Potential Solutions for Kentucky’s Private Barrel Selection Program Legal Dilemma: SB 160 & HB 500

Private Barrel Selection

The words “quick action” and “legislation” don’t normally go hand-in-hand. But in the land of Bourbon, hey, desperate times call for desperate measures.

Earlier this month, we splashed a story on how Kentucky’s entire “Private Barrel Selection” (PBS) program was called out at a Fall 2021 legislative session by the state regulatory eyes under the lens of being kinda sorta not legal. Not good. However, the scrutiny and tone not necessarily being to eliminate, but more on the lines of “well, this isn’t legal as it stands now, lets look at fixing it”.

What’s Illegal about Private Barrel Selections?

In KY, the law of the land says a visitor to a distillery is permitted to consume no more than 1.75 ounces of spirits and only 9 liters (twelve 750 ml’s) for purchase at that distillery. When on a PBS, it’s very very likely you’ll sample more than 1.75oz’s. The real problem, there aren’t any laws strictly for PBS. So now, PBS falls under the existing conditions for regular distillery visitors and site seers. There’s also concern with the retail sale of PBS and laws against exerted unfair force from producer to retailer.

SB 160 and HB 500: Potential Solutions for PBS Dilemma

On Feb 10th and Feb 14th, 2 different House Bills, HB 160 and HB 500 respectively, were proposed. Each designed to make PBS legal and remove any fuss that currently exists with PBS. SB 160 has tunnel vision solely on PBS where as HB 500 has some additional booze benefits to the consumer/tourism realm. Hint hint – think barrel aged cocktails for example.

SB 160 Breakdown: Here’s What It Would Do

You got to love the last three words of the opening line,”SB160 SALE OF ALCOHOLIC BEVERAGES (SCHICKEL, JOHN) AN ACT relating to the sale of alcoholic beverages and declaring an emergency“.

  • Amend KRS 241.010 to redefine “consumer” and define “private selection event” and “private selection package”
  • Amend KRS 243.027 to authorize a manufacturer to ship samples to persons or entities engaged in private selection events; indicate that the shipped sample quantity limits apply to each separate recipient
  • Amend KRS 243.0305 to allow a distiller to conduct private selection events and sell private selection packages at retail
  • Amend KRS 243.884 to exempt most private selection package sales from the wholesale tax
  • Amend KRS 244.240 to exclude a distiller selling private selection packages from the interlocking interests prohibition

HB 500 Breakdown: Here’s What It Would Do

Like SB 160, HB 500 would set specific parameters in defining Private Barrel Events (the act of Private Barrel Selecting) and participants within it, but as you can see below, there are additional objectives.

One being to set legal parameters for “Barrel Aged and Batched Cocktails”. Another, allowing a distillery to have 1 (only) off-site tasting room in KY. Conceptually, think perhaps satellite tasting rooms for a microbrewery.

  • Amend KRS 241.010 to define “barrel-aged and batched cocktails,” “private selection event,” and “private selection package” and to redefine “consumer” and “vintage distilled spirit”.
  • Create a new section of KRS Chapter 243 to establish a “limited nonquota package license” that allows designated alcoholic beverage drink licensees to sell vintage distilled spirits and private selection packages
  • Amend KRS 243.027 to authorize a manufacturer to ship samples to persons or entities engaged in private selection events
  • Indicate that the shipped sample quantity limits apply to each separate recipient
  • Amend KRS 243.029 to require a direct shipper licensee to include all applicable taxes in the selling price for alcoholic beverages
  • Include sales tax as a separate item on the customer’s invoice
  • Amend KRS 243.030 to set a $300 annual fee for a limited nonquota package license and for an off-premises retail sales outlet license
  • Amend KRS 243.0305 to allow a distiller to conduct private selection events and sell private selection packages at retail
  • Set package and sample limits for sales at fairs, festivals, and other similar types of events
  • Permit distillers to purchase jointly branded souvenir packages from microbreweries
  • Restrict a distiller to only one off-premises retail site for each of its licensed premises
  • Amend KRS 243.110 to make a limited nonquota package license compatible with listed drink licenses
  • Amend KRS 243.232 to authorize a limited nonquota package license holder to sell vintage distilled spirits
  • Amend KRS 243.240 to exclude private selection package sales from the normal quota retail package license restrictions
  • Amend KRS 243.260 to issue a special temporary license for farmers markets
  • Amend KRS 243.884 to exempt most private selection package sales from the wholesale tax
  • Amend KRS 244.240 to exclude a distiller selling private selection packages or supplying barrels for barred-aged and batched cocktails from the interlocking interests prohibition
  • Amend KRS 244.260 to permit a retailer to keep distilled spirits or wine in a container for preparing barred-aged and batched cocktails
  • Align distilled spirit container limits with the largest applicable federal standard of fill size
  • Amend KRS 243.034 and 243.0341 to conform

Both SB 160 and HB 500 are in the very early stages of proposal. We will keep you posted with updates. If neither bills pass, well, we don’t even want to go there.