The craft beer revolution in Colorado is nothing new. Recently, however, Colorado has seen growth in the production of craft spirits. Wineries and brewpubs have long been permitted to sell food on premises, but manufacturers of distilled spirits were prohibited from doing so.

That has now changed. Colorado Governor John Hickenlooper recently signed into law House Bill 15-1204 authorizing the establishment of “distillery pubs” in the state. The new law was modeled after Colorado’s brewpub license law, and allows microdistilleries to operate restaurants to showcase their craft spirits.

As with brewpubs, there are regulatory hurdles that distillery pubs must clear. First, the distillery pub must obtain licenses from federal, state, and local authorities. Those local requirements mandate the distillery pub demonstrate that it “meets the reasonable requirements and the desires of the adult inhabitants of the neighborhood” where it will operate. Also, for on-premises consumption, like most bars, the business can’t sell alcohol after 2:00 a.m. Liquor can’t be sold in sealed bottles for at-home consumption after midnight.

The new law also limits the amount of craft spirits these new distillery pubs can produce to no more than 45,000 liters (5,000 cases). Also, the law caps the amount of spirits sold at wholesale to licensed retailers to 2,700 liters (300 cases). And, at least 15% of the distillery pub’s gross revenue must come from the sale of food.

The new distillery pub law also replicates the “tied house” prohibitions contained in the brewpub license laws, which generally prohibit vertical integration of the alcohol beverage industry. But, distillery pub owners can own craft brew pubs and vice versa.

The new distillery pub should enable Colorado’s fast-growing craft spirits industry to capitalize on a seemingly ever-growing demand in Colorado from consumers who want to enjoy products produced at local businesses.