Deregulate moonshine

If you take the rural Tennessee back roads that meander east out of my home county of Rutherford and into Cannon County, you’ll soon find yourself at the front gates of Short Mountain Distillery, a 300-acre farm that produces authentic, small-batch Tennessee Moonshine, Bourbon, and Whiskey.

Short Mountain is one of six new distilleries that have popped up across Tennessee since the General Assembly passed a law in 2009 that expanded the ability to distill liquor and spirits. Prior to state deregulation of the industry, only three distilleries operated in Tennessee: Jack Daniel’s, George Dickel, and Prichard’s.

Simply, the bill allows potential distillers to circulate a petition within a given county to allow the establishment of a distillery within that county. Petitioners must collect a number of signatures equal to 10% of the number of county residents who voted in the immediate past Presidential election before the measure appears on the ballot as a referendum. If the measure passes, interested parties may begin the process to establish a distillery within that county.

The law didn’t eliminate all regulations. Since the repeal of Prohibition, a three-tier system for producers, distributors, and retailers has existed that forces producers to sell only to distributors, who then sell only to retailers, at which point the consumer is allowed to enter the market and purchase only from retailers.

Furthermore, there are layers and layers of regulations at the federal and state level that distillers must sort through before they can get their product in front of consumers. Distillers must even jump through additional hoops at the local level by being approved by local boards, in addition to the federal and state regulations that bedevil them with a complex bureaucratic process at every step of the way.

Christian Grantham, the Chief Operating Officer of Short Mountain Distillery, agrees with many of the regulatory hurdles, but he does see a need to differentiate between large distilleries and smaller ones.

“The state and federal regulations do make sense but do not seem to take into consideration small businesses and start-ups,” Grantham explains. “It seems mostly geared toward making sure bigger corporations don’t get away with harming the public, including not paying their fair share in taxes. The regulation is a huge burden to those wanting to start small.”

Grantham’s observation also reveals that, for all that these regulations ‘target’ large companies, they benefit those companies by preventing smaller companies and start-ups from entering the market. The need to apply the same level of reporting to distilleries of all sizes places an undue burden on smaller companies, such as the ones that benefit from the 2009 law.

While the law officially made it onto the books in July 2009, Short Mountain only began producing its moonshine at the beginning of this year, due in part to the still-burdensome regulatory process.

These regulations also show how government has a symbiotic relationship with the big distilleries, as the regulations that hurt small businesses ensure that taxes are paid at every step of the distilling and sale process – a far cry from the days of illegal bootlegging during Prohibition.

By relaxing regulations, Tennessee legislators have helped create an atmosphere where small distilleries can enter the market, create jobs, and expand choice for Tennessee consumers.

Tennessee still has a long way to go in the repealing laws that govern the manufacture and sale of alcohol, but this is one step in the right direction toward more freedom and more choice.

Matthew Hurtt is a libertarian activist, hell-bent on exposing ridiculous government regulations. Follow him on Twitter @matthewhurtt.

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