spoken 28-year-old representing the third-generation to work the family winery, meets me at the bar in the comfy (if wintertime-quiet) tasting room. They haven’t yet made much of a fuss over their milestone spirit because they only made the one barrel, he says. After accounting for “angel’s share” evaporation, that left him with 47 gallons of rye—enough for a mere 20 cases. It’s all right there on the label, which reads, “Aged 2-years in new oak barrel.” Singular.

“And it’s a 100-percent rye, so not really a traditional Maryland-style rye,” Fiore adds. “I really just wanted to see if I could do it.”

Well, did he? Yes. The 90-proof spirit tips back with a surprising smoothness, sweet and clean but with enough rye on the tongue to let you know it’s no corn whiskey or bourbon. OK, perhaps it’s a tad thin and another grain in the mash bill, along with another year or two in wood, might add some depth and complexity, but it’s a damn fine first barrel. And notable is what I don’t taste—the resinous off-notes I invariably detect in whiskeys “speed aged” using small barrels or other stratagems employed to try and cheat time and tradition.

Fiore says he’s a veritable one-man band when it comes to the distilling operations, showing me the pair of vintage-looking Portuguese pot stills and the Kentucky-made, 30-gallon reflux still he alone works to make corn-based moonshines, vodka, and grappa. More rye is on its way, too. When not working the copper, he’s out delivering the goods to stores and bars.

“Luckily, we’ve got the winery as well as the distillery so we can try different things,” Fiore says. Though distilling is a growing part of revenues, it remains an adjunct activity to a well-established, 30-year-old winery business. Most of Fiore’s red wine is aged at least two years, so sitting on product is also no biggie for the business. For the growing number of entrepreneurs jumping into craft distilling as a startup business, however, it can be a tougher row to hoe.

It’s tempting to compare craft distilling today with where craft brewing was 25 years ago. In some ways, the craft brewers helped birth a more fertile marketplace for the spirit makers. But craft distillers face unique headwinds compared to their beer-making brethren, including a bigger tax burden, greater difficulties learning their craft (home brewing is legal; home distilling is a felony), and additional thickets of state and local red tape, licensing requirements, and zoning hassles.

Perhaps no one knows more about craft distilling’s challenges here than Kevin Atticks, executive director of the year-old Maryland Distillers Guild—a position he holds concurrently with executive directorships at both the Maryland Wineries Association and the Brewers Association of Maryland. The Guild now counts 11 active distilleries among its members with another 10 listed on its website as “coming soon.”

“The laws distilleries are operating under are, in large part, in their original form following Prohibition,” Atticks says. “They’ve not been revised or pushed to the same limits that the breweries and the wineries enjoy.”

Take taxes. Back in the 1970s when a two-tier beer tax structure came into being, small breweries (making less than 60,000 barrels annually) got a break, enjoying a federal alcohol tax burden less than half of what the Buds and Millers face. (Not to be confused with the state alcohol excise taxes, which are paid by the consumer at point of sale.) For smaller breweries, the TTB tax works out to about 12 cents a six-pack. The tiniest craft distillery, meanwhile, pays the same fed tax rate as Jack Daniels—employing a formula that works out to $2.14 for every 80-proof fifth. Such taxes can weigh heavily on mom-and-pop makers, with their thinner margins and shallower pockets.

There’s also a considerable financial burden at the state level and the Guild’s main priority for the coming year is to improve (and cost-cut) state licensing. Presently, a state distilling license costs $2,000 a year. Craft makers looking to bottle their own goods—which is basically everybody—have to fork out another $600 per year for a separate rectifiers license. And if you want to self-distribute? Cough up an additional $1,750 for a wholesaler’s license. (A microbrewery can be up and running with a $500 license.)

“It’s so confusing right now when every distiller has to have multiple licenses,” Atticks says. “We’d like to expand the flexibility of the license, which is something wineries and breweries have very much benefited from over the years, while hopefully creating a single, less-expensive license.”

Craft distilling is still such a new animal in Maryland (unlike, say, Washington state, home to some 110 such distilleries) that local governments, zoning boards, and municipal officials can get flummoxed when learning that a distillery wants to set up in their jurisdiction.

“The town manager told me distilling was not something allowed in the business district, only in the industrial district,” says Scott Jendrek, who aims to open Patapsco Distilling Co. in Sykesville this May to produce vodka, gin, limoncello, and nocino. “When I asked where the industrial district was he said, ‘Well, we don’t have one.’” And so Jendrek had to set about having the zoning laws changed to allow micro distilling as a conditional use. The town is now on board—even enthusiastic—about his plans and he hopes to get the final municipal seal of approval early next month, but it’s been a real time suck. “I had aimed to be the second licensed distiller in the state and now I’m not even going to be the 10th,” Jendrek says.

The Baltimore Whiskey Company, meanwhile, started operations in a warehouse just outside of Remington last year. When I pop around for a visit the still is firing, the mash tuns brimming, and the air perfumed—not with the grainy aromas you’d expect, but with apples. They’re making Charles Street Apple Brandy, one of the distillery’s follow-up products to its well-received Baltimore Shot Tower Gin that hit bar rails last November. Its namesake rye whiskey won’t be out until in 2018, as the distillery is doing traditional barrel aging (praise the Lord). Missing amid all this excitement is distiller, Jake Holshue, who helped found the firm back in 2014. He had come to Baltimore from a distillery in Montana, but was lured back west to distill for Oregon’s Rogue Ales and Spirits in September.

“We left on super amiable terms,” company President Max Lents says, noting that Holshue was able to coach their new distiller, Eli Breitburg-Smith, some before he left. (Breitburg-Smith is a former head brewer at Peabody Heights Brewing so he already has the fermenting side of spirit-making down.)

Still, this hello-goodbye routine highlights the lack of nationwide bench strength in distilling talent. Most craft brewers began as homebrewers, visiting beer-making stores, and mixing and mingling with other hobby brewers at clubs and contests. It was easier to get up to speed.

Fiore learned distilling from his Italian grandfather and also took a course at Chicago’s Koval distillery. Dan McNeill, who together with partner, Meg MacWhirter, look to open the MISCellaneous Distillery in Mount Airy this year (making rum and rye), traveled to distilling programs in upstate New York, Washington state, and Kentucky to learn the craft. Even so, once licensed, a period of trial and error begins. “The equipment we’re using isn’t large enough to break the bank if a batch goes bad,” McNeill says. “We don’t have to have to be experts at this from the start.”

But given all that craft distilling is up against to turn on the lights, turn out a good product, and turn a profit, it has to be a labor of love for those taking it up. (And this is before discussing the elephant in the barroom: While craft brewers were up against anemic cookie-cutter lagers from Coors and the gang, craft distillers compete with big Kentucky and Tennessee distillers that turn out tanker loads of tasty, high-quality, tradition-rich spirits at good price points; Jim Beam is no Bud Light.)

But when I toss out this “labor of love” notion while at Baltimore Whiskey Company, Lents cuts me off. “Labor-of-love businesses are for people who are retired and just want something to do,” he says. Distilleries are not a hobby and he thinks the company’s—and Maryland’s—prospects for craft distilleries are good. “We want this to turn into something.”

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