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Outdated Rules Hamper Local Distilleries

Andy Chow
Bottles from Watershed Distillery

Ohio is seeing a boom in locally-made products. Communities around the state are enjoying the local coffee scene and the newest craft brew. One of the fastest growing industries is the local liquor scene. But as Statehouse correspondent Andy Chow reports, a slew of antiquated rules might be hampering the movement.

“So it’s going to be a little bit loud back here because we’re running our distillery today,” said Greg Lehman.

Greg Lehman has become an expert at showing off his company.

“We’ll crash cool it down and once it’s cold then we add the yeast. The yeast doesn’t like it too hot so that yeast will attack the sugar and it will convert the sugar into alcohol,” said Lehman.

He and Dave Rigo are co-owners of Watershed Distillery which started in 2010. The Columbus-based operation makes vodka, gin, bourbon and a few other specialty spirits.

I’m walking around the distillery and I can tell that many components of the process just screams “local.” The corn comes from Granville and the wheat is shipped from Belmont. And as for the rye?

“We have a rye farmer. It’s one guy and he plants, harvests, bags, delivers our rye. He does it all just north of Dayton,” Lehman said.

Even the labels on the bottles and the boxes used for shipping come from Lancaster and Mt. Vernon.

Lehman and Rigo, both born and raised in Ohio, understand the excitement behind trying local products such as craft beer or locally roasted coffee. And Lehman says Watershed plays a role in that culture.

“People might give us a shot because we’re local but they’re only going to come back and drink more if it’s good,” Lehman explained.

Watershed is right in the middle of the craft distillery movement. The industry is rapidly growing in the state which now has about 20 small distillers. Watershed and a few other distillers have done so well that they’ve encountered a problem.

Ohio law says, once a distiller produces more than 10,000 proof gallons of liquor, they can no longer provide samples or sell bottles from their site. Watershed’s demand has gone up and will soon reach that threshold. As Lehman puts it, Watershed is hurt by its success.

“If they’re here, and they taste it, and they enjoy it, and they know a little bit more about it—it’s really easy to spend $30 on gin because they know how they’re going to use it, they know they like the product,” said Lehman.

The production threshold barrier is just the most recent hurdle in what has been an uphill battle for the craft distillery industry.

Ryan Lang is co-founder of another Columbus-based distillery, Middle West Spirits, and he’s president of the Ohio Distillers Guild. Lang says these businesses are constantly hampered by outdated liquor laws and that Ohio is still working its way out of the Prohibition-era.

“There hasn’t been a need for change so making changes to a system that is nearly 60-, 70-years-old it’s a challenge. It’s baby steps,” Lang explained.

Democratic Representative Michael Stinziano of Columbus says overhauling the regulatory culture that’s hovering over distillers can be a tricky dance.

“The challenge is do you do a more comprehensive, trying to do everything at once, or do you take it piece-by-piece. My experience has been piece-by-piece gets a little traction but then can get caught up in the different timing and different issues,” said Stinziano.

Stinziano says he’s supporting a bill that would allow places like Watershed and Middle West to keep offering samples and the ability to buy bottles during tours.

Back at Watershed, Lehman shows me the machine that automatically corks each bottle. It’s just another example of the sights, sounds and even smells that comes with a tour of Watershed.

Rigo says about 10,000 people have enjoyed their tours. And that might be apparent by the amount of bottles they sell out of the gift shop afterwards. Those purchases make up about 10% of Watershed’s overall sales. But Rigo says there’s a deeper value to these tours.

“Word of mouth is still by far our strongest form of advertising. To have 25, 30 people here on tour and to make even fans out of five of them. They go out and tell their friends and family and tell the story of Watershed,” Rigo said.

Lehman, Rigo and Lang all remain hopeful that the Legislature can make a change to the law before their companies take a hit.