Testimony — Jen Kearney, Watershed Distillery, on House Bill 86 (House Commerce Committee)

Summary

Testimony of Jen Kearney, Director of Administration at Watershed Distillery, to the House Commerce Committee on House Bill 86. It says the bill would increase micro-distillery production limits and remove the 50-cent charge for small tasting samples in retail settings. It says Watershed Distillery was founded in Columbus in 2010, and obtained an A3a liquor permit in late 2012. It says exceeding the current production limit of 100,000 gallons per year would force the distillery to shut down its restaurant and bottle shop.

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                                         House Bill 86 Testimony
                                       House Commerce Committee

                                              Jen Kearney
                             Director of Administration, Watershed Distillery


Commerce Committee Chair Johnson, Vice Chair Manchester, Ranking Member McNally,
and Commerce Committee Members:

Thank you for the opportunity to testify today on House Bill 86. This legislation would increase micro-
distillery production limits and remove the 50-cent charge for small tasting samples in retail settings.

Watershed Distillery was founded in 2010 in Columbus by two friends who wanted to revive Ohio’s once
abundant distilling traditions. At a time when craft distilling was just lifting off in Ohio, we were fortunate
to have enthusiastic community support and interest in our spirits. Customers stopped by to hear our
story, tour the distillery, and taste our gin. When they asked to buy a bottle to take home, we had to direct
them to the nearest liquor store. That was a huge disconnect for our customers and for our business.

Then in late 2012 when we obtained an A3a liquor permit, we were able to build an on-site bottle shop
and sell our spirits directly to consumers – at the same price to the consumer and at the same tax rate
to the State, but we gained the opportunity to tell our story and build enthusiasm and pride in our Ohio
made product. This helped grow our operations as we hired more employees and increased the dollars
we were spending on local agriculture products.

With the passage of House Bill 351 in 2016, Watershed Distillery was able to expand again. It allowed us
to open Watershed Kitchen + Bar in 2017, where our customers could enjoy our craft cocktails alongside
a great meal. Then they could grab a bottle of Old Fashioned on their way out to have a nightcap at home.

The passage of these two bills allowed us to grow our operation from 4 employees to 73 employee over
the past 10 years.

During the pandemic when our restaurant shut down, our bottle shop helped keep our business alive,
which kept our people working during a time when many Ohioans were unemployed. The pandemic added
jet fuel to an already growing craft spirit industry. How many of you started making cocktails at home
during lockdown? Even though we are back to celebrating with friends and family in restaurants and
bars, the home craft cocktail trend is still going strong. And the manufacturing of craft spirits in Ohio is
growing faster than ever as a result.
Now Ohio distillers are once again pushing up against the production limits of our current A3a permits.
Exceeding the current production limit of 100,000 gallons per year would force us to shut down our
restaurant and our bottle shop. We’d no longer be able to sell bottles at the distillery and we’d also have
to lay off 40 people who are employed in our restaurant.

So what do we do? Cap our growth? Move our production out of state? Shut down the restaurant? We
don’t have to do any of those if you help pass House Bill 86.

Today Watershed employs 73 Central Ohioans. These aren’t just seasonal or transient jobs – our
employees have longterm careers at Watershed with good salaries, full healthcare benefits, paid time
off, parental leave, and retirement with company match. We have built career pathways for everyone
from distillers and bottlers and supply chain managers, to marketing executives and sales reps, to the
seasoned executives on our leadership team. We’ve done that right here in Central Ohio and we’re really
proud of it.

Increasing our production would allow us to create many more Ohio jobs. The continued growth of this
industry in Ohio depends upon the passage of House Bill 86.

This bill would also bring some commonsense parity to a small but annoying requirement to charge 50
cents per tasting sample in retail locations. Wine and beer are not required to charge consumers, only
distilled spirits producers are. Our customers sometimes wonder if it’s a tax. Many consumers no longer
carry cash or change and often walk away frustrated and confused. This puts us at a real disadvantage
against bigger, nationally known competitors and is a missed opportunity to showcase Ohio-made spirits
in OHLQ stores.

Thank you again for the opportunity to talk to you today. I am happy to answer any questions you may
have at this time.


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