Seven Stills, the popular local brewery and distillery, is in hot water with the state. It’s expanded rapidly since its founding in 2012, and just opened a massive new location in Mission Bay, overhauling 22,000 square feet for $11 million. But according to a weekend statement from co-founder Tim Obert, the California Department of Alcohol Beverage Control (ABC) has found the company in violation of 68 counts of tied-house laws, rules intended to protect small craft brewers from monopolistic behavior from far-larger counterparts. The violation means Seven Stills’ liquor license has been suspended for 90 days, which means it will not be able to brew beer or distill whiskey for several months.
Seven Stills has the distinction of being the city’s only local brewery and distillery combined, which is cool for craft beer and whiskey nerds, and it’s built a solid reputation with its hazy IPAs, strong whiskey, and food menus that include double-stacked burgers, breakfast burritos, and butter-chicken poutine.
Unfortunately, the company has also developed a reputation as a rule breaker: In 2016, Seven Stills’ Bayview brewery and distillery was barred from serving hard alcohol by the city, Hoodline reported at the time. Though Seven Stills had a brewing license (allowing them to pour craft beer on site) and a distilling license, the latter only allowed them to pour small whiskey tastings (1.5 ounces of alcohol per customer per day). Though Obert and co-founder Clint Potter lobbied to amend those regulations, they eventually closed that taproom completely, citing an ABC requirement that they offer a full menu of food to qualify for the type 74 craft distiller liquor license they sought. The Bayview space was just too small for a kitchen, Obert told Hoodline, so they turned their attentions toward opening a 22,500 square-foot Mission Bay venue, and kept the Bayview space as a production facility.
Seven Stills has also received at least one cease and desist letter for its can designs, which have played upon well-known brands like In-N-Out, Swisher Sweets, and Swedish Fish. In a letter regarding Seven Stills’ In-N-Out Stout, the burger chain’s legal team sent a punny —but, ultimately, firm — letter asking Seven Stills to relabel the drink. Obert joked at the time that he “basically knew” that the company would get pushback from In-N-Out, and when asked about a replacement label, he said, “Oh, it’s definitely going to get us another cease and desist.”
This time, the issue is “tied-house laws,” ABC regulations that date back to the Prohibition. As Esther Mobley, the wine critic for the Chron explains, the rules — which are intended to prevent producers (brewers, distillers, and winemakers) from exerting undue influence over retailers (restaurants, grocery stores, etc.). But in today’s social media landscape, that violation could take the form of a tweet or post that advertises a tasting at a local restaurant.
That’s not to say that that’s what Seven Stills is guilty of, as when speaking with Eater SF, Obert refused to provide any specifics on the 68 ABC violations to which Seven Stills admits. “At the time we were doing a lot of this stuff, we were completely unaware [of these violations]. It wasn’t until we started attending conferences that we realized and changed practices.”
According to Obert, the ABC offered them the choice of shutting down for 90 days or paying $10,000 per violation. The choice, it seems, was clear, as Obert says that the six-figure fine would have shut Seven Stills down for good. But, still, the suspension is “a huge hit to our business,” and one that requires some cuts.
According to Obert, Seven Stills’ newly opened Mission Bay taproom — which cost the company around $11 million to build, Obert told Eater SF last fall — will be able to remain open since it operates under a separate, still-valid liquor license. But the company’s Mission taproom, which opened last June, quietly shuttered a few weeks ago, as Yelpers noticed first. Seven Stills’ Sunset taproom, which is located at 3645 Lawton Street, will also be forced to close temporarily for 15 days, likely in early March.
Regarding Seven Stills’ Bayview production facility, Obert says “we simply can’t afford to pay the additional rent, insurance, debt to service the tanks, and utilities for three months while we serve our suspension and will be putting it on the market.” Only a few hours after sending an email announcing the Mission and Bayview location closures, Seven Stills sent a second email to customers advertising a “Winter Cleaning Sale,” advertising barrels, kitchenware, appliances, and more in a one-day sale.
The two emails in combination painted a desperate picture for Seven Stills, something Obert didn’t dispute. “Yeah, it sucks,” Obert tells Eater SF. “We were not planning on closing. We built the Bayview by ourselves. In the Mission, we just spent six months getting it ready. Now we’re cleaning and clearing it out.”
For now, Obert says that Seven Stills is doing everything it can to get production up and running at the new Mission Bay facility. But even though that location has been open since November, production there has been delayed by 18 months, prompting fears that the company might not have enough beer on hand to get through the suspension period. If and when they run out, they plan to pour other local producers, like Temescal and Bare Bottle, Obert says.
“We just want to get through this without selling” the business, Obert says. “I could go to a big conglomerate and get a million dollars right now, but I don’t want to do that. We’re going to get through this. It’s a big speed bump. But we’re trying to use it as a learning experience to improve operations, to do what we love to do, but finally do it legally.”