Cover Story:

Distillery Dreams

First Texas Bourbon Business Since Prohibition Has a Shot With Help From Austin Attorneys

By Brenda Sapino Jeffreys

November-December 2008

Dan Garrison, proprietor and distiller of Garrison Brothers Distillery, is going where no man has gone before in Texas, at least since before Prohibition began in 1920.

He owns the first legal bourbon distillery in Texas since Prohibition, and around Thanksgiving, Garrison will celebrate when he fills the 100th barrel of Garrison Brothers Distillery bourbon. Because bourbon has to age for at least two years, Garrison Brothers Texas Bourbon Whiskey isn't for sale yet.

Getting the distillery business to the point where Garrison can admire rows of barrels of aging bourbon has been a long haul. Garrison relied on several lawyers from Austin firms as he traveled a somewhat uncharted path to getting the state and federal permits he needed before he was able to even buy a still or test some of his "black-market" bourbon recipes.

Garrison Brothers Distillery's Dan Garrison and Debbie Ramirez of Graves Dougherty Hearon & Moody Image: Joel Salcido

Garrison, who lives in Austin with his wife, Nancy, and two children, spent the past three years making his dream of distilling some very good bourbon come true.

"There's no 'How to Make Bourbon for Dummies' book," Garrison notes.

"For the last three years, it's been a 24-hour-a-day job," he says.

Garrison grew up in Texas, but he worked on Madison Avenue in New York City from 1992 to 2002. He moved back to Austin and worked as a marketing executive to a software technology company until he was laid off in 2003 when the company was sold to Commerce One. Garrison says he worked hard to build that company, and after his stock options dwindled to about $500 in value, he decided that the next business he worked on would have to be one he could "touch and smell and taste."

In the meantime, Garrison, at one time an avid marathon runner, started a nonprofit organization called the Town Lake Trail Foundation. As the group's executive director, Garrison says he raised around $2 million to improve the trail system around Town Lake in Austin, now renamed Lady Bird Lake.

But in 2005, after Garrison read a news story about a businessman who had bought a large still to make vodka, the longtime bourbon drinker decided he was interested in making artisan bourbon in Texas.

"The next thing you know, I was off to Kentucky to meet the people who made bourbon," Garrison says. He toured several bourbon distilleries where national brands are made, including Maker's Mark, Buffalo Trace, Wild Turkey and Four Roses, and he got to know some master distillers and distillery warehousemen in Kentucky.

Garrison did a lot of due diligence in 2006 and 2007.

"I researched the industry, spent a lot of time collecting these black-market bourbon recipes from all over the Internet," he says, adding that he met some "moonshiners" online who shared with him some information about the best yeast to use for making bourbon, and how to best cook the liquid.

By doing his own research, Garrison found out that he couldn't buy a still until he had a federal distiller's permit. And he couldn't get a permit until he owned or leased land and had filed articles of incorporation for his company.

So, in 2006, Garrison hired Debbie Ramirez, a shareholder in Graves Dougherty Hearon & Moody in Austin, to help him get his company up and running. At the same time, he started looking at land in the Texas Hill County.

Garrison eventually settled on a site in Blanco County near Hye, which is about 10 miles from Johnson City.

"The land was absolutely beautiful — wildflowers, plenty of water on the land and a 60-acre field where I could plant my own soft red winter wheat to use in bourbon," he says.

Thomas Davies, a partner in Stahl, Bernal & Davies in Austin who assisted Garrison with real estate issues, says Garrison purchased the land, and the distillery company is leasing the property from Garrison. That separation of the land and the distillery business will make it easier for Garrison to raise money for Garrison Brothers Distillery, Davies says.

"He acquired more land than the distillery is on to buffer the distillery from the neighbors, which was part of his deal in acquiring the land," Davies says.

Davies says he has been impressed with Garrison's focus.

"He was really thinking ahead, not just doing a hobby out there, really thinking of how to make this work over a long period of time," Davies says. "You could think that someone like this could be out there and dreamy. He's really been very persistent and focused to what he's doing."

Garrison got his federal distilled spirits plant permit in October 2007, and two months later, the Texas Alcoholic Beverage Commission granted him a state permit.

With the federal permit in hand, Garrison purchased a used still in October 2007 from Buffalo Trace Distillery. He won't reveal the purchase price of the 100 percent copper antique still he calls the "copper cowgirl" but he says a similar one purchased new would cost at least $250,000.

From January through May, Garrison spent 18-hour days, usually seven days a week, testing recipes.

"It was a real challenge. We have a cooker that's a 200-gallon Crock-Pot. We tried maybe 200 recipes; some turned into nothing more than cornbread. There's definitely some secrets to how to do it well. There's secrets to the sugar content in the mash," he says.

Ramirez, who does a lot of legal work for entrepreneurs, says she helped Garrison with corporate governance issues — understanding what he can and cannot do as a limited liability company — and with understanding securities laws as he raised capital from investors. She also helped Garrison sever his business relationship in 2008 with a former partner. (Garrison declines to identify his former partner.)

Because Garrison is trying to raise money through a private placement, he cannot discuss financial matters or say how much he has personally invested in the business. However, he says the cost of getting a distillery such as his up and running is in the $1 million to $2 million range.

Wayne Hollingsworth, a partner in Armbrust & Brown in Austin, is assisting Garrison with the private placement. He says he helped structure the placement so it will be marketable.

Hollingsworth, who has known Garrison since his client was in software marketing in Austin, says the distillery is an interesting project.

"It is very exciting . . . what he's trying to do. It's very novel — novel in the fact there's not that many distilled spirits manufacturers in Texas," Hollingsworth says.

Garrison continues to use Ramirez for business issues, and he turned to Orlesia Tucker, a shareholder in Graves Dougherty, for trademark work.

Garrison almost threw in the towel this spring after three years of work on the business.

"After my partner left the business, it was kind of traumatic. It was very expensive for me. I was about at the point to dissolve the business and get out, sell the land and basically give up on this dream. It was emotionally devastating," he says.

But his father, who lives in the Puget Sound area in Washington state, and his brother Charles, who runs a restaurant in Phoenix, flew to Texas and spent a weekend in May "whipping him into shape."

"They said, 'Get back to work.' We spent the four days in May making bourbon, and that's the recipe I settled on," Garrison recalls. "When we made that mash, it was the sweetest, best-tasting we've ever made, and I knew we had it."

Also, around that time, Garrison says some "very good friends" loaned the business some money to get it through the hard times. He can't sell the bourbon until it ages, and that won't be before 2010.

From 2006 through July 2008, Garrison says he was living at the distillery in a little cabin during the week and returning to Austin and his family on the weekends. That was a stressful schedule, but now that the distillery is in regular production, he hired two employees. By September, the employees were running the distillery during the week, and Garrison has been driving to Hye to work on the weekends.

He says they run a continuous cycle at the distillery that takes five days from fermentation to distillation. The bourbon is aged in oak barrels, which by law have to be brand new and made from white American oak. Depending on size, the price of a barrel ranges from $175 to $425, but the distillery can sell its used barrels to distilleries that make rum, tequila or beer, he says.

Garrison can't say when the bourbon will be ready to sell; he says he will "give it all the time it needs."

"If I had the answer to this, it would make forecasting different. The heat plays a huge role. The hot Texas sun is our partner in this. It gives the bourbon its character and complexity, because the distillate goes in and out of the barrel . . . the longer the better," he says.

Once it's ready, the veteran adman will do his own marketing. He's already talking to distributors and wants to find one that "believes in our bourbon." He expects to start selling it through independent liquor stores in Texas.

Having gone through the process, Garrison speculates that others haven't gotten into the bourbon business in Texas because it's so difficult to get the necessary permits. But he says Texas is second only to California in the amount of bourbon sold each year, so he sees a great market for his product.

Garrison says he's seeking additional investors, because he plans to expand the operation in the spring by adding several stills.

"We want to be able to expand and meet statewide demand," he says.

Garrison Brothers Bourbon will be pricey, he says. "It's going to be very good and it's going to be expensive."