This is the Cato Daily Podcast for Thursday, June 13th, 2019.

I'm Caleb Brown.

When Bob Gunter started Kalloa Rum in Hawaii, he anticipated using local sugar cane to make rum to sell to his fellow Americans.

One problem he discovered, selling to his fellow Americans on the mainland incurs massive shipping costs, all thanks to the Jones Act.

We spoke this week.

Tell us about your company.

Well, Koloa Rum Company was formed in 2006 in Hawaii and the intent was to establish a distillery to make rum from locally grown sugarcane on the island.

How long have you been in business?

We started bottling and selling rum in September of 2009, so we're just about at the

10-year mark at this point.

All right so when you started doing this with the locally grown sugar cane,

did you have any indication that shipping to the mainland would be such an expensive

endeavor?

Frankly, no, and perhaps naively so it was just something that we had not really thought much about

obviously being so remote in Hawaii shipping is a major part of our lives

most everything we consume in Hawaii is shipped in by ocean freight. So obviously we knew that was out there.

What I did not know was the extent to which the cost for that shipping, the freight,

in and out of Hawaii would be as expensive and as limited in terms of options available would be.

And it was really only until we really became established and began selling more and more product on the mainland, U.S.

Therefore shipping product out of Hawaii to the mainland.

And our production increased as we continue to grow and expand our business.

Obviously more and more input supplies and ingredients had to be shipped in from the mainland.

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