In 1933 when President Franklin D. Roosevelt signed the 21st Amendment ending 13 years of Prohibition, he was not primarily motivated by the hysteria around organized crime, nor the tragedy of the thousands who died ingesting toxic denatured alcohol. It was the Great Depression and the U.S. government needed money.
He and other officials were looking to the alcoholic beverage industry, previously the nation’s fifth largest, for a bailout. Since Prohibition began, they figured they’d lost $3 billion per year in illegal untaxed income from alcoholic beverage commerce.
“I think it’s time for a beer,” the president said.
But to hinder an illegal market that could compete with the formal economy and undermine the government’s taxing ability, federal and state governments long prohibited home brewing. Finally in 1978, some restrictions were relaxed to allow beer and wine to be made at home or in microbreweries.
Now, members of the Hobby Distiller’s Association are arguing in a federal lawsuit in the Northern District of Texas that home distilling of spirits should be legalized too. Since December, they have been engaged in a legal battle with the U.S. Department of Justice and the U.S. Department of the Treasury’s Alcohol and Tobacco Tax Trade Bureau to remove the ban. Unlike the bootleggers who fled the feds in high-speed car chases during Prohibition, members of the Hobby Distiller’s Association say they seek to hone their craft and distill spirits for personal consumption legally. But they are caught at the crosshairs of competing interests—the federal government, which fears losing tax revenues, the big distillers, who don’t want competition, and the Federalist Society and other libertarian groups, which have embraced their cause as part of a larger effort to reduce the feds’ regulatory and taxing powers.
Railean Distillers uses the tall hybrid column reflux-pot still that has seven separate trays to distill a variety of spirits. On display to the left is an antique pot still and a basic column still hobbyists would use at home. (Josephine Lee)
“Hobbyist distillers should just be left alone,” Hobby Distillers Association President Rick Morris told the Texas Observer.
Rick Morris’ love for the spirit distilling craft is obvious. In his book The Joy of Home Distilling, Morris narrates the process for novice hobbyists, starting from how to “keep our little yeast friends happy,” through its aerobic respiration, fermentation, and sedimentation process used to produce beer or wine, and then to converting that into spirits. That happens in distillation, during which the liquids are further purified and concentrated with greater alcohol content through repeated boiling and condensation. From distilling wine, you get brandy, schnapps, or other fruit-based spirits. From distilling beer, you get whiskey or scotch. By distilling a neutral fermenting yeast, you get vodka, Morris explains.
But this very process is at the heart of the ongoing court case. In other words, it would be completely legal for Jesus to turn water into wine today. But if the son of God wanted to convert that wine into brandy, he’d be committing a federal felony punishable by up to five years in prison and $10,000 in fines.
Since 1992, Rick Morris has been selling supplies to small distillers through his Keller-based company Brewhaus. But in 2014, when the federal Alcohol and Tobacco Tax Trade Bureau forced him to hand over a list of customers and then arrested eight home distillers and seized 48 stills in Florida, Morris and others decided to push to decriminalize home alcohol distillation and created the Hobby Distiller’s Association.
By 2015 the group had met with the Alcohol and Tobacco Tax Trade Bureau and gained support of several congressmen, including Ron Wyden, chair of the Senate Finance Committee. In 2015, Wyden introduced the Craft Beverage Modernization and Tax Reform Act to support small crafters making wine, beer, and spirits, including a provision to exempt home distillery establishments that produced spirits for personal consumption from excise tax requirements.
But Morris said that after pushback from large distillers, such as the Kentucky Distillers’ Association, the bill died in committee. The next year, a similar bill passed but without the provision exempting home distillers. “We were trying to do it the proper way by trying to get the laws changed. But the Kentucky Distillers’ Association and others are larger and more powerful than we could ever be,” Morris said, adding that hobbyist distillers were left to “hone their craft in the shadows.”
Kelly Railean, a small craft distiller, co-owner of Railean Distillers in San Leon, and former customer of Brewhaus, believes the continued ban on home distillation is driven mainly by large distillers and distributors who want to prevent the competition large beermakers have gotten from craft breweries. Since she started her business in 2006, she’s had to fight state and federal regulations to crack open the market for small distillers. Railean Distillers is already known as the first rum distillery in Texas. But as a former sommelier, a judge for craft beverage contests, and a former salesperson for a national distributor, she says she believes stringent laws regulating small distillers, including a ban on distilling at home, is styming innovation.
“They’ve handcuffed small distillers with these laws. It’s just awfully expensive for people who want to get started,” Railean said.
Before they begin, distillers have to apply for plant permits, file a bond, have their tanks and pipes inspected, their stills constructed and inspected, their building ready to go, and then regularly submit records, reports, and be subjected to inspections thereafter. Even with all that, the Texas Observer found that the federal Alcohol and Tobacco Tax Trade Bureau granted only an average of 352 new permits nationwide annually since 2012. Anyone who violates those laws, or possesses, purchases, or sells distilled spirits produced illegally is subject to arrest and fines. Texas law also requires a state commercial distilling license just to possess a still.
In 2023, the Hobby Distiller’s Association renewed efforts to decriminalize home spirits distillation after Morris received a call from attorneys at the Competitive Enterprise Institute, a libertarian think tank that has long sought to chip away at the federal government’s regulatory powers. In December, the Institute filed a complaint on behalf of the Hobby Distiller’s Association; then in March, the group filed a motion for preliminary injunction to prevent the federal government’s enforcement of the home distilling ban.
In the federal lawsuit Hobby Distillers Association, et. al. v. Alcohol and Tobacco Tax and Trade Bureau, et. al., lawyers for the Competitive Enterprise Institute argue that the home distilling ban exceeds the government’s constitutional powers to regulate interstate commerce and collect taxes. Home distilling for personal consumption, the complaint states, is a local and noneconomic activity, and therefore not under federal government jurisdiction. And unlike the ban on homegrown cannabis that was upheld by the U.S. Supreme Court because it was deemed “necessary and proper” to enforce the federal law criminalizing the use, sale, or distribution of marijuana, the plaintiffs’ lawyers argue there is no comparable statute criminalizing spirits.
In addition, the plaintiffs assert that home distillation produces no revenue, and therefore, does not interfere with federal tax collection.
Devin Watkins, an attorney for the Competitive Enterprise Institute, told the Observer that home distillers would still have to abide by federal and state laws, obtain permits, and follow other regulations. “But if successful, they would be able to legally distill at home. … It would mean that the federal government would realize that this was not really a constitutional provision and would just stop enforcing it,” Watkins said.
In legal filings, government attorneys defend the home distilling ban as just “one part of a well-considered scheme adopted to protect the revenue generated by the excise tax on distilled spirits,” a long-standing tax, established since after the Civil War.
Those revenues are significant. According to an analysis of federal data, the U.S. government collected $11.1 billion, or 2.6 percent, of its total revenue from excise taxes on alcohol during the 2023 fiscal year. And because these taxes are based on alcohol content, more than half came from distilled spirits. Texas separately collected $1.8 billion from excise taxes on alcohol last fiscal year.
But home distillers say their struggle to practice their craft at home isn’t an attempt to evade taxes or sidestep the law. They are willing to pay excise taxes, if necessary, the lawsuit says. Nor do the members of the Hobby Distiller’s Association profess all the same goals as those of the Competitive Enterprise Institute.
Railing against federal overreach and calling for states’ rights, the institute echoed the calls of right-wing “Constitutional Originalists,” writing on their blog: “The plaintiffs’ request for a preliminary injunction reflects a broader struggle to defend personal freedoms and uphold the federalism at the center of our Constitution’s design.”
Since its founding in 1984, the institute has tried to dismantle laws regulating finance, labor, technology and telecommunications, transportation, food and drugs, and energy and the environment, even denying climate change science as “false” and “alarmist.”
Leonard Leo’s Federalist Society has also supported the Hobby Distillers Association’s cause as part of larger efforts to “target” the federal government’s power to regulate commerce and collect taxes: “If refining a spirit in your home to enjoy with family and friends can be banned outright as an exercise of the federal government’s interstate commerce or taxing power . . . what can’t be? Perhaps we’ll soon join hobby distillers around the nation in toasting another step toward restoring a federal government of limited and enumerated powers,” writes the Federalist Society on its website.
Eric Segall, constitutional law professor at the Georgia State University College of Law, told the Observer he disagrees with the larger goals of the Competitive Enterprise Institute. But Segall said he believes hobby distillers have a strong argument: Home distillation does not appear to be an “economic activity” the government can regulate under the Commerce Clause. “If it goes to the Supreme Court, it’s highly likely that the law will be struck down. … As currently constituted, the Supreme Court will not be sympathetic to this law.”
Since 1937, the Supreme Court has ruled against the federal government’s power to regulate commerce only three times, Segall said. While he doesn’t believe a win for the plaintiffs would damage the Commerce Clause doctrine, Segall says it would be a symbolic political victory for right-wing libertarians.
“The stakes aren’t that high. But it’s always a sunny day for the Federalist Society, if the Court strikes down a law under the Commerce Clause,” Segall said.
