We were picked by the Editor of SanDiego.com for the Editor’s Choice Award for things to do in San Diego! Come visit our tasting room when we open in October, until then check out fun things to do at SanDiego.com!
The Old Harbor Warehouse is a clear span building much like an aeroplane hangar. It is located on 17th & K Street in the East Village of San Diego, California. We came to decision that this was the space for us for a number of reasons: Location. Size. Layout & Materials.
East Village is in our eyes, the next frontier for development in San Diego. When you look at the above photo there is a clear difference in height between the Gaslamp Quarter/Marina/Civic Core/Columbia and East Village. There are about 13 new high rises going into EV over the next few years along with lots of new businesses and restaurants. We want to be a catalyst for the area by bringing some local flavors to our hood. Beyond that we are a few blocks from the San Diego Harbor from which we take our name.
Spanning one hundred by seventy-five feet for a total of 7,500 square feet this space is considerably larger than any start up distillery would need. However we are in this for the long haul and intend to be able to add additional still capacity while having room for all the barrels and infrastructure needed to support producing a goodly sum of whiskey, rum, gin and the like.
This was a clear span warehouse. Which means we could pretty much do anything we wanted inside. This allowed us to design the space to our specifications. The only existing structure in the warehouse was the top right room, which unfortunately was not up to current code, so we got to tear it out and replace it with a fire-code friendly room while expanding the restroom to meet current ADA standards. We also added the tasting room, entrance, two offices, proofing room, bottling room, finished product storage room, sump pump room & a brand new emergency exit!
We believe that whiskey is greatly altered by the environment in which it ages. Specifically temperature and humidity will effect the evaporation rates of water and ethanol out of the barrel. It’s a complicated subject that we will get into later, but ideally there will be fairly wide temperature swings over short-ish periods of time. Our building is made out of concrete & corrugated steel. We have seen some dramatic temperature changes inside thanks to the huge metal roof that absorbs the suns energy and radiates it into our warehouse while the large concrete floor and open air expanse of the warehouse will allow it to cool drastically during the night.
We launched out online store today through StorEnvy. It seems to be working okay. We had a few issues with processing that PayPal payments in the beginning, but I think we got those fixed.
We have a pretty limited number of shirts that our good friends over at Bumpnote Factory are printing for us. You can also choose to pick them up locally by selecting “Brazil” as your country and they will be available at Coffee & Tea Collective on the 21st if you pre-order by the 20th of December. Otherwise we will just be shipping them out as soon as they become available. Check out the store HERE.
As discussed earlier that doesn’t stop a handful of folks from trying their hand at it. Some of these folks go legit, some get caught by the revenuers, but similarly to home brewing there is actually a pretty large culture of underground home distillation in the USA. If you want to learn about HOW to make spirits one can simply open up google and search “Home Distilling” and the first link can be extremely useful to ascertain much of the knowledge one would need to get started. With that being said, please keep in mind that anything I go into detail about on this blog is for informational purposes only. Do not try it at home, unless you take these following steps.
So what do you need to do to get a legal distillery in the United States of America?
Formerly know as the Bureau of Alcohol, Tobacco, Firearms and Explosive (ATF) this is the first stop on your way to legally producing liquor. After 9/11 when they reorganized with the passage of the Homeland Security Act of 2002 into the Tax and Trade Bureau. To apply for a federal Distilled Spirit Producer license you need two things: Somewhere to distill that isn’t attached to a residence & a bond. Legally if you have these two things, they pretty much need to give you a license. Assuming you can fill out the paperwork correctly and are not associated with terrorist or have any recent felonies.
Alcoholic Beverage Control!
This agency will differ from state to state, and in some cases county to county. Here in California applying for a state Alcoholic Beverage License (in my case a type-4 ‘distilled spirit manufacturer’ & type-6 ‘still’) is once again a matter of paperwork and location. There are about 12 pages of paperwork to fill out and you cannot be near buildings with specific occupancies like churches, parks or schools. Once again, no felonies within 10 years or alcohol-related misdemeanors within 3 years. You can be protested by ANYONE within your ABC offices jurisdiction. I heard a story about a few elderly ladies from Lakeside holding up the opening of Petco Park because they were afraid that people we going to be leaving the stadium intoxicated with bottles and causing a ruckus. Thankfully once the Padres wrote in the license application that they were not allowing to-go beverage sales the ladies withdrew their protest allowing the stadium to open regularly.
Legal Environment – Part 2: The local business, legal, bureaucratic and environmental aspects of starting a distillery.
So, you can adequately fill out paperwork? You don’t have any recent felonies or misdemeanors? Not a terrorist? Are you sure? OKAY. Let’s start looking at some other fun legal aspects of starting a distillery. I will start with the broad strokes and work to the nitty-gritty. Keep reading if you feel like learning some boring legal mumbo-jumbo!
Depending on your state, county or city you might be able to easily ascertain the zoning required to open a distillery. Keep in mind that operating distilleries are currently few and far between so there is a good chance that your local business development group will not have ANY idea what is involved. When I first applied to start a distillery in East Village San Diego they assumed that distillation was a heavy industrial operation, similar to the manufacturing of tires or turbines. Thankfully craft beer has had such a great surge in popularity in San Diego that we had a in at the Mayor’s Economic Growth Services as they could see the economic benefit of a new alcohol tax revenue and Russ Gibbon got behind us and helped explain the process to Civic San Diego. Suffice to say, distillation is NOT heavy more like light-very-light manufacturing. So we were able to get the zoning clearance to open up in a Mixed Commercial (MC) Zone. That does not mean that every where will agree with that designation, but it is what we got, and we will take it. In California you need to be in a Light Industrial (LI) or higher designation to produce alcohol (unless you are a brewpub) but thankfully MC can function as LI in certain circumstances. All this is to say, make sure you can legally open where you plan on operating.
BUSINESS IMPROVEMENT DISTRICT!
In major cities you often time need to get clearance from not only the local zoning departments, but also an even smaller clique called a Business Improvement District (BID) in my case the East Village Association. Luckily they are pretty much the coolest and were stoked to have me on board. They even wrote my a fancy letter of support to the Alcoholic Beverage Control in the event I was protested! Not every city or town will have this but it something to take into consideration.
Whenever you start a new business it is a good idea to create a new entity. In California it costs $70 to file + a $15 filing fee to have an LLC or S/C-Corp (which is kind of like having a baby) in that it is it’s own PERSON! Seriously, ask Mitt Romney about it. Corporation ARE people. You do not need to start your own entity, but just think of it this way. In the event you get sued, do you want anything you own to be up for grabs or only things that your new baby LLC owns? I’ll take door number two, Bob.
FICTITIOUS BUSINESS NAME!
Do you want to name your distillery– John Doe Distilling? No? Well, time for a DBA (Doing Business As) these are pretty easy to set-up. Call a local paper, tell them your fictitious business name, your real businesses name and your address. They will run it for a few days, send you and the county clerk proof they did this and voilà! You are doing business under that fictitious name!
EMPLOYER IDENTIFICATION NUMBER!
Once you have a legal entity to call your own, you can set up a EIN in order to start paying taxes. Huzzah! You do this through the Internal Revenue Services website. It takes about 30-40 seconds. Seriously. They are great at taking your money.
Don’t forget to cover your ass. Sure, you can let that precious little baby LLC of yours get sued and take all the blame for whatever shenanigans you get yourself into, but let’s be honest. It is a lot of work getting all this stuff together. Better to pay some nice older LLC/INC to promise to pay for your dumbs in the even that you screw up. Which thankfully is not HIGHLY likely… so it might only run you a few thousand dollars a year.*
Legal Environment – Part 3: Fire Codes, Water & Sewage Codes, Building Codes, & more codes!
The real nitty gritty of local laws: Fire Code. Waste Water Issues. Building Codes. These are things you probably do not think about when day dreaming about opening a distillery. I know I didn’t.
I thought about cool looking bottles. Branding various articles of clothing. Sipping cocktails into the twilight hours. Crafting a new recipe for whiskey that blows everyones mind! Sure, those might come at some juncture, but it is a long, tiring and lonely road to get to those “daydreamy” aspects of opening a craft distillery. Currently we are at about day number 684 from the inception of the idea and we are a number of months away from running our first batch.
One of the biggest issues associated with opening a distillery that is overlooked is that high-proof alcohol is considered a highly volatile compound. IB & IC classification in California Fire Code with flash points at room temperature at concentrations above 50% ABV. This can make designing a distillery kind of difficult. If you want to produce highly alcoholic beverages you are going to need to deal with the fire code. This is one of the major differences between starting a brewery/winery and starting a distillery. The others are the higher level of taxation & stricter requirements to receive licensing. There is not only the California Fire Code, but cities can adopt and create their own set of rules as well, often times that means just adding in additional restrictions to the CA fire code. This means you will need to get a local company to look into the specific rules about what you want to do and where you want to do it. Unfortunately since this is a new-ish industry there might not be a lot of prior knowledge about what you need to do to pass code, which means you get to do the leg work financially. Some other points of consideration: Boilers. Ventilation. Emergency exits. Occupancy loads. Sprinklers. Explosion-proof electrical fixtures.
An other thing to consider is waste water, at least in California. Maybe other states make it easier, but here it can be quite a hassle. You cannot drain many solids associated with fermentation and distillation into the sewer system. Cleaning chemicals used to recondition the copper or clean the stainless steel must be neutralized (thankfully in some cases they will neutralize themselves when mixed together as a low PH acid and a high PH caustic are both used in different applications through the distillery.) Even when you do take those precautions they still need to be tracked and monitored in the event of an accident… but back to codes. You need to design your water systems in a way that can accommodate these waste water and treatment needs.
If you are opening a distillery there is a pretty good chance you are going to need to add a few items to your space. At a minimum floor drains, but likely a whole slew of tenant improvements. Do you need an architect? A general contractor? Can you do it yourself? It will really depend on how stringent of enforcement and codes that you have to deal with are. More than likely you are not going to be dealing with plan checkers or inspectors that have dealt with a distillery before. Probably a brewery or pub. Maybe a winery, but unless you are opening up in a location that has a pretty decent amount of distilleries like Portland, Seattle, Denver or NYC chances are you will be one of the first to come on their radar. This means you get to teach them how these operations work, which means that it will probably take additional time to get up and running.
Last post we talked about a little US history with regards to production of spiritus alcohol. Today we are going to delve into a broader history, specifically where naming conventions come from and what they mean legally.
Water of Life –> Aqua Vitae –> Uisge Beatha, which is pronounced “ooshka bay-ha” and eventually evolved in the the word whiskey or whisky which we are familiar with today. What is whiskey? Any cereal grain that has been fermented and distilled. Various locations have their own CFRs (Codes for Recognition) such as Scotland where Scotch Single Malt Whisky (sans the ‘e’) must be made with 100% malted barley and made in SCOTLAND or Bourbon which adhere to a number of strict guidelines; 51% corn & new barrels (among other requirements) and made in the USA. See where this is going?
Which is a more specific type of Mezcal, was created after the Spanish arrived and ran out of brandy. They decided to try turning the indigenous drink of pulque, which is fermented agave juice, into something a little stronger using techniques learned in the old country. Tequila (which means ‘the rock that cuts’) can only be produced around the town of Tequila in the state of JALISCO. Mezcal can be made anywhere in OAXACA, but not anywhere outside of Mexico technically.
Derived from the Dutch word for ‘burnt wine’ – brandewijn and it is pretty much what it sounds like, cooked or burnt wine. Essentially any fruit sugar that is fermented in distilled. There are number of brandies that have names with controlled designations of origin. Cognac can only be produced in the areas surround COGNAC, France. Calvados is apple brandy that is made in NORMANDY, France, this would be called Applejack in the USA. The list of types of brandy goes on and on: slivovitz, armagnac, pisco, metaxa, kirschwasser, but essentially they are all Eau de Vie created from sugars derived from fruit. We will go into further detail about some of these spirits at a later date.
The history of rum is a pretty complex one and it will get it’s own post. In essence it is any hard liquor derived from sugar cane or it’s byproducts. There are a few regional varieties: Cachaça which is made from sugar cane juice, not molasses and can only be made in BRAZIL. Rhum Agricole Martinique may only be produced on the island of MARTINIQUE. Aguardiente is a little more loosely defined, but generally it is made from a sugar-must and can have additional flavors added.
Originating in France as genièvre, or jenever in Holland, but both mean Juniper, which broadly speaking is what makes gin, GIN. There a number of location based names for Jenever you recognized in the European Union. There are a really two “distinct” varieties of gin recognized: Compound Gin–which is simply adding flavors or essences of botanicals to distilled spirits. Distilled Gin–which is actually introducing juniper and other botanicals via distillation. Genièvre can be very similar to your typical gin and that would be classified as a Jonge (or young) Jenever because it uses a neutral grain spirit as the base or there is the Oude (or old) style that uses something that would be more closely associated with a white whiskey as a base or more grain forward flavored with botanicals. They both can have sugar added to sweeten them up as well.
Vodka comes from the Slavic word meaning “little water” which makes sense since there is only a little water (less than 5%) left in the distillate. The main legal definition is that vodka must be distilled to 190 proof / 95% ABV and be neutral in flavor and aroma. It can be made from any of the sources above: grain, fruit, sugar, honey, potatoes, really anything that can be converted into a fermentable sugar.
Now you know a little bit about the various types of spiritus alcohol. As a Distilled Spirit Producer there a number of limitations as to what I can name my spirits. If I want to make a Mezcal it would have to be called “Agave Spirit” SEXY! If I want to make a Genièvre it would be designated “Genever-style” HIP! If I want to create a Cachaça it would go by the title “Agricultural Rum” FANCY! That doesn’t mean we cannot make any type of spirit we want, it just limits us from a nomenclature standpoint.
Why do all these various locations have protected names for their alcohol? To protect the profit for the producers and the taxes for the country of origin.
Legal Environment Today: Part 1.
- San Diego?
Well, not the last one, but probably a few of those. Generally when someone speaks about distillation the first thoughts that come to mind are going to be speakeasies, backwood stills, bourbon, Scotch, rum, tequila… probably one of the last things that anyone would ever think is San Diego. That makes sense, and I have no intentions to change that… just thought I’d throw it out there.
The question is WHY do these terms come to mind? In our humble opinion; Johnny Law. Revenuers. Taxes. $$$.
After the American Revolution the US Federal Government had a pretty big tab left behind. Alexander Hamilton being a moderate drinker himself (three glasses of wine a day max per his doctor’s order) saw the benefit of prescribing a tax upon an article of consumption. If the cost of drinking was too high, a consumer would slow consumption thus demising drunkenness, simultaneously, they could tax alcohol fairly high as most folks are willing to spend a shilling or two per gallon to have a nice drink. This would benefit both the federal government AND the populace… or so he thought.
The Whiskey Tax of 1791 did not make for a happy farmer/distiller, in fact, it sparked a rebellion. The first real test of George Washington’s new democracy. Five hundred Western Pennsylvanian farmers took to arms and stormed the fortified house of federal tax collector, General John Neville, and burned it to the ground. What was these farmer’s beef? Taxation without representation. A familiar tune to what started the American Revolution. Anyways, if this newly minted government was to survive they could not let a few farmer’s run around willy-nilly opposing taxes. So GW sent a force of 13,000 men to suppress the rebellion. The first real act of our Federal Government showing a willingness to stop violent resistance. Between that rebellion and about 1919 it was moderately smooth sailing, until…
Alcohol has always had a bit of stigma, in fact as early as 1657 in Massachusetts, there have been laws prohibiting the sale of alcohol and to this day 33 of 50 states still have dry counties. In fact, by 1850 the American Temperance Movement has 1,500,000 members and was growing quickly, but the Civil War kind of put a damper on their movement. By the election of 1916 there were strong factions in both the Republican and Democratic parties favoring both dry and wet legislation… so like any good Presidential Incumbent Woodrow Wilson ignored the issue, as did his rival. Germany and WWI inadvertently lead to a quicker passage of the 18th Amendment for two reasons: 1- German-Americans were one of the strongest opponents of the law and 2- with lessened agricultural demand we could focus on our supply-chain on the war effort. Somewhat ironically the war ended before the 18th Amendment was even ratified, but it did and on January 17th, 1920 prohibition began.
Boy, did that go badly. It was estimated that during prohibition 80% of congressmen and senators drank, all the while passing dry bills. How could they not? Prohibition was extremely profitable for those on the take. Organized crime received a major boost from the prohibition of alcohol. Moonshining, racketeering, bootlegging, it was madness. Since alcohol has uses in many industrial processes the Feds ordered that all industrial alcohol be poisoned and when the gangsters figured out how to denature that process they ordered even stronger poisons added! Unfortunately that did not deter everyone from drinking the poisoned hooch and as result an estimated 10,000 would die drinking methanol tainted alcohol before prohibition ended. If one positive effect arose out of prohibition it is that prior to the volstead act drinking was mostly a singularly male activity at saloons. During prohibition drinking became a co-ed event. So there is that, but one thing didn’t stop even after the passage of the 21st Amendment…
Moonshine is still very much alive and well in this country. Turn on the television and you are likely to run into a well-bearded pack of hillbillies making fools of themselves somewhere (No, not Duck Dynasty) but seriously, if your family has been making ‘likker’ for the better part of our county’s history chances are you are not going to stop because some tax-man says so. It is still prevalent in the Appalachians and Southeastern United States and some say it even lead to the invention of stock car racing, but you’ll have to ask Junior Johnson about that one…
Legal History: Part 2 — Names & Places
Dead Reckoning: Defined as a record of the ships current position from the course previously set using estimated velocity and drift records… or in other words a calculated prediction of where a ship is at any given time based on it’s history.
That is exactly what we are doing here at Old Harbor Distilling Company‘s blog. We know where we are going and we know how to get there, but there are going to be various headwinds, currents and drifts that come along that will require a re-adjustment of our dead reckoning. This blog is going to be a record of the changes we make along the way and the growth that takes place because of it. From applying for our federal distilled spirit producer license to dealing with local government bureaucracy. We will also be educating you on the ins-and-outs of spirit production. How to make gin, rum, whiskey, apple jack, eau de vie, and many more!
Below is a picture of our warehouse before construction started, even as I write this post a lot has changed, but bigger changes are coming and we want you to be a part of it from wherever you are. Hopefully it will be as fun and educational for you as it is for us.
So step aboard as we begin this long and harrowing journey to turn this warehouse into the first distillery in East Village, San Diego.