The company that owns the Tumwater Craft District has filed suit against Heritage Distilling Co., seeking to evict the spirits maker from its Capitol Boulevard building and collect more than $182,000 in unpaid rent. Craft District LLC filed the complaint for unlawful commercial detainer and monies due in Thurston County Superior Court on September 18.
Landlord Alleges Months of Missed Payments
According to The Olympian, Heritage Distilling owed Craft District LLC more than $182,169.79 through August 12, based on court records. The landlord issued a notice to cure the back rent or vacate the premises on August 18, court records show, and is now seeking a writ of restitution to restore possession of the space along with a judgment for the amounts due. Craft District LLC operates the Tumwater Craft District along Capitol Boulevard and is represented by a Tacoma-based attorney, per the same court filing.
Heritage Distilling had operated a tasting room in the first building at 4200 Capitol Blvd SE, a 30,000-square-foot structure that opened in June 2021 as a joint facility with South Puget Sound Community College, home to the nation's first associate degree program in craft brewing and distilling, according to the City of Tumwater. That same building continues to house the college's brewing and distilling program. After the tasting room closed, tables, chairs, and other equipment were left in the distillery's space.
A Company-Wide Retreat From Tasting Rooms
The Tumwater closure was not an isolated decision. Heritage Distilling had signed a 10-year lease with Craft District LLC for 12,500 square feet back in November 2018, but the company announced that all of its tasting rooms would close by the end of 2025. Founder Justin Stiefel said at the time, “This was an extremely difficult decision and one we did not make lightly,” attributing the closures to changing consumer behaviors, increasing costs, and state taxes. Stiefel also said future investments in the tasting-room business were unsustainable.
That announcement, detailed in an October 2025 release from Business Wire, described an asset-light restructuring meant to shutter all five company-owned tasting rooms across Washington and Oregon by December 31, 2025, lowering annual operating expenses by more than $5 million. Heritage Distilling is based in Gig Harbor and planned to continue retail sales at its Gig Harbor Waterfront tasting room.
Financial Turmoil at the Corporate Parent
The tasting-room exit came as Heritage Distilling's parent, rebranded as IP Strategy Holdings, Inc. and trading on Nasdaq under the symbol IPST, faced its own turbulence. The company executed a 1-for-20 reverse stock split effective April 23 to address Nasdaq's $1.00 minimum bid-price rule, according to a filing reported by Investing.com, which noted the stock had dropped 97 percent over the preceding six months. Separately, IP Strategy Holdings adopted a treasury reserve policy built around the $IP cryptocurrency token. A Nasdaq Hearing Panel determined on May 11 that IP Strategy Holdings had regained compliance following the split, but placed the company under a mandatory panel monitor for one year through May 2027, per Stock Titan.
Pivot to Tribal Distillery Partnerships
Rather than maintaining retail leases, Heritage Distilling has redirected its physical operations toward its Tribal Beverage Network, partnering with tribes including Oregon's Coquille Indian Tribe, which broke ground on a casino distillery in early 2025, and Arizona's Tonto Apache Tribe to build tribally owned distilleries on sovereign land, according to Sip Magazine. An 1834 federal prohibition on distillery operations on tribal lands was repealed in 2018, as detailed by Brewbound.
The Tumwater Craft District has since added buildings and tenants, and the complex remains active. The Olympian reported that it had contacted both Craft District LLC and Heritage Distilling for comment on the lawsuit.
