More News of Whiskey Misconduct In 2023

By Richard Thomas

Earlier this year, bourbon fans on both sides of the United States were rocked by news of alleged corruption, in what was the biggest news of its kind since Pappygate. In February, it was revealed that managers of the Oregon Liquor and Cannabis Commission (OLCC) had been under investigation for several years for abusing their authority. The month before, Justins’ House of Bourbon, one of the leaders in the field of dealing in collectable bourbon, saw its facilities in Kentucky and Washington, DC raided by local authorities, amid rumors of selling fakes and illegally re-importing Blanton’s Bourbon. After the passing of several months, it is time to revisit these cases and review developments.

Corruption At The OLCC?
An Oregon state investigation unveiled in February 2023 alleged that top managers at the OLCC had been using their authority in what is an alcohol control state to divert bottles of rare liquor, most infamously Pappy Van Winkle, to themselves. Oregon is one of America’s 17 liquor control states, where the state government serves as distributor and store retailer. Therefore, in Oregon it is the state that receives the allocation of scarce whiskeys available to the state as a whole, and the OLCC directs where those bottles go. OLCC leadership, including Executive Director Steve Marks, are alleged to have diverted the rare bottles to particular stores at times they could go in and pick them up, easily acquiring them and paying regular retail prices instead of inflated market values. Although definitely not theft, it is clearly the kind of abuse of authority that should make an Oregon bourbon enthusiast’s blood boil.

Marks and other managers at OLCC resigned, with Marks being replaced just eight days later. Also coming to issue in February 2023 was the new OLCC headquarters and warehouse construction project, which had reportedly ballooned over its projected cost by 133%. That could be explained by the rapid escalation in the costs for materials and labor in the construction industry during the Pandemic, but the story added another layer to the existing tale of corruption at the OLCC.

In July, Marks filed a lawsuit against Oregon Governor Tina Kotek, alleging that he was wrongfully forced to resign due to the influence of local cannabis business interests. In August, the state cancelled the plans to build the new headquarters that Marks was overseeing as head of the OLCC, and will instead move the organization to vacant office space it has in Salem. The warehouse project will go ahead. There is no news whether criminal charges are being pursued against the OLCC’s managers, and Oregon authorities would not comment on that investigation.

House of Bourbon Partly Cleared, But Only Partly
Justins’ House of Bourbon is a popular destination for travelers on the Kentucky Bourbon Trail, with their stores in Lexington and Louisville being the best known area retailers for collectable bottles of American whiskey. They also run an online retailer from Washington, DC called Bourbon Outfitter. In a shocking development, they were simultaneously raided in Kentucky and Washington, DC in January.

One of the Justins of Justins’ House of Bourbon is Justin Thompson, who in addition to co-ownership of that company is owner of Bourbon Review magazine and co-owner Belle’s Cocktail House in Lexington.

In May, the Washington, DC end of the case was seemingly closed. Although the company had been re-importing Blanton’s Bourbon from Europe for sale (at a considerable mark-up from MSRP) in the U.S., they had not been doing so illegally. According to reports, the matter ultimately boiled down to some fines for improper record keeping.

Some news coverage of events on the Washington, DC end of the case wrongly implied that Justins’ House of Bourbon had been fully cleared of all serious wrong-doing, which was not the case. In August, the Kentucky part took a step forward, lodging a complaint against the company alleging multiple violations of the law regulating the sale of vintage spirits and liquor regulations generally. That law, among other things, legalizes the resale of liquor in private hands to retail vendors, since it is normally illegal for a private person to sell liquor to anyone. Those violations include failure to label vintage spirits as required, purchasing non-vintage spirits, purchasing excessive amounts of vintage spirits from single sellers, and illegal transport of spirits across state lines (between Kentucky and their Washington, DC branches). The latter was to enable the shipping of spirits, contrary to Kentucky state law.

Justins’ House of Bourbon was offered a settlement, whereby they would admit to their violations and pay a $60,000 fine, but retain their licenses and continue to do business in the state. However, it seems they didn’t take the settlement, and now the Kentucky Department of Alcohol Beverage Control is seeking to revoke the company’s liquor licenses. The case is widely seen as the groundbreaking first test of Kentucky’s vintage spirits law, passed in 2017.