Regulatory casualties mount while tariffs make news

The Montana Distillery's closure signals a broken alcohol system.

The recent bankruptcy filing of The Montana Distillery highlights a critical issue facing domestic alcohol producers today. This isn't simply a story about one business failing, but rather a symptom of a deeply flawed regulatory system that continues to hamper growth throughout our industry.

As reported in The Drinks Business, "The owners attributed their downfall not to a lack of demand but to what Hlebichuk described as an 'oppressive regulatory' climate..." This reality is playing out across the country, where our regulatory structure actively damages domestic alcohol businesses rather than supporting them. Read the full article here: https://www.thedrinksbusiness.com/2025/04/the-montana-distillery-files-for-bankruptcy/

I am not saying that this distillery would have been saved, but our US regulatory structure does nothing but damage our industry’s businesses.

There are three clear sales channels for all beverage alcohol producers: direct to consumer, direct to trade, and wholesale. Legislators have a responsibility to ensure that all channels are freely open to producers, rather than being swayed by wholesale propaganda that falsely positions the mandated wholesale channel as the only channel available. The current restrictive system is failing to serve the needs of 99% of producers.

The argument that the three tier system is legitimate because courts and states enforce it is protectionism for one type of seller. This isn’t a legitimate justification, in fact, it is backward thinking at its worst.

By closing off any channel in favor of another, legislators and courts are creating a regulatory environment that actively discourages domestic businesses. While tariffs are making the news, as I mentioned in my previous post, without changes to our bad regulatory environment, all the hoopla the current administration is creating will amount to nothing for domestic business.

Our family craft producers (the 99%) create many of the hospitality jobs, tourism opportunities, and tax dollars that are important for states to maintain a healthy economy. Yet our legislators and consequently regulators are the ones preventing domestic businesses from surviving, ultimately letting down the country while driving business overseas.

Growing domestic businesses and domestic employment requires federal support and, more importantly, state-level infrastructure that allows businesses to sell what they make to those who want to buy it. The 21^st Amendment did not stipulate the outdated three tier system. This structure was created, in error, in each state and causes the very problem it was meant to prevent. It is time for legislators to make the necessary changes and for courts to support producers and consumers, with industry associations helping to educate lawmakers. We need to understand that the wholesale channel is contributing substantially to legislator’s coffers, creating bias for their channel. This should not be tolerated.

A true but sad story - when discussing potential legislation in a state recently, I was told “Oh, you need to talk to the wholesalers first. If they are not on board, the legislators will never pass the bill.” Everyone knows the system is corrupt, but they are unwilling to change it for fear of losing their donations, and associations for fear of retaliation from wholesalers against their already restricted distribution of home state products. Shame on the legislators for allowing this to happen.

The Montana Distillery’s close is the fault of our regulatory system and this will continue unless all channels are opened. Fear of change and greed are not legitimate reason to hold back change.

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This week’s ruling: More of the same problem
This is exactly the problem we see with courts making terrible decisions that negatively impact US businesses, as shown in a recent case where a federal court in California dismissed a winery's challenge to shipping laws. Read the full article here. This ruling demonstrates a complete lack of understanding of how harm and damages are created for producers while reducing choice for consumers. It is time for proper reform to take place.