The Wall Street Journal-20080201-WEEKEND JOURNAL- Taste -- de gustibus- Spirits Maker Is Willing but Law Is Bleak

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WEEKEND JOURNAL; Taste -- de gustibus: Spirits Maker Is Willing but Law Is Bleak

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Gardiner, N.Y. -- I'm standing in the distillery room at Tuthilltown Spirits here, and when owner Ralph Erenzo pours a dram of his "Hudson Baby Bourbon" for me, I sample it right away. It's smooth and sharp and then burns a little on the way down. After I taste it, he tells me that I should have waited. "Let it open up in the glass for a minute." The longer it sits, he insists, the better it will be. I want to pull out my wallet and buy a case, but to do so would be illegal. Mr. Erenzo can't sell me a drop.

Tuthilltown Spirits isn't so much a distillery as a pot still set up a few years ago by Mr. Erenzo and Brian Lee. The two had no experience distilling anything, but they paired on a lark. Mr. Erenzo had bought 35 acres on the edge of the Shwankgunk Ridge, about two hours north of New York City, with dreams of running a climbing gym and campground. But the locals objected to the latter. And so he sold off all but seven acres and turned to booze. Mr. Lee showed up to look at some of the land for sale but instead fell in love with the idea of making alcohol.

Tuthilltown is named after a historic flour mill that Mr. Erenzo sold off -- the property Mr. Lee had initially inquired about buying. And now Messrs. Erenzo and Lee, along with a few employees -- who include Mr. Erenzo's son and nephew -- are distilling vodka from apples and bourbon from locally grown corn, as well as rum using molasses from Louisiana and rye whiskey using Canadian rye. And they are finding buyers for nearly everything they pour into a bottle.

As in other rural places, family farming in the Hudson Valley is disappearing because there is not enough money in it. Having grown up in the area, I now have the displeasure of driving past farms that once teemed with activity and are now being turned into housing developments or simply being reclaimed by nature.

Turning the Hudson Valley's fruit into liquor is one way to save the family farm. After all, the price Tuthilltown offers farmers for what they grow is a lot sweeter than what they would get at the local farm stand. (And the end product might have wider appeal than government- funded ethanol.) A 375 milliliter bottle of Tuthilltown's Hudson Baby Bourbon sells for $40 in the U.S. and for about $85 in Paris. The company is doing so well that it has added a second still. Mr. Erenzo hopes that his alcohol business will not only revitalize local farms but attract other distillers and become a draw for tourists -- a sort of Napa Valley for bourbon, vodka and other spirits.

There was a time when nearly every farming community in America had a distillery. Throughout the 19th century and into the 20th, the hard stuff made it a little easier to get through the hard times. Mr. Erenzo estimates New York once had about 1,000 small distilleries, many of which turned out fine rye whiskey. Bringing such stills back, he says, "is like the newest old tradition."

New York's micro-distillery industry disappeared during Prohibition and never staged a comeback because state and federal liquor laws make it difficult for small guys to compete in the liquor business. The state regulations boil down to this: A business owner can distill his own alcohol, or he can distribute or sell someone else's. In other words, Mr. Erenzo can't sell a single bottle of Tuthilltown liquor directly to consumers, no matter how many people stop by and ask.

To overcome the legal hurdles, Mr. Erenzo and other interested parties spent four years lobbying Albany. Last year, thanks in part to Republican State Sen. Bill Larkin, the Legislature passed and Gov. Eliot Spitzer signed into law a provision creating a new type of liquor license. It allows the holder to distill and sell directly to consumers up to 35,000 gallons a year of alcohol.

There's just one problem. The new license requires that every drop of those 35,000 gallons be made from only New York ingredients. And, as Mr. Erenzo is quick to point out, since there aren't any sugar plantations in New York State he would have to stop producing his rum, not to mention his rye (from Canadian rye) and single malt (from Canadian barley), in order to sell directly to the public. So in the coming months, he'll likely find himself back lobbying in Albany. At least he'll have plenty of the good stuff to help him through this hard time.

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Mr. Miniter is an assistant features editor of The Wall Street Journal.