In a case that could impact how California distilleries operate, the Blinking Owl Distillery will close for 25 days beginning on November 12. California’s Department of Alcoholic Beverage Control ruled against the Santa Ana craft distillery for exceeding the 1.5 ounce alcohol serving allowance after a visit from two undercover ABC trade enforcement officers.
The ABC ruling comes as Blinking Owl and other local distilleries navigate how to operate a business with a tasting room. The fine print in the Type-74 Craft Distillers License allows distilleries to serve 1.5 ounces of alcohol per person, per day, though the requirement is waived during private events. An ABC spokesperson says Blinking Owl violated the terms of the Type-74 license, and cited an administrative law judge’s ruling to suspend operations at Blinking Owl for 25 days.
As Orange County’s first craft distillery since Prohibition, Blinking Owl began producing spirits like vodka, gin, and aquavit in 2016. Its tasting room is a significant part of the business, giving customers a chance to sample the spirits. California distilleries like Blinking Owl use the same Type 74 license, where it’s legal to serve sample portions. But distilleries are not bars, and consuming larger, significant servings of alcohol is strictly forbidden.
Two violations with ABC
Blinking Owl owners Robin and Brian Christenson acknowledge that their first ABC violation was accidental. This occurred at a private gathering in November 2017. Robin Christenson invited a patron to join a gathering of friends to have a second drink. Robin thought this person was a regular customer, who turned out to be an ABC officer who cited Blinking Owl with an overserving violation, resulting in a $3,000 fine. The Christensons allege they repeatedly reached out to ABC to ask for clarity on the fine, but ABC did not provide them.
The second violation took place in October 2018, when an undercover ABC officer registered himself and a second person as guests to Blinking Owl’s private event list. ABC says that both were given wristbands. The wristbands were part of Blinking Owl’s in-house system that indicated to staff that the bearer was a private party guest, allowing those patrons to consume more liquor than the 1.5 ounce sample limit.
During that ABC visit, another couple entered the tasting room without wristbands and sat next to the undercover officer. The officers consumed two drinks, left the premises, and did not identify themselves until one month later.
ABC took issue with the lack of physical separation between the general public and private parties, and the staff’s willingness to serve over the 1.5 ounce limit. The undercover agent found that this lack of separation invalidated his private party status, and therefore he was over served, and Blinking Owl received its second violation. The administrative law judge outlined the violation and why the system did not work:
“Indeed, the bartender’s own statement that all Agent Gray needed to do was call ahead to be able to drink more alcohol shows that Respondent’s intentions were to use its manufacturing license as a subterfuge to run a retail distilled spirits operation.”
Though the incident occurred last year, the Christensons received a new letter in May stating the Blinking Owl violated two counts by serving the two undercover officers more than the 1.5 ounce limit during the 2018 visit. Frustrated with the process, Robin Christenson and Blinking Owl’s head distiller visited the ABC offices in Sacramento. Christenson says state ABC officials admitted Blinking Owl did not violate any laws, but still upheld the 25 day suspension.
How other distillers see and comply the law
And while ABC maintains that it spoke with the Christensons more than once for clarity, other distillers are closely monitoring the case to make sure their business stays within the law. Huntington Beach’s Surf Still Works co-owner Josh Kornoff believes Orange County distilleries are doing their best to get it right. “Craft distilleries in Orange County interpreted ABC tasting room rules to the best of our ability, never intending to run into any compliance issues,” says Kornoff.
“We support clear, fair, and consistent interpretation of serving limits in regards to private events. It’s really unfortunate the way things turned out as they did. We all took a good faith effort in determining what was compliant with the rules, and it looks like we were wrong,” says Kornoff. “Everyone took immediate corrective actions to get back into compliance, and we intend to remain so until the rules stand or they change.”
To avoid any violations, other distilleries opt for a California Liquor License Type 47, which is the common license that bars and restaurants use to serve cocktails and spirits (along with beer and wine if they choose). Long Beach’s distillery Portuguese Bend utilizes a 47 license, which allows them to serve liquor to the public without a specific limit.
The Christensons say they’ll lose tens of thousands in revenue during the closure, especially during the busy holiday season. The tasting room revenue constitutes the majority of the Blinking Owl’s income, but ABC permitted the distillery to continue production, distribution, and sales during the 25 day period.
Blinking Owl. 802 E Washington Ave, Santa Ana, CA