Small Batch Distillers And Uncle Sam

Wayne Curtis writes about the regulatory hoops small distillers have to jump through:

The Ernest Scarano Distillery is located in a 120-year-old barn outside Fremont, Ohio, a town of about 17,000 that’s home to several cutlery companies and a ketchup factory. When I visited in the fall, I noticed that the open barn door had a chain hung across it with a sign reading Bonded Area. Ernest Scarano, the owner and sole employee, told me that he needed to see my ID before I could come in. “The bonded area is for the feds,” he explained, as if the web of state and federal regulations governing liquor production were the most natural thing in the world. “The permitted area for the state of Ohio is the entire barn.” I fished out my driver’s license, and while he logged my information into a notebook, I admired the quiet emptiness of the surrounding cornfields. I felt like a bit player in a film about some rural bureaucratic dystopia.
In the early 19th century, some 14,000 distilleries across America were merrily operating, sending up little dogwood-blossom puffs of smoke in the hills and imbuing cities with the aroma of fermenting grain. Then came Prohibition. Nearly everyone shuttered in 1920, and few returned after Repeal in 1933—a generation of skilled distillers had been skipped, and the new distribution channels established by Congress favored large producers. Big Liquor elbowed its way up to the bar, and smaller distillers couldn’t find a seat.Eight decades later, micro-distilling is making a comeback: dozens of new small-scale producers fire up every year, fueled by a do-it-yourself culture, their hopes in many cases hitched to the “locovore” movement. At the end of last year, some 860 distillers held federal licenses.I’d sought out the Ernest Scarano Distillery because it was the smallest commercial distillery I’d heard of, and I was curious about the mechanics and economics of such micro production.
Scarano’s business plan calls for producing about 100 gallons of rye whiskey every year, or roughly what a large liquor producer spills in an afternoon. Scarano, a 60-year-old with a neatly trimmed gray beard, has studied theology, worked for the Detroit diocese, and owned a telephone-installation business. When he decided he was getting too old for 40-foot ladders, he opened a small shop called Mantiques. (“Classic guy stuff,” he said, such as antique tools, vintage chain-gang outfits, and old well pumps. “No teacups or anything.”) Inspired by a rye he’d tasted a few years earlier, he took up distilling on the side. “I’ve had four or five careers in my life,” he told me, “and I wanted one more.”
Craft distillers not only need to be knowledgeable in such arcane matters as the esoteric habits of yeast and the miraculous properties of copper; they also must be deft in navigating the complex regulatory geography. (As I once heard a tour guide at the Wild Turkey distillery explain: “How do you make bourbon? You take some moonshine, put it in a barrel, and add a bunch of federal regulations.”)

On a related note, a local distillery just got its ducks in a row and started operations.