Small Spirits Makers' Equal Tax Act
Goal
Encourage the growth of hand-crafted spirits production in the U.S. by creating a reduced federal excise tax rate for small-scale distilled spirits makers, similar to the current reduced tiers for beer and wine producers.
Background
The distilled spirits industry has enjoyed a renaissance of local, artisan production of unique spirits over the last five years. Our numbers have swelled from less than 40 licensed makers in 2003 to more than 150 in 2008. Because of our efforts, U.S. and even some overseas consumers are beginning to experience innovation and quality in spirits products they can find in the marketplace that mirror what beer lovers enjoyed with the birth of micro-brewers in the 1980s-1990s and wine lovers with the emergence of the independent winemakers in the 1970s-1980s.
What made the growth of small beer and wine makers possible other than hard work and passion was a reduced federal excise tax rate that allowed them to compete with much larger producers who benefited from the economies of large-scale production. Today, small-scale beer producers pay 39% of the $18 per barrel in federal excise tax for the first 60,000 barrels they make if they produce less than 2 million barrels per year. Similarly, small producers of average-proof wine (14% alcohol) pay 18% of the $1.07 per gallon in federal excise tax for the first 100,000 gallons they remove provided they make no more than 150,000 gallons per year.
To put this in context, small beer producers pay $0.02 vs $0.05 in federal excise tax per 12 oz can, while small wine producers pay $0.04 vs $0.21 per 750 ml bottle.
By contrast, spirits makers -- large or small -- pay the same $13.50 per proof gallon or $2.14 per 80-proof 750 ml bottle of spirits.
Proposal
Small-scale spirits producers need a similar reduced-rate federal excise tax structure to continue to innovate and compete effectively with large-scale producers. We the undersigned producers propose the following structure to bring balance to small distilled spirits producers that mirrors the excise rates of small beer and wine producers: Tier one/regular -- 100% rate, Tier two/small-scale -- 20% rate.
Proposed Distilled Spirits Excise Tax Rates Distilled Spirits.............Proof Gallons*.............750ml Bottle
Regular Rate................$13.50.......................$2.14 (at 80 proof)
Reduced Rate**............$2.70.........................$0.43 (at 80 proof)
( A proof gallon is a gallon of liquid that is 100 proof, or 50% alcohol. The tax is adjusted, depending on the percentage of alcohol of the product.) ((Reduced Rate -- For the first 60,000 gallons of spirits if producers make no more than 100,000 gallons per year.)) Producers who support this legislation
1. Modern Spirits LLC Monrovia, CA
2. Colorado Gold LLC, Cedaredge, CO
3. Tuthilltown Spirits, Gardiner, NY
4. Dry Fly Distilling, Spokane, WA
5. Ellensburg Distillery LLC Ellensburg, WA
6. Dynamic Alambic Artisan Distillers LLC Mattawa,
WA
7. Great Lakes Distillery LLC, Milwaukee, WI
8. Drum Circle Distilling, Sarasota, FL
9. Grand Traverse Distillery, Traverse City, MI
10. Mystic Mountain Distillery, Larkspur, CO
11. Pacific Distillery LLC, Woodinville, WA
12. Delaware Phoenix Distillery, Walton, NY
13. Heartland Distillers, Fishers, IN
14. Fat Dog Spirits, Tampa, FL
15. Harvest Spirits LLC, Valatie, NY
16. Cascade Peak Spirits, Ashland, OR
17. New Holland Brewing Co. and Artisan Spirits, Holland, MI
18. Newport Distilling Company, Newport, RI

Producers In Licensing Process
1. Sherman in KY
2. Paul in CA
Next steps
Build list to 50 supporters
Finalize proposal
Contact our reps (and probably make a small donation to their re-election funds)
For more info contact melkon@modernspiritsvolka.com
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Kothe Distilling Fall 2008 Workshop This event will be the first workshop held by Kothe Distilling Technologies. We have put a lot of time and energy into compiling a program for future distillers and distiller's with some experience. We are going to cover everything from fruit selection, mashing, and the actual distillation process to the legal aspects of starting a distillery in North America. Dr. Klaus Hagmann, one of the leading experts in the field and Ulrich Kothe, the founder of Kothe Destillationstechnik will also be giving insights into the distillation process.
info@kothe-distilling.com
571-278-1343
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Peach Street Distillers Releases Colorado's First Bourbon
First Legal Colorado Bourbon Available in Limited Release

Palisade, Colo. After more than two long years in the barrels, the wait is finally over for Colorado spirits lovers. Peach Street Distillers, distillers of the popular Goat Vodka and Jackelope Gin, have released the first legal bourbon ever made in Colorado. Peach Street Distillers' Straight Bourbon Whiskey hit the shelves of their tasting room Friday where anxious patrons eagerly awaited the opportunity to purchase a bottle of the historic, caramel-colored elixir.
"I've been dropping by every week for what seems like an eternity, but they say the finest things are worth waiting for," said Grand Junction resident, Josh Williams, who purchased one of the very first bottles. An elated Rory Donovan, Co-founder of Peach Street, agreed. "Waiting for this bourbon has proved to be quite an exercise in restraint, but the rewards are well worth it." According to Donovan the bourbon is light on the palate, revealing soft caramel flavors and cereal notes with aromas of light oak and vanilla. The bourbon is proofed at 46% alcohol by volume, or 92 proof, according to Head Distiller, Davy Lindig's, specifications. Each 750 ml. bottle is hand-numbered by Lindig and features a black wax-dipped top.
The initial release of Peach Street's Bourbon is limited to only 200 bottles available only at the distillery, which is located in the heart of Colorado's wine country in downtown Palisade. Peach Street continues to distill bourbon on a regular basis, and a peek into their barrel-aging warehouse, or "rick house," reveals stacks of new oak barrels carefully doing their part to help craft the small-batch Colorado spirit. The bourbon will be released statewide in the spring.
A common misunderstanding is that Bourbon must be made in Kentucky, and although there are strict laws governing what a bourbon is, the spirit can technically be made anywhere in the United States. According to the Alcohol and Tobacco Tax and Trade Bureau, Bourbon must be made from at least 51 % corn, aged for not less than two years in new charred American oak barrels, and nothing can be added at bottling to enhance the flavor or color. As with all of Peach Street's spirits, they use local, Colorado ingredients, including the famed sweet corn of Olathe.
Donovan founded Peach Street Distillers in November of 2005 with Bill Graham and David Thibodeau, two close friends hailing from Durango, and also Co-Founders of Durango's Ska Brewing Company. The three chose to locate the distillery in Palisade because they could not pass up the generous bounty that Palisade had to offer; Cool nights, warm days and low humidity create the perfect growing conditions for many types of fruits such as grapes, apples, and, of course, the famous Palisade Peach. In addition to the bourbon, vodka and gin, once a year Peach Street hand-crafts limited eau-de-vies using the fruits of that year's harvest.
Peach Street's Goat Vodka and Jackelope Gin are available in Colorado, Oregon, California, and Kansas. All Peach Street products are available in the Tasting Room, located within the distillery at 144 S. Kluge, Palisade, Colorado.
For more information please visit
www.peachstreetdistillers.com
or call 970-464-1128.
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Interpreting absinthe Lake Bluff micro-distillery recreates legendary liqueur

By KEN GOZE kgoze@pioneerlocal.com
In the old movies where moonshiners carried out their work in the cover of the woods, running a still seems like such a leisurely activity. The hand-wound copper coils gurgle and drip slowly into a waiting clay jug.
Derek Kassebaum's gin mill is no backwoods contraption, however. The 2-ton electrically heated pot and condenser tower is a tribute to German engineering efficiency, and when it gets going, alcohol flows from a spout like water from a kitchen tap left wide open.
Derek Kassebaum, master distiller of the North Shore Distillery in Lake Bluff, empties a 5-gallon carboy full of freshly distilled absinthe into a container where it awaits the herbs that will add flavor and the characteristic green color of the once illegal liquor.
The stream of clear booze quickly fills a 5-gallon glass jug, and Kassebaum has to move fast, slipping a funnel into the flow to divert it into another jug while scooting the heavy filled one to the side. He manages to do it without spilling a drop.
He lifts the full carboy, a vessel similar to those perched atop office water coolers, and dumps it into a large white mixing tank, where it will steep with dried herbs, taking on a deep emerald/olive hue. The whole room in the converted warehouse space smells of licorice and mint and something woody, like herbal tea with a 150-proof kick.
Inspirational drink
Kassebaum is cooking up a batch of absinthe, the potent and highly aromatic liquor that inspired 19th century artists and poets before being banned virtually everywhere by World War I.
After a decade of resurgence in Europe and determined efforts by devotees to clear absinthe's reputation as a neurotoxic beverage, it was effectively re-legalized in the United States last year for the first time since 1912.
Kassebaum's North Shore Distillery, a 3-year old startup spirits company in Lake Bluff, is the second domestic distiller to produce an absinthe, and their offering, Sirene, is getting strong marks from critics.
Tucked away in an industrial park near the tollway, the one-still, husband and wife micro-distillery has built its reputation with a line of botanical-infused gins and vodkas, and absinthe was an irresistible challenge for Kassebaum, a chemical engineer with a chef's heart for experimentation. He tinkered with a formula and many herbs before rolling out the brand in May.
Complex of flavors
"My goal has always been to have our own interpretation of the spirit. We love the idea of a complexity of flavor, and I really tried to come up with an absinthe that had a lot going on," Kassebaum said.
Absinthe has a licorice-type flavor from anise and fennel and an earthy bitterness from the herb wormwood, absinthe's defining ingredient and the one that was blamed for its supposed ill effects a century ago. Starting with those three ingredients, each distiller comes up with their own signature, and secret blend of culinary herbs and spices to add layers of flavor to the beverage hyssop, coriander, lemon balm, peppermint.
The end product is supposed to have a certain visual effect in a glass, what the French termed the "louche" clouding when water is added, and the many flavors have to mesh with each other, Kassebaum said.
Distilling is equal parts art and science. The still heats the slurry of herbs and high-proof beverage alcohol and one by one, the alcohol and many different plant oils and essences evaporate and percolate over the condenser, leaving behind the most acrid, bitter and heavy flavors.
Getting it right
Kassebaum has digital readouts and a device to monitor proof, but experience and a trained palate also come into play. He knows to stop the run when the distillate's flavor starts getting too heavy or light. The same goes for coloring. The time to get it right varies by temperature, and Kassebaum has to watch carefully.
"Handcrafted" isn't a folksy marketing gambit for North Shore Distillery. Kassebaum and his 60-gallon still are the entire production department as well as product development. A dozen paces to the left is the shipping dock, and a few steps the other way is the bottling plant, a pair of wide tables next to a filter and pump apparatus not much larger than a food processor.
He has one assistant doing the work of filling the bottles and sealing the tops with wax. That operation shares a wall with the corporate office. Labeling is done by a team of at-home moms and a grandmother.
It's all very labor intensive, but that's the Kassebaum's business model. Derek, a chemical engineer and business consultant, and Sonja Kassebaum, a tax attorney, jumped off the corporate treadmill into this venture in 2005 because they wanted to do something more fun and they saw an opportunity.
Filling a niche
If microbreweries could revolutionize the market with interesting small batch beer, why not do the same for distilled liquor?
The Gurnee couple had plenty of experience with homebrewing, and Derek learned the distillers art in college, although his expertise was geared toward petroleum.
Starting up a distillery was no simple task, in part because of a thicket of state and federal licensing regulations governing the operation of a still and the taxes that are collected on every drop produced. Because of the difficulty, few people had done it, leaving a relatively unexploited niche for the Kassebaums.
"The liquor industry is just like beer used to be, it's dominated by big players doing very mainstream stuff," Sonja Kassebaum said. "We decided we wanted to do something we'd be excited to get up and do every day."
Their niche is rich and complex botanical liquors made with real ingredients, not extracts or artificial surrogates. Along with absinthe, they produce a Tahitian vanilla vodka, a gin loaded with flavors besides juniper and an aquavit, a Scandinavian favorite dominated by caraway.
Small pleasures
They also do a limited-release product each summer -- gins infused with dates, Ceylon tea, fresh rhubarb or this year, mangoes. Those runs are maybe a couple hundred bottles.
"That's what's fun about being small. We can make a batch of something that's two or three hundred bottles and sell it," Derek said.
Their products, in about 250 locations in Illinois and surrounding states, have won the praise of critics and several industry awards.
Sirene won favorable reviews on two of the largest online absinthe forums, Fee Verte and the Wormwood Society. It's a tough crowd to impress, given that some of them, like Brian Robinson of the Wormwood Society, have tasted hundreds, including vintage French brands worth thousands of dollars a bottle.
"I like it (Sirene). I think it's probably as close to traditional as you can find in the states right now," Robinson said.
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Carboy's in a distillery are dangerous.
Brewers have used carboys for years with very few problem, except when you drop one of them on the floor.
No problem, as five gallons of beer containing 7% alcohol (beer) it won't catch fire and burn down the brewery.
I recently saw a photographs of a distiller collecting his spirits run in a carboy.
Imagine what happens when you drop a carboy containing 170 proof on the floor. (It's a bomb).
I phoned the distiller and told him that the carboy's are dangerous. (He has now stopped using carboys)
I had learned about a carboy breaking at distillery and building caught on fire. The carboy that broke and it wasn't dropped! It was being used to collect the run from the still.
Runs as you know, are hot and often over 100 degrees. The hot spirits cause the carboy to crack and break spilling 5 gallons of 170 proof on the floor
The distillery burned because the distiller used water to wash the spirits off the floor.
When water is added to "pure alcohol" it will flash and burn. (I'm sure a chemist can explain this)
Carboy are dangerous!
Don't use them to collect or store spirits!
Bill Owens President ADI.
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