Blue Spirits bankruptcy leaves Cashmere Mill District space in limbo

CASHMERE — The Chelan-Douglas Regional Port Authority is waiting for the bankruptcy process to determine what happens next at the former Blue Spirits Distilling operation in the Cashmere Mill District, where the doors are locked and company property remains inside the Port-owned facility.

Blue Spirits filed for bankruptcy in June and closed both its production operation in Cashmere and its tasting room and venue in Leavenworth. While the Leavenworth property has since sold, the company's departure from the Mill District leaves the Port with an unresolved lease at the center of Blue Spirits' former operations.

Director of Finance and Administration Monica Lough told Port commissioners Aug. 11 that the Port had reached approximately 60 days since the bankruptcy filing without anyone coming forward to assume the lease.

“We still have not had the trustee come forward and say that they wanted to move forward with the lease,” Lough said.

Lough said the bankruptcy process could extend that decision to 120 days, leaving the Port largely in a holding pattern while the future of the lease and property inside the building is resolved.

A bank also holds an interest in Blue Spirits' personal property remaining at the Cashmere location. Lough said discussions are underway over whether the bank will take possession of that property or allow the bankruptcy trustee to sell it and turn over the proceeds.

“So we're sitting with the doors locked at this point,” Lough said.

The Cashmere facility is part of the Mill District, the Port's redevelopment of the former Cashmere Mill property. Blue Spirits operated its distilling and production business there while maintaining its public-facing tasting room and event venue in Leavenworth.

The company's financial difficulties had previously surfaced before the Port. In 2022, commissioners approved a temporary rent deferral for Blue Spirits at the Mill District after the company reported financial challenges. At the time, Blue Spirits had made substantial investments in improvements to the Port-owned property as one of the original anchor tenants.

The deferral allowed the company additional time to make its lease payments but did not alter the Port's ownership of the Cashmere facility.

Blue Spirits remained active in the years that followed. As recently as 2025, the company received national recognition at the New Orleans Spirits Competition, where its Espresso Flavored Vodka was named Best of Category. The espresso vodka and the company's Pickle Flavored Vodka also received gold medals.

At the time, Blue Spirits products were being sold through its Leavenworth location, online, through select retailers and through wholesale distributors.

The company's bankruptcy now leaves the Port waiting for the legal process to run its course before it can determine what comes next for the Mill District space.

For now, Lough said, the Port is maintaining control of the building while the lease and Blue Spirits' remaining property are sorted out.

Andrew Simpson: 509-433-7626 or andrew@ward.media