New Kentucky Legislation:
Kentucky distillers now able to sell cocktails and increased number of bottles on site
by Stacy Kula, Esq.
Kentucky has passed revolutionary new legislation to benefit distilleries. Determined to remain the Bourbon epicenter of the country, Kentucky has granted the following new or improved privileges that became effective as of July 15, 2016 although distilleries are still subject to all other state laws regulating a distillery and its licensed premise.
- Authorization to sell onsite distilled spirits, wine and beer by the drink so long as the distillery is located in wet territory or distillery moist territory. While microbreweries and small farm wineries have long held similar retail privileges, this is the first time distilleries have been allowed to sell at retail by the drink in Kentucky. Notably, the ability to make such sales extends to both Class A distillers (producing more than 50,000 gallons) and Class B distillers (producing 50,000 gallons or less), not just craft distilleries.
- Increase in the amount of samples a distillery may provide for free from two .5 ounce samples to 1.75 ounces of samples per visitor per day. Importantly, in addition to the increase in volume, the statute no longer requires that such samples be provided in a certain number of pours. Thus, distilleries may give as many samples as desired so long as they do not exceed 1.75 ounces per visitor per day.
- Expands the definition of the term "souvenir package". Previously, the law required that the souvenir package be Kentucky straight bourbon whiskey produced or bottled at the distillery selling it. Now, a souvenir retail package can include any type of spirit so long as the package of spirits is also available at a licensed retailer and the product is available for retail sale at the distillery where the spirits were produced or bottled or the spirits were produced or bottled at another of that same distiller's license distilleries in Kentucky.
- Increased the number of souvenir packages that can be sold at retail at a distillery’s gift shop from 3 liters per visitor per day to 4.5 liters per visitor per day and eliminated the 1 liter per visitor restriction at business events held at the distillery premises.
- Allows a distiller, if in conjunction with a distillery tour, church event or charity event, to provide to persons 21 years of age and older free branded nonalcoholic novelty items whose actual retail cost does not exceed $75 per item and production by-products.
- Did you know that Kentucky is still geographically 50% dry? No retail alcohol sales can be made in areas that are dry. Territories that are “wet” have voted to permit all forms of retail alcohol sales. “Moist” means that the territory was dry, but voters approved that only a certain section or restaurants be able to sell alcohol at retail within the otherwise dry territory where retail alcohol sales are illegal. Specifically, a vote to go moist can be had for golf courses, small farm wineries, horse race tracks, qualified historic sites and limited restaurants, and now distilleries! The new law now allows a local option precinct election for the limited sale of alcohol beverages in a city or county precinct where the distillery is located; however, this statute will expire three years after July 15, 2016. This new local option election is what allows a distillery in dry territory to go moist so that the distillery can make retail sales, even if the city or county is dry.
Stacy C. Kula, Esq. is an alcohol beverage, hospitality and corporate law attorney practicing out of the Lexington and Louisville offices of Stoll Keenon Ogden PLLC. She works closely with distilleries, wineries, breweries and retailers, helping them navigate through the difficulties of federal and state alcohol licensing, enforcement, corporate and contractual issues. Despite practicing in the Bourbon epicenter, Stacy’s favorite alcohols are spiced rum, gin and limoncello—but she’s always willing to sample the newest product on the market! She can be reached at (859) 231-3054.