The Star Beacon; Ashtabula, Ohio

Local News

March 25, 2014

Bill would help support Ohio’s micro-distilleries

HARPERSFIELD TOWNSHIP — A bill introduced in Columbus would give Ohio’s micro-distilleries, including one in Ashtabula County, a chance to recoup a larger chunk of their profits.

House Bill 499, co-sponsored by State Rep. John Patterson, would allow distilleries to sell 750 gallons of their product to personal consumers before the state begins to take the share it can legally claim.

Gene Sigel, of Red Eagle Distillery in Harpersfield Township, said his business could see upwards of $90,000 in additional revenue if the bill passes.

“It sounds like a small amount of gallons, but actually it means a lot,” said Gene Sigel of Red Eagle Distillery in Geneva. “It could really make a big difference.”

The bill would be the first major adjustment to HB 243, passed in 2012, that authorized the creation of smaller-volume distilleries. Red Eagle resulted from that bill, and in April 2013 sold the first of the bourbon and rye whiskey crafted at its South River Road headquarters.

The taxing mechanism set up in the original bill essentially views micro-distillers in the same vein as state agency stores. A hefty bite is collected by the state, Sigel said. Over a nine-month period, Red Eagle generated $107,000 in sales revenue from the sale of 400 gallons of whiskey, but $47,000 was siphoned off by the state, he said.

“We have a big investment in Red Eagle, and it’s frustrating we can’t realize the profits,” Sigel said. “(The current bill) has cut our margins very tightly.”

Columbus puts the proceeds into the Jobs Ohio program, but the state may be better served allowing distilleries to claim a slightly large of the profits, Sigel said. The money can be poured back into the businesses, helping them grow and create jobs, he said. Like wineries, distilleries can become a boon to the state’s tourism industry, Sigel said.

“It could result in tremendous growth to the tourism business,” he said.

Ohio has seen the debut of nearly 20 micro-distilleries since the 2012 law was enacted, Sigel said.

The bill made its debut a few weeks ago, and Patterson said he was glad to add his name to legislation.

“I know the positive impact it would have on the district and I signed on as co-sponsor,” he said Monday. “It’s important. It would be beneficial to streamline the operation (of distilleries like Red Eagle), making them more attractive to the tourism industry. It’s common-sense legislation.”

HB 499 still has a lengthy journey ahead in Columbus, Patterson said. The matter will be assigned to a committee, which will convene hearings ahead of any vote. If approved, it will head to the Senate and follow the same path, which proponents hope leads to the governor’s desk.

State Rep. Ron Young, of the 61st House district, is the bill’s primary sponsor and could not be immediately reached for comment Monday.

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