In 2010, five distillers who’d set up shop near one another in southeast Portland got together to see if some cooperation could lift all boats. They formed a collaborative known as Distillery Row, coordinating weekend hours to encourage more visitors to take more tours. It became a model for distilleries in other cities and helped Portland become a popular destination for consumers curious about local spirits. Visitors streamed in, often brought in by operators of bus and pedicab tours. Portland emerged as the Emerald City of adult beverages, a shimmering, welcoming Valhalla of spirits, just as it had emerged earlier for fans of Oregon beer and wine. In just a few years, some 21 spirit producers set up shop in and around the city.
Today, Portland continues to draw national attention—although now more as a warning flare and cautionary beacon of what can happen when tables turn. While the number of distilleries belonging to Distillery Row has expanded to eight, many new and existing distillers are reporting roadblocks in getting permits in place for new establishments or for expanding existing distilleries. Some have thrown up their hands and looked elsewhere; others have scaled down their plans. “There’s no way I would ever consider another project in Portland,” said Shobi Dahl, founder of Modernist Spirits.
Portland’s first craft distiller, Clear Creek, which opened in 1985, shuttered up its Portland distillery earlier this year, moving to a smaller town 60 miles east—a change occasioned by its acquisition by Hood River Distillers. And while many other spirits producers who launched early on have benefited from grandfathering, others, such as House Spirits, founded by Christian Krogstad and Lee Medoff in 2004, have learned that success that leads to expansion can lead to chronic headaches. Confident in their products and flush after the success of their Aviation Gin (which they sold to Davos Brands in 2016, which in turn sold a share to actor Ryan Reynolds in 2018), House Spirits set in motion a plan to move to a larger industrial neighborhood in another part of the city. Here, they discovered that terrain they thought they knew well was now quite unfamiliar.
“You might get permitted with no problem under your old jurisdiction,” Krogstad said, “but if you’re going to expand or build a new space, boom!, it’s a whole new world. You make a business plan based on what you thought were the ground rules. But, lo and behold, the new ground rules just added 30 percent to your costs.”
In part, Portland’s spirits producers are suffering the growing pains that can afflict any thriving industry. When urban craft distilleries first started cropping up in earnest a decade or two ago, they tended to benefit by arising in the shadows. Fire marshals, along with mechanical, electrical and plumbing inspectors, weren’t quite sure what to make of these new places, and so often drew on their experience with other makers of alcoholic beverages, such as wineries and breweries. “There were very few distilleries, or much awareness of them,” said Krogstad. “They looked at us and they saw a brewery, so no problem.”
Over time, regulators came to realize that distilleries were different animals, which led to more regulatory scrutiny. That attention was heightened by reports of explosions or fires at craft distilleries around the nation—last year alone, episodes occurred at Wolf Creek in Ohio, Wigle Whiskey in Pennsylvania and Island Beach Distillery in New Jersey.
When regulators sought to step up oversight, they found little to guide them. “The thing is, there are no codes for distillers, even large distillers,” Krogstad said. “So the codes are really intended for petroleum refineries and places like that. They’re not considering ethanol—which is much easier to put out [than oil].”
What’s more, each marshal and inspector was getting up to speed on regulations, codes and best practices via his or her own routes, leading to erratic rulings. And these surprises were compounded by the usual shifts in staffing over time. One inspector might learn what he thought were the appropriate codes to address a new project, but then a replacement would arrive, having immersed himself in another section of the code book and drawn different conclusions.
Reed Lewis, who’s worked on multiple distillery projects as an architect at Portland’s Laurence Ferar & Associates, Inc., saw this firsthand. “The first inspector was learning the code along with us, so one week he’d say this and that, and then a week a later he’d look at another part of the code and say, ‘You have to do something different,’” he explains. “Or he’d say something was okay verbally, but then in writing it wasn’t.” (Lewis wrote a detailed look at how two Oregon distilleries coped with this in the Winter 2018 issue of Distiller.)
Further compounding the issue, Portland has in recent years seen a widespread revitalization in its light industrial areas. These had been by and large abandoned over the years as traditional light manufacturing consolidated or moved to cheaper industrial parks with easier access to highways outside the cities. But then came a new generation of millennial “makers” who found these raw spaces ideal for glass-blowing studios, cideries, breweries, coffee roasters, decorative metal fabricators and the like, with the added bonus of being within walking, biking or bus distance of residential areas. Then add to all this the rise of well-funded cannabis operations following statewide legalization.
“The most difficult issue in Portland now is finding industrial space,” said Lewis. “You need to find an area zoned properly for what you’re trying to do, and many of those spaces aren’t available—they’ve all been bought up by the marijuana industry.”
The light-industrial revival has led to heightened zoning attention in once overlooked areas. New requirements involving improved streetscapes, new sidewalks and other improvements have boosted costs and added time, since getting all the permits often requires considerable to and fro with the city.
Dahl, who was previously CEO of Dave’s Killer Bread in Portland, purchased an industrial building he thought ideal for his next project, a new distillery—ideal, that is, until he started seeking approvals from the city. “I filed things on street improvements, distillery-related permits, the tasting room,” he said. “Some were easy, and some kept getting denied and I had no clue what to do to get past them. I probably filed over a dozen appeals.”
Adding to his aggravation, Dahl found it hard to get any guidance on what exactly he needed to alter in rejected proposals to receive a go-ahead—he said it was like feeding a request into a black box, which would spit out a “yes” or “no” without explanation. He’d correct and then resubmit and wait weeks or even months until another answer was spit out without explanation. After one rejection, he said, he finally agreed to build a sidewalk that connected from one unconnected lot to another, but his plan was again rejected after a six-month wait, this time over inadequate wheelchair accessibility and bike parking. Dahl finally abandoned his distillery plans and started working with an existing distiller to produce his products; the building he bought has since been leased to a cider maker, who ran into fewer problems getting approvals.
What lessons can aspiring distillers draw from the closing of Portland’s golden age of free-range urban distilleries? For starters, existing distillers should be aware that just because the process of getting permits was easy the first time around, they shouldn’t count on that sort of ease when filing for a major expansion. Plan for expansion early on to allow enough time to work through the new thickets. And first-time distillers should factor in more time and money for experienced fire and engineering consultants, who may be better able to anticipate problems.
Krogstad also suggests front-loading the process by meeting with all regulators early on, going through the codes line by line well before final plans are made and using the experience of other distilleries as examples of what you plan to do. “It’s better to get in front of it, and do a walk-though of the code and your reasoning so they can follow along,” Krogstad said. “Once they’ve formed an opinion about something, going back and changing that can be very difficult.”
Lewis suggests that new distillers should also work diligently to avoid plans that trigger more stringent oversight. If you can stay within the International Building Code “F” occupancy classification, for Factory, and avoid “H” for Hazardous, that can help sidestep potential problems and may make starting up smoother. “Trying to be an F1 occupancy is a reasonable starting point,” Lewis said. “Don’t go for H3 if you don’t have to.”
Not long ago, Portland welcomed a new fire marshal, and some distillers say he’s been more consistent in his requests, and easier to work with. Yet no one anticipates a return to the more freewheeling days when someone with an idea, a few credit cards and a bit of copper and yeast could cobble together a booming business on the fly.
“The reason it’s a story for most of the rest of the country is that it’s a cautionary tale,” Krogstad said. “This could happen to you.”
Wayne Curtis is a freelance journalist and contributing editor at The Atlantic. He has written hundreds of articles for dozens of magazines and newspapers, including The New York Times, Wall Street Journal, Bon Appetit, Men’s Journal, American Archaeology, American Scholar, Canadian Geographic, Islands, AARP The Magazine, Travel+Leisure, Down East, Preservation, and Yankee. Curtis wrote the book And a Bottle of Rum—A History of the New World in Ten Cocktails (Three Rivers Press, 2007). He has presented at Tales of the Cocktail, American Distilling Institute, Manhattan Cocktail Classic, Atlanta Food and Wine Festival, the American Museum of Natural History in New York and other venues.