Lawmakers have passed a bill allowing small artisan distillers in South Dakota to sell directly to retailers. Currently, producers of distilled spirits have to sell through a distributor to get their product to market. House Bill 1004 is similar to a provision which currently allows small South Dakota wineries direct access to retailers. Patrick Rounds owns Dakota Spirits Distillery in Pierre. He says the goal is not to replace distributors.
"I do not want to be a distributor. I’ll tell ya that’s hard. It takes a lot of work you’ve gotta drive to all these places, you gotta haul the product. In our business model it doesn’t make sense to distribute this product ourselves," says Rounds, "However, until it's big enough it really doesn’t make sense for other distributors to take it either. So our goal is to try to have the ability to take our product to get the market started and then to work with the distributor and we can say listen at this account we can sell this many cases and if they see the numbers its that may be worth it for them. And that way I can prove it with real numbers."
Rounds says House Bill 1004 is good for small business and helps promote the state.
Opponents of the legislation say it could violate the federal Dormant Commerce Clause because it shows favoritism to South Dakota businesses. They say this could potentially open up the state to lawsuits from outside distillers.
The measure passed by a vote of 10 to 4. It now moves to the House floor.