ST. JOHNSBURY — The owners of the St. Johnsbury Distillery, formerly known as Dunc’s Mill in Barnet, were issued a cease and desist order from a federal agency overseeing alcohol manufacturing on Friday.
The shutdown was because of a glitch with the name change paperwork, said Dan Hughes, one of the business’s owners on Monday.
“We’ve been given a cease and desist order because we were under the impression that we could use and continue to operate under Duncan’s permits (the business was begun by Duncan Holoday) as long as we filed within a 30-day period from closing,” explained Hughes. “Because of the name change, I guess that’s not true.”
Hughes said, “Duncan’s on board and we’re leasing his facility.”
The new owners plan to eventually move the operation to St. Johnsbury, and renamed the business for that reason, hoping to make it into a tourist draw.
Holoday has agreed to help the new owners, who also include Hughes’s son, Brendan, and his son-in-law, Brian Garvey, with the transition.,Holoday will also stay on as their master distiller for a year.
The shutdown happened Friday when the business owners were given the notice, meaning they cannot produce, sell, take part in events, or conduct any business, according to Hughes.
“Here we are, we’re sitting on all our Christmas orders and we can’t ship,” said Hughes, who said the news on Friday was “devastating.”
Hughes said, “I understand rules and regulations. I guess my question is, if we are applying for permits and doing everything we can, why can’t we continue doing business? Nothing has changed but the name. If we didn’t apply for the permits or we did something wrong, I can understand a cease and desist.”
“A cease and desist from the State of Vermont a week before Christmas is devastating,” he said. “We bought the business on November 10th full of enthusiasm and now we cannot produce or sell anything until this is settled. One would have thought we could have worked through this and secured our Christmas orders before shutting us down. It’s very frustrating.”
He said, “They told me on Friday and on Saturday we were planning on doing three events, at the St. Johnsbury Farmers’ Market, at the Montpelier Farmers’ Market, and we were paid to be at the craft show in Montpelier.”
“Financially, it’s devastating,” said Hughes. “I know ignorance is not a good defense, but we thought we were okay.”
Hughes said the state is awaiting sign off from the Alcohol and Tobacco Tax and Trade Bureau (TTB), the federal agency which oversees the permitting of spirits and alcohol manufacturing, before the cease and desist order can be lifted.
Skyler Genest, director of the compliance and enforcement division for the Vermont Department of Liquor Control, said on Monday that his staff must make sure laws related to the sale and consumption of alcohol are complied with. He said he was made aware of the acquisition of Dunc’s Mill and that the purchasers had not yet obtained the TTB federal permit.
“I worked with the licensing division as well as conversed with the TTB who confirmed that the new entity, St. Johnsbury Distillery, had not officially obtained their authorization from the TTB to manufacture spirits, and it is the protocol of the agency to not grant state licenses until federal permits have been granted,” said Genest. He said the business was informed that they could not operate until the issue was resolved.
Genest said, “I authored a cease and desist order that they were not licensed by the state nor were they permitted to manufacture alcohol by the feds,” and if they continued to manufacture they would face criminal or regulatory penalty, he said.
“The fact of the matter is neither federal permits or state licenses are transferable, realistically we have given them beyond the 30-day period,” said Genest.
Genest said, “Ultimately, the lesson learned here is we can sympathize with them and had they reached out to us in the early stages of their business plan … I think we would have walked them through the process and avoided this timing.”
According to Hughes, the new owners closed on the business Nov. 10 and began working on obtaining permits Nov. 13. “I don’t know what kind of a backlog they have in Washington,” he said. “It’s just devastating for a small company. There’s never a good time for something like this to happen, but historically, last weekend’s sales are one of the best weekend sales Dunc’s Mill would have, and we were prevented from that. We can’t produce, we can’t sell.”
Hughes said he left a message at the governor’s office, hoping he may be able to fast-track the permit so they can resume production and sales soon. “I’m hoping he might be able to ask someone in DC, can you please expedite this? I would think it would be relatively simple,” said Hughes. “It’s just very devastating to not be able to participate in our holiday sales … We’ve been ordering raw materials, full speed ahead here.”
Genest, from the liquor control department, said as soon as state officials get word from the TTB, they will help to get St. Johnsbury Distillery open quickly, “We’re ahead of the curve, as soon as they get their federal authorization, there is very little standing in the way of their state license.”