Gallatin County Tavern Owners Sue to Block Distillery Permit

Jim R. Harris, III, has lived and worked in Bozeman for more than twenty-one years.  During that span, Jim co-founded Outside Bozeman magazine, ran a real estate company, and continued his professional photography career specializing in aerial and architectural photography. More recently, he’s turned his attention to spirits.  Whiskey, vodka and gin, to be exact.

Micro-distilleries are relatively new in Montana, but are quickly gaining steam.*  Since the 2005 legislature enacted laws authorizing micro-distilleries, at least seven have begun operating.  Jim is working hard to bring the next one, Bozeman Sprits,** to downtown Bozeman. Similar to the laws pertaining to breweries, micro-distilleries are allowed to serve patrons up to 2 ounces per day between the hours of 10:00 a.m. and 8:00 p.m. Patrons may also purchase up to 1.75 liters of spirits to take for off-premise consumption.

Jim has already obtained his distilled spirits plant license from the Feds as well as an interim license from the Montana Department of Revenue. He crossed the last major hurdle on May 6 when the City of Bozeman granted Jim a conditional use permit to allow the distillery to operate at 121 W. Main Street, the old Schnee’s Boots & Shoes store.

Or so he thought.

On June 3, the Gallatin County Licensed Beverage Association sued the City seeking to overturn the conditional use permit approval.  The Association is represented by attorney Art Wittich, the Montana Senate Majority Leader.  Correct or not, the technical arguments in the lawsuit aren’t that hard to understand.  It’s the “why” part of it that’s more perplexing. 

Bozeman’s B-3 commercial zoning district permits certain land uses outright while others are  allowed as a conditional use only after completing an additional public participation process.  The Association claims the distillery would primarily be a manufacturing facility which is not permitted in the B-3 zoning district either outright or as a conditional use. The validity of their argument depends upon various interpretations of the ordinance.

Plaintiffs can’t sue just for the fun of it.  They must allege a specific injury.  Serving alcohol in Bozeman’s B-3 commercial zoning district is fully permitted under the regulations, so the Gallatin County Licensed Beverage Association must have an issue with the manufacturing side of it, right? Perhaps a concern that manufacturing alcohol in the downtown area is unreasonably dangerous?  Maybe an issue with odors, noise, heat, or other byproducts? 

The Association’s allegations of injury are set forth in it’s Complaint for Declaratory Relief:

  • The Plaintiff’s purposes is to ensure equal enforcement and application of liquor laws in Gallatin County, and to protect the business interests of its members. 
  • Each of Plaintiffs’ member’s liquor licenses will be diluted in value by the addition of improper or unlawful liquor businesses, including improperly licensed micro-distilleries, which are not subject to the current limits on issuance for liquor licenses. 
  • Additionally, each Plaintiff’s members will lose revenue by the addition of this new, non-full liquor license holding, micro-distillery that will serve liquor.  

Nope, not even a hint of concern about the manufacturing process or its potential incompatible nature with downtown businesses.

Zoning laws are not enacted or designed to protect the value of a state created license or the specific revenue stream of any individual business. Rather, by law they must be enacted to protect the public health, safety and general welfare, usually by making some attempt to separate or regulate incompatible uses and to encourage growth to occur in compliance with a locally adopted plan.

At least the Association is up front about its purpose.  The distillery represents competition for existing bars, albeit at a maximum of two ounces at a time.  Yet, one could easily argue the distillery represents an opportunity.  It will most certainly bring even more patrons to downtown Bozeman who may seek out other establishments once their two ounce maximum is reached – especially those establishments which tout the whiskey, vodka and gin made just down the street. There is a certain symbiotic relationship just begging to be exploited in an already successful downtown.

Competition between those who have bought into Montana’s fractured quota system for alcohol licenses and Montana’s burgeoning brewery scene formed a well publicized battle during Montana’s recent legislative session.  The debate over a bill to further restrict brewery tap rooms, which initially focused largely on an “unfair competition” platform, quickly devolved into irrational accusations of unlicensed debauchery directly responsible for Montana’s DUI problem.

Frankly, it was clear at the time that Montana’s new micro-distilleries had to be next.

The merits of the Association’s arguments will be for the court to decide.  Meanwhile, Jim is moving forward with the project and takes comfort in the support he’s receiving from others in Bozeman.  ” I have spoken with several of the local bar and restaurant owners within Bozeman and surrounding areas,” Jim tells us.  “The majority side with what I am doing as they have asked about my plans and how we plan to make spirits. It really gets people excited when you explain the process and that they can actually come in and taste it, then buy a bottle to enjoy with friends and family elsewhere.”

As of Wednesday, the lawsuit had not been served on the City of Bozeman.
*  Yeah, I know.
** Bozeman Spirits was originally using the d/b/a “Big Sky Distillery,” but Jim tells us that’s being changed to Bozeman Spirits to reflect the enthusiasm and backing he’s received from the community.