Steel Tie Spirits and other Florida distillers have been lobbying state lawmakers to loosen liquor restrictions so small operators can do business like microbreweries.
Like much of the nation, Palm Beach County is experiencing a beer boom. In industrial districts and downtowns from Boca Raton to Tequesta, independent microbreweries have sprung up to serve ales, lagers and porters made on the premises.
Craft distillers of liquors remain a rare breed, however — and Ben Etheridge, the co-founder of Steel Tie Spirits, has been getting a crash course in why few entrepreneurs are trying their hand at selling small-batch liquor directly to consumers.
“It has absolutely been a struggle,” Etheridge says while giving a tour of his lavishly renovated facility.
State laws make it prohibitively difficult for craft distillers to operate, he says. Steel Tie opened this summer at the Warehouse District in West Palm Beach. Much of the 6,300-square-foot space is a distilling operation where Etheridge makes rum and vodka under his Black Coral brand.
Etheridge started the company with his late father, and Black Coral already has a foothold in the local rum market. It’s sold at Publix, Total Wine, and ABC Liquors and at independent retailers and bars. Bottles are priced at $21.99 to $23.99.
As for running a craft distillery as a retail operation? That’s a different story.
The front of the freshly opened distillery includes a bar, a T-shirt shop and relics from old Palm Beach. But state law doesn’t allow Steel Tie to sell rum drinks. It can give out samples, but it can’t charge drinkers to imbibe.
Steel Tie is allowed to sell bottles of rum and vodka, but even that comes with a caveat: The distillery can’t sell more than six bottles a year to any one customer, Etheridge says. That means telling loyal customers they’ve hit their limit for buying directly from the distillery and have to go to a liquor store for more.
Etheridge points to the Steam Horse Brewery next door and the Civil Society and West Palm Beach Brewery, both about a mile away: They charge for beer on premises and legally sell as much take-away product as customers are willing to buy.
Of course, the craft beer industry has blossomed only after years of fighting for more favorable treatment from Tallahassee. Etheridge and other Florida distillers have been lobbying state lawmakers to loosen liquor restrictions so small operators can do business like microbreweries.
“We’re not asking for special treatment,” Etheridge says.
Craft distillers have made some regulatory gains in Florida. Lawmakers once entirely banned the sale of liquor from tasting rooms. In recent years, they have nudged up the limit to four bottles per customer per year, then to six bottles.
Illustrating just how complicated liquor regulation is, Etheridge is fighting on a second front, this one in Washington. He and other craft distillers want Congress to extend a reduction of the excise tax on small distillers.
Distilled spirits generally are taxed at $13.50 per “proof gallon,” but a lower rate applies in 2018 and 2019, according to the Tax Policy Center. Etheridge says the tax savings have been significant enough that he was able to hire seven employees.
He says that if Congress doesn’t extend the tax break by the end of the year, he’ll take a significant financial hit when the higher tax rate resumes.
Etheridge has made a hefty investment in his new facility. He has a 13-year lease on his space, and he says he spent $250,000 on a new air conditioning system. The distillery houses multiple tanks that cost $25,000 apiece.
With few revenue streams coming from his hip new operation, Etheridge has opened up the floor of the distillery for yoga classes. Students pay a few bucks apiece to stretch, then sample the spirits. Etheridge, who sports a bushy beard and holds a general contractor’s license, doesn’t spend much time in downward dog himself.
“I can’t even bend over to tie my shoes, but we’re doing yoga classes?” Etheridge marvels. “We’re doing anything we can.”
Etheridge hopes his distillery is just the first of many in Palm Beach County. He wants craft liquor makers to follow microbrewers and become a cottage industry with their own bus tours.
“I would love to see five or six other distilleries in Palm Beach County,” Etheridge says.
Asked why he decided to make a big bet in his craft distillery amid sales restrictions and other hurdles, Etheridge says he’s not one to let a few challenges prevent him from pursuing his passion.
“You do what you’re good at,” he says, “and you do what you love.”