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In the past six years, Kentucky has ratified more laws regarding alcohol – both its production and consumption – than in any time since the Prohibition Era.
So says Kristin Baldwin, director of governmental and regulatory affairs for the Kentucky Distillers’ Association.
“I see my role specifically as a matchmaker for how to help our members get answers … to get them through to the right person in government,” Baldwin said.
The KDA dates back 40 years before Prohibition, to 1880 when 32 distillers banded together to protect Kentucky’s signature spirit from “needless and obstructive laws and regulations.”
Today the KDA has 33 members and oversees the Kentucky Bourbon Trail program in additional to its legislative mission. All distilleries in Kentucky are invited to apply for membership and dues are based on the amount of spirit the distiller has aging, which allows the small, craft distilleries to have a seat at the table with bigger, established ones.
Beginning in Bourbon
Baldwin first started with the KDA in 2008 as executive assistant. She left in 2011 to spend two years in Washington, D.C., as an advocate for the automotive industry to the federal government. In 2013, she returned to the KDA to take the newly created position of director of governmental and regulatory affairs position. Despite being a native of Georgetown, Baldwin wasn’t automatically a bourbon fan.
“I was not a connoisseur and did not appreciate Kentucky bourbon before I was hired on,” Baldwin says. “The job found me, and then I came to appreciate bourbon after I started in the industry.”
Local Liquor, Global Drinkers
Baldwin’s work is divided into three components: assisting the distilleries with government relations, making Kentucky laws friendlier for distilleries and working at the federal level to develop the global marketplace for Kentucky’s signature spirit.
“One of the major missions that our board has tasked us with is becoming a more globally recognized organization,” Baldwin explains.
That might be a challenge with the new White House administration and Donald Trump’s campaign promises to withdraw from or renegotiate trade agreements, including the Trans-Pacific Partnership, which he has called “a potential disaster for our country.”
The TPP is an agreement among 12 Pacific Rim countries designed to reduce barriers to trade, among other goals. Fortunately, the Kentucky bourbon industry has Baldwin.
“My role as director of governmental affairs is to continue to educate people in the administration — continue to educate people on all levels — of what our specific issues are and why we believe we need to be protected,” Baldwin says, commenting about her upcoming challenges.
Home Runs on the Home Front
Looking to the past, Baldwin has had successes in helping transform the bourbon industry in Kentucky. In 2014, the Kentucky legislature passed House Bill 445, which offers distilleries a credit on the taxes paid on aging barrels but requires distilleries to reinvest that money back into Kentucky.
Since Kentucky is the only state that taxes spirits maturing in barrels, this change marked a huge win both for the bourbon industry and the state of Kentucky. Much of the recent expansion of distillery operations in Kentucky, including dozens of new aging warehouses and new jobs to go with them, can be credited, at least in part, to this legislation.
While House Bill 445 arguably created more value for the bigger players in bourbon (the more barrels you have aging, the greater your tax credit), last year’s legislative win marked a turning point for all of Kentucky’s distilleries.
On April 9, 2016, Gov. Matt Bevin signed into law Senate Bill 11, which allows Kentucky distilleries to apply for a special “nonquota type 3” license, commonly called just NQ3. This license allows distillers to open bars on their premises — giving them the entirely new option of selling their wares (and, conceivably, anyone else’s) by the drink.
This legislation elevates distilleries to equal footing with breweries and wineries, which have long been able to sell their products by the drink on their premises. Andrew Buchanan, owner of the craft distillery Hartfield & Co. in Paris, launched a bar inside his distillery as soon as he could.
“For a small place like ours, this is a game-changer. It provides a totally new revenue stream that can make a huge impact on our business. Having a cocktail bar at Maker’s Mark or Woodford Reserve might be a blip on their earnings report, but for a distillery our size, it has totally changed our business model,” Buchanan says.
Robert Downing III, business development manager and distiller at Barrel House Distilling Co. in Lexington, echoes the sentiment.
“[Senate Bill 11] has allowed us to double the size of our production facility, purchase new equipment and begin the installation of a new cocktail lounge at the distillery, which should be open in early 2017. Of course, this will allow for the creation of more jobs at our facility and will also enable us to continue positive momentum into 2017 and beyond,” Downing said.
Lifeline & Matchmaker
Baldwin also helps the craft distillery owners navigate the complex and often frustrating world of alcohol-related paperwork.
“I love my small-business owners,” Baldwin says, “because small-business owners are the ones doing the work at midnight, 2 a.m., filling out the forms. … And so those guys call me and say, ‘This form is absurd, this form is ridiculous, how can you help me work through that?’ I’m their lifeline.
“So we will hold a seminar and we’ll say, ‘Can you guys that read these forms and create these forms, will you come before my group and explain it to them?’ and they say, ‘Absolutely.’”
Baldwin helps in real-time, too.
“You may have been waiting on an email for two months from somebody. You can call me, I can send one text or an email and I can get an answer in an hour,” she says.
The Future of Bourbon Legislation: Greater Equality
Having accomplished by-the-drink equality in Kentucky, Baldwin has set her sights on leveling the playing field in other arenas. Her current agenda includes licensing for distilleries to participate in fairs and festivals the same as brewers and wineries, and allowing e-commerce retailing to close the gap between the Napa and Sonoma vineyards experience and the Kentucky bourbon tourism experience.
Right now, a tourist in California can have a bottle of wine shipped to his or her home, but it’s currently illegal for a Kentucky distillery to offer the same service.
Insider Drinking Tips
All this bourbon work comes with a fair measure of consuming Kentucky’s signature spirit at business functions. How does Baldwin manage it?
“I’m usually a one-glass drinker. My first glass will be bourbon and ginger, and my second glass and successive will be ginger ale. I like to call them my show drinks. … I drink a lot of ginger ale at events to show that I am probably still consuming or still appreciating the product but in a responsible manner,” Baldwin says with a laugh. “It’s an insider trick.
Drink a lot of ginger ale after your first drink and you can still drive home responsibly.”