RICHMOND — Ever since Virginia slapped strict laws onto the sale of distilled spirits after Prohibition, enterprising businesspeople have looked for ways to set the devil’s water free.
This year, the legislature is weighing bills pushed by local makers of small-batch liquor that would allow them to pocket more of the profit from their bottle sales and give customers inventive ways to imbibe the strong stuff.
The bills are among dozens seeking to ease alcohol regulations in Virginia, including efforts to serve drinks in cigar shops and art studios, reduce the amount of food restaurants must sell in order to be allowed to pour cocktails, and allow state-run liquor stores to sell tourism merchandise such as “Virginia Is for Lovers” swag.
The onslaught has left lawmakers weighing public safety against economic development as Virginia struggles to reconcile its tip-of-the-Bible-Belt rural communities with Washington’s progressive suburbs and the embrace of entrepreneurs by Gov. Terry McAuliffe (D). It poses a particular conundrum for some Republican lawmakers, who must balance the teetotaling tendencies of some of their socially conservative constituents with an ideological aversion to government regulation and interference.
And the proposals have sparked a wave of opposition from sellers of other forms of alcohol, who are reluctant to give producers of hard liquor a competitive edge.
“We’re [seeing] more folks looking for ways to sell alcohol that we’re not used to,” said Del. C. Todd Gilbert (R-Shenandoah), a former prosecutor who chairs the committee that hears alcohol-related bills. “We certainly want to encourage business to thrive in Virginia, but that is bumping up against long-established rules and regulations. We may need to go back to the drawing board.”
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An overhaul of Virginia’s Department of Alcoholic Beverage Control can’t come soon enough for Denver Riggleman, who followed his wife Christine’s hunch a few years ago that they could build a business distilling spirits in the Blue Ridge Mountains.
They named it Silverback Distillery after Denver Riggleman — a former intelligence officer with gray hair and a hot temper. Christine apprenticed out west, learning to cook liquor that is far superior to the bathtub gin that, according to family legend, her aunts made years ago.
“We learned from the ground up,” Denver Riggleman said. “I was a good drinker — I was talented at that — but I never made liquor. . . . It might be a family tradition, we just don’t want to own up to it.”
The Rigglemans’ two-story distillery features modern tasting rooms with photos of their signature gorilla and fermentation equipment that rivals national brands.
On a recent Saturday, customers crowded around locally sourced soapstone bar tops like they would at any tavern. But there were some subtle differences.
The glasses were small — Virginia’s craft distilleries can serve at most four half-ounce tastings of their product, amounting to a series of mini-neat drinks or cocktails. There is no similar limit at wineries and breweries. And the share of sales that goes to the state ABC agency is larger than what beer and wine sellers have to pay.
Hoping to change all that, some of the state’s 40 distillers — including the Rigglemans — formed a guild and hired W. Curtis Coleburn III, a former ABC head, to lobby lawmakers and the state’s powerful alcohol interests. They so far have found little enthusiasm for making big changes to a state-run system that generated $845 million last year, for a record profit of $152 million.
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“We as an industry are vested in making sure that stays in place and grows,” said Philip H. Boykin of the Virginia Beer Wholesalers Association, which is pushing to limit changes in the state’s alcohol regulations. “Because if those profits aren’t coming out of ABC, they’re going to be looking to other alcohol interests for those tax dollars.”
The Virginia Restaurant Lodging and Travel Association opposes the proposal to allow much bigger tasting portions at distilleries, which they say would give those businesses an unfair advantage over restaurants. Restaurants can serve unlimited, full-portion cocktails, but unlike distilleries they must sell a certain proportion of food in order to be able to serve liquor.
“Until that state policy changes, we as a restaurant community don’t want to see some businesses being given an advantage in selling liquor where we don’t enjoy the same privileges,” lobbyist Thomas A. Lisk said.
The Virginia Wine Wholesalers Association did not return messages seeking comment.
Riggleman said the lobbies fear competition and see the growth of businesses like his as a threat and a slippery slope toward privatization of the sale of hard liquor — a concept that former governor Robert F. McDonnell (R) tried but failed to push through the GOP-controlled legislature in 2011.
The wine and beer lobbies made $1.7 million in political donations in 2014 and 2015, according to data compiled by the Virginia Public Access Project. The loosely formed distillers guild is so new that it has not coordinated a similar political giving effort.
But Virginia’s distilled spirits industry has seen a 62 percent jump in total sales — direct from distilleries and through ABC retail stores — over the last five years, according to a beer and wine association analysis of state data. Boykin, the beer lobbyist, said those numbers show craft distilleries can afford to wait for “thoughtful, deliberative” change. The General Assembly approved a small increase in tasting size last year, for example, and seems likely to approve another small increase this legislative session.
But Riggleman, who considers himself a rebel and an entrepreneur, is impatient. He says he and his wife would not have built their business in Virginia had they known what they were up against.
“If you’re lobbying to hurt another industry because you’re afraid of competition, that’s cronyism,” he said. “Every other industry has this level playing field. Why not us?”
That frustration is exactly what McAuliffe is trying to combat with a slick economic development operation and incentive grants. His administration has awarded eight businesses involved in craft brewing a total of $471,500 in exchange for a $30 million capital investment and 128 jobs, data show.
“You will be hearing more about economic development happenings in the distilled spirits sector during 2016 because of projects that are coming online and existing projects that are growing,” Secretary of Agriculture and Forestry Todd Haymore said in an interview.
Scott Harris — who with his wife, Becky, founded Catoctin Creek Distilling in Purcellville in Loudoun County in 2009 — said he is optimistic about the future of the spirits industry in the state.
Millennials want to know where their food comes from, Harris said, “and it’s no different for whiskey. They say, ‘Oh, this whiskey was made an hour from here, and I can go visit.’ ”