Is making booze at home about to become legal?

Business, Money, News, Politics, Taxes

In 1978, President Jimmy Carter signed legislation allowing Americans to produce their own beer and wine—but nothing stronger—for personal consumption. Four decades later, distilling spirits at home remains illegal.

But in one of the stranger twists of our very strange political times, it turns out that President Donald Trump’s pending tax reform might end up clearing the way, nearly 40 years later, for legal home distillation.

Why home distilling is illegal

While laws regarding home distilling vary from state to state, the practice remains illegal on a federal level. Why? Well, for one thing, making beer and wine at home is much less dangerous than distilling. If something goes wrong, you might end up with a bad-tasting IPA or a foul-smelling merlot. Make a mistake while distilling, however, and you could poison yourself. Or you know…blow up your house.

“There are several reasons why distilling is illegal,” says Paul Hletko, founder of FEW Spirits and former president of the American Craft Spirits Association (ACSA), “ranging from the fact that it is exceptionally dangerous to distill spirits without proper training, to the punitive tax structure that heavily penalizes consumption of alcohol in the form of distilled spirits.”

When homemade evolves to craft

There are more than 5,000 breweries across the nation, most of which are craft breweries. And industry experts suggest that as many as 90 percent of craft brewers got their start as homebrewers. President Carter’s federal approval of home brewing was the key to its explosive growth over the past 40 years.

It stands to reason, then, that as long as home distilling remains illegal at the federal level, we will see no such growth in the spirits industry, right? Not exactly. The number of craft distilleries in the United States has tripled since 2007, to nearly 1,300 active producers. There’s little doubt that most of these producers got their start at the home level—perfecting their craft, so to speak, by breaking the law.

It’s actually fairly simple for distillers to circumvent the federal ban. Copper stills and other distillation-related items are sold for legal purposes, such as producing essential oils, so obtaining the necessary equipment is easy. And internet sites like Hillbilly Stills offer recipes, instructional videos, and equipment for making spirits at home.

Meanwhile, the growth is nowhere near done. An October 2016 Fortune article described the “broad shift in a variety of beverage categories to sell more craft items that are deemed premium” and cited projections that the volume of craft spirits “could increase from 4.9 million cases in 2015 to as much as 25.6 million cases by 2020.”

Craft, taxes, and capitalism

Hletko says, “There is a strong micro-distillery movement, led by the ACSA, implementing legal changes across the country to make small-batch distillation more economically rational.” And indeed, in January 2017, the Craft Beverage Modernization and Tax Reform Act was introduced in the Senate.

The bill would amend the Internal Revenue Code as it relates to the taxation of certain alcoholic beverages, including lowering federal excise taxes on alcohol. The problem, however, is that the current proposed legislation—unlike an earlier version introduced in 2015—does not include the legalization of home distilling.

“Whereas the 2015 version of the version of the act included a provision that would have permitted distillation of up to 24 proof gallons per year for personal consumption, that provision has been stripped from the new version of the bill,” writes C. Jarrett Dieterle, a fellow at the R Street Institute and editor of

The omission is likely due to the danger intrinsic to home distilling. And support—or the lack thereof—from big-time investors won’t help. “Given that [distilling] equipment produces highly explosive vapors, I highly doubt that investors will be interested,” says Hletko. “The product liability inherent in selling such equipment would lead most sophisticated investors away.”

Consumers will continue to demand new offerings of craft spirits. And, until the federal government catches up, home distillers will continue concocting and creating—illegally.