When longtime friends Rocco Panacci and John-Paul Sacco visited some Kentucky bourbon distilleries a few years ago, they dreamt of taking their passion for whisky to the next level, and figured they could just set up shop in Toronto.

The software developer and the construction contractor wondered why there weren’t more small-scale spirit makers in Ontario considering the explosion on the craft brewery scene.

Then their research really got them woozy.

“We quickly figured out that all of the restrictions and very little profit margins make it really difficult to sustain as a business here,” Panacci says.

Canada is famous around the world for its whisky. It’s the home of Crown Royal, Canadian Club and Seagram’s. So the duo was amazed to discover that very few craft spirit makers have sprouted up across the country, unlike in the U.S., where the industry is on fire.

In fact, there are as many craft spirit makers on Vancouver Island — and even in B.C.’s Okanagan Valley — than in all of Ontario today (a dozen). British Columbia has experienced a recent micro-distillery boom after introducing legislative changes in 2013 to encourage start-ups. To date, that province has more micro-distilleries than all other provinces combined.

Meanwhile in Ontario, the focus of late has been on leveling the playing field for craft beer and wine makers, with the introduction of sales in grocery stores. But the Ontario government has promised support next for spirit distillers in its 2016 spring budget. Promised changes include reduced regulatory barriers, which is creating a buzz in craft spirit circles.

“I get lots of calls from people saying ‘This is so cool’ and want to know more about how to get into it,” says Don DiMonte, treasurer of the Ontario Craft Distilling Association. He is preparing to open the Last Straw Distillery in Concord, Ont., as soon as he gets licensing finalized.

DiMonte is one of five whisky, vodka, rum and even moonshine makers that are set to launch or have just opened in Ontario, and many more are expected to get into the game once the province loosens what the industry says are restrictive barriers to selling craft booze.

For instance, unlike micro-breweries and small-scale wineries, small spirit distillers can’t sell directly to bars and restaurants, “which makes it pretty difficult to get our product in the hands of bartenders,” notes Panacci.

They are also prohibited from serving cocktails directly to customers who visit their locations, while beer and wine makers across Ontario are renowned for hosting tasting tours that have translated into highly successful retail operations.

Last June, the Alcohol and Gaming Commission of Ontario got changes started, announcing licensed distillers in the province are no longer required to maintain a minimum production of 5,000 litres of alcohol per year — a very large amount when you’re just starting out — in order to be eligible for an on-site distillery retail store.

That was encouraging for Panacci and Sacco, who are planning to open Yongehurst Distillery Co. in Toronto in April on a very small scale at first, with the introduction of white rum, triple sec and amaro, an Italian liqueur. It will take three years before they can release their own whisky at their cozy distillery in the Dupont-Dovercourt area, which is the federal government’s age requirement before the liquor can be called Canadian whisky.

“Because home distilling is against the law in Canada, we had to start the business, rent space and get licensed before we could do all of the necessary R&D (research and development) we needed to really perfect the craft,” explains Sacco.

“We had to do all of that on our dime for close to two years without having sold any product. A distillery is an expensive venture to start up,” he notes.

About10 years ago, Canada had just eight mostly large-scale distilleries from coast to coast, all making various forms of whisky and each satisfying a niche market.

Now, more than 60 smaller spirit makers have joined the club, and there could be many more once Ontario opens the doors legislatively, says Canadian whisky expert Davin de Kergommeaux.

He noted the focus is more on white spirits such as vodka and rum, since they can be made and released quickly, “otherwise it would be very difficult to keep the lights on,” he says.

Luckily, the guys at Yongehurst aren’t easily deterred when they set their minds to something.

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“We both grew up in homes where making things as opposed to buying them was just a way of life,” explains Panacci.

“Our families made wine, cured meats and jarred tomatoes, so for us to think we could make our own quality spirit didn’t seem like a very big jump outside of our comfort zone,” he says.

“But it’s not easy to get in.”

Know your local distillery

Still Waters Distillery

With a friendship rooted in their love of whisky, Barry Stein and Barry Bernstein established Ontario’s first micro-distillery, beginning production in March 2009. The two Barrys are considered pioneers of the craft-distilling movement in the province, and have honed their skills to create a range of spirits, with their flagship Stalk & Barrel whiskies leading the way. They make their spirits from grain on site and do not outsource any part of the production process. They also make single malt vodka and white rye, and won artisanal distiller of the year at the 2015 Canadian Whisky Awards.

Toronto Distillery Co.

Owners Charles Benoit and Jesse Razaqpur make organic gin, single-grain whisky, beet spirit and Applejack at their certified organic distillery in The Junction. The two high school buddies launched in 2012 at what was the first new distillery to be licensed in Toronto since 1933. Their wheat and rye grain spirits actually brag about their youth, not how old they are, deriving their flavour straight from the distillation runs themselves rather than from barrels. The two are awaiting the outcome of a lawsuit they launched against the LCBO, claiming the monopoly’s markup on each bottle of booze sold is “unconstitutional.”

Last Straw Distillery

When construction firm manager Don DiMonte told his wife a few years ago that he wanted to start his own distillery, she told him it could be the last straw for them, at least financially. Since then, he has relocated from their family’s farm in Erin to Concord, Ont., where he wants to make single malt liquor, then age it in ex-Jack Daniels and Heaven Hill Bourbon Barrels. He plans to open in June once he clears the regulatory hurdles, and his youngest son plans to join him once he graduates with his business degree in May. They are experimenting with rye and gin as they wait for their single malt to age and be ready for sale in two and a half years.

Junction 56

One of the new kids on the craft distillery block, engineer Mike Heisz started production last July and has had his retail store open since September in Stratford, Ont. He had worked at Blackberry for 14 years and decided to do something completely different. With his strong connection to the local community and experience working in a brewery, he says he understands the pride in homegrown products and is excited to produce locally made products, including whisky, gin, vodka and legal moonshine. He also works with customers to create unique and personalized spirits. He hosts tours and holds events on site at his retail location.

Dillon’s Small Batch Distillers

Launched in 2012, this distillery cranks out Canadian rye whisky (for which it won a gold medal at the 2013 San Francisco World Spirits Competition), vodka, gin, white rye and even absinthe. Distillers Geoff Dillon, his father Peter and partner Gary Huggins chose the location to be close to farmers, who grow fruit and other ingredients literally in their backyard. Their first products were made from a base of Niagara wine grapes that would otherwise be thrown on the ground during the annual thinning process. Their grain is sourced locally, too, plus they make fruit spirits such as Pear Eau-De-Vie.