February 13, 2014 – For the second year in a row, Mississippi River Distilling Company has been working hard to get legislation passed in the state of Iowa to reduce restrictions on Iowa Micro-Distilleries.
WHAT ARE WE ASKING FOR? Essentially, we are looking for the same privileges that Iowa breweries and wineries enjoy.
• We want the ability to sell drinks made with spirits that are manufactured on site. Currently, we are only allowed to serve 2 ounces of free samples per person, per day.
• We are asking to raise the daily retail sales limit to one case. Iowa law limits our retail sales at the distillery to two bottles per person, per day. Iowa breweries, wineries and liquor stores have no sales limits.
This change will allow for more Iowa made products to be sold in our state. That means more tourism dollars, more alcohol tax dollars and more jobs in Iowa. The more we can do to make this industry attractive for Iowa business people, the more we will see the industry grow. The state is a direct beneficiary of increased alcohol sales because of the state tax and distribution system.
There is great interest in hosting events at Iowa distilleries, much like groups do at Iowa breweries and wineries.
This change would open Iowa distilleries to more exposure and tourism opportunities. Many other states, including Illinois, Missouri and Michigan allow for sales of product by the glass and the bottle at microdistilleries. According to the American Distilling Institute, states that allow for retail sales by the glass and bottle saw a 78% growth in the number of microdistilleries in their states from 2011 to 2013. States without these laws saw a 14% increase during the same time period.
TAX REVENUE FOR IOWA
In fiscal year 2012, the Iowa Alcoholic Beverage Division received $6.7 million in revenue from the sale of products made by Iowa microdistilleries. In contrast, Iowa had $7.7 million in total revenue from the sale of every bottle of wine in the state. Beer sales generated nearly $14 million. But hard liquor sales generated over $255 million. Iowa's three largest microdistilleries accounted for 2.3% of that revenue. As the sole distributor of hard liquor in Iowa, the state has as much to gain as any microdistillery from a revenue perspective. Every dollar of profit made from alcohol sales at Iowa microdistilleries generates a dollar of tax revenue for the state of Iowa.
CONSISTENT WITH IOWA LAW
Iowa microdistilleries all work through the current state control of alcohol trafficking in our state. This bill takes steps to maintain the current three-tier system of alcohol trafficking in Iowa. By doing this, the Iowa Alcoholic Beverages Division will be able to ensure that all taxes are properly assessed when the products are distributed. No tax breaks for the industry are included in this bill. The bill will lead to increased tax revenue for Iowa.
* Iowa distilleries are not allowed to engage in wholesale distribution of spirits.
* All products will be distributed through the Iowa ABD warehouse in Ankeny.
* Product sold for on-premise consumption (by the glass) will be purchased through a "Class E" liquor licensee (Wholesaler), just like every other Iowa bar and restaurant does and therefore maintaining the current system in Iowa.
This bill has bi-partisan support from our local representatives. Representative Steve Olson (R) is driving the bill in the House. Senator Rita Hart (D) is leading the charge in the Senate. is being supported by the Iowa micro-distilling industry, Iowa Association of Business and Industry, Iowa Corn Growers, Iowa Farm Bureau and the Iowa Restaurant Association.
The only registered opposition to the bill has been from the Iowa Wholesale Beer Distributors Association. This is a well organized and well funded lobby that has great influence in Des Moines. Ironically, this organization did not oppose past legislation that opened up these privileges for small Iowa breweries and native Iowa wineries. We are hopeful that through dialogue at our committee hearings we can help our lawmakers and opposition see that this legislation poses no threat to existing business. Instead, it supports small family business, local farms and holds great potential for tourism, tax revenue and jobs in Iowa.
Micro-distillation is a rapidly growing industry, much like small wineries and microbreweries were 15 to 20 years ago. Iowa's three biggest micro-distilleries, Templeton Rye in Templeton, Mississippi River Distilling Company in LeClaire and Cedar Ridge in Swisher, accounted for over $6.5 million in wholesale liquor sales in Iowa in the last fiscal year. Iowa has an opportunity to encourage significant growth in production and tourism in our state with this legislation.
This law change will boost tourism, create jobs and increase tax revenue in the state of Iowa.
Ryan Burchett, Owner/Distiller
Mississippi River Distilling Company
303 North Cody Road
PO Box 801
LeClaire, IA 52753