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Bill to create 'educational distillery' license sparks debate over Alabama's three-tier alcohol system
Summary
A proposed license to create tourism-focused ‘‘educational distillery’’ operations drew support for tourism and local economic development and opposition from wholesalers and smaller distillers who said production thresholds and three-tier protections would exclude many Alabama distilleries; the committee held a public hearing but did not vote.
The House Committee on Economic Development and Tourism held a public hearing on Senate Bill 316, a proposal to create a new “educational distillery” license intended to promote tours, tourism and on-site events at large distilleries.
Under the bill as introduced, a licensee would be required to produce at least 100,000 gallons annually and operate a distillery of at least 5,000 square feet. Sponsors told the committee the licensing category would allow large distilleries to sell alcoholic beverages produced on-site for retail and on-premises consumption and permit sale of beer and wine produced elsewhere for special events and on-site restaurants, with the aim of promoting tourism and generating tax revenue.
Proponents linked the idea to existing models such as the Kentucky Bourbon Trail and Tennessee programs. Louis May, Alabama state sales manager for Clyde May’s Whiskey and grandson of Clyde May, told the committee the license would help drive tourism, “promote economic growth” and allow the distillery to tell the story of its brand. Mark James, an attorney with Adams and Reese representing Macarich Distilleries and Clyde May’s operations, described the Troy facility as a $25 million investment and said the Alabama ABC helped draft the bill.
Wholesalers and beer distributors opposed the bill’s initial language, saying it would “crack” Alabama’s three-tier system that separates manufacturers, wholesalers and retailers. A representative of the Alabama Beer Association said the three-tier rules protect consumers and local businesses and warned against removing franchise protections wholesale.
Smaller distillers also opposed the bill as drafted. Joshua Goins, head distiller at Red River Distillery in Birmingham, and Jimmy Sharp of John Edward Distilling Company said the proposed production threshold (100,000 gallons) would exclude nearly all Alabama distilleries. Goins told the committee he and other small distillers produce far less—Red River estimated roughly 10,000 gallons annually—and urged a lower threshold; the transcript records an amendment lowering the threshold to 25,000 gallons and witnesses urging that a level closer to 5,000 would be inclusive for most in-state producers.
Committee members pressed witnesses on the three-tier implications and on alternatives such as creating separate corporate entities for hospitality operations, a workaround some university-affiliated food-service contracts use. Supporters said ABC staff were involved in drafting and are not opposed if the three-tier protections would remain intact; opponents argued the bill as written risks consolidating production and distribution advantages for large national producers.
The sponsor requested the public hearing; the committee did not take a final vote on SB316 during the session and recorded no formal committee action on passage. Committee members indicated there may be further amendments or that proponents could return with modified language addressing smaller distillers’ access and three-tier concerns.
Ending: The committee held a public hearing and left SB316 pending further amendment and consideration.
