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Last winter I visited a small new distillery housed on the ground floor of a Dickensian industrial building in a run-down part of an American city—exactly which city doesn’t matter, because I guarantee there’s a building just like it near you. It was occupied by what my friend Karen Rush has dubbed yuts, or “young urban tradesmen": that leather-aproned, sepia-tone breed of ironmongers, tinsmiths, papermakers, and the like who have embraced urban industrial homesteading with the same zeal their parents once brought to rural cheesemaking in the sadder parts of New England.

The distillery’s operators, a trio of agreeable, Oliver Twist–ish young men, had just launched a new vodka, which I’d seen in local bars and on liquor-store shelves. But when I looked around, I didn’t see any of the equipment one might expect to find at a vodka distillery—no gleaming column still, or storage bins for grain or potatoes, or even tanks for fermentation.

It’s a little-known fact, but you don’t actually need a still to call yourself a distiller. The vodka makers I visited had adopted a simple and surprisingly common business model: buy a large quantity of potable alcohol from an industrial supplier (one vendor of neutral spirits offers it “in drum, truckload and railcar quantities"), run it through a tall charcoal filter to remove any trace impurities, cut it with water, decant it into bottles, and then slap on a label touting it as a local craft product worthy of its premium price.

For the time being, the craft-distilling movement is basking in the summery sunshine of congeniality: it’s still young, and rising tides are lifting all boats. Eighty-one craft distillers launched last year in the U.S., bringing the total to 315, according to a white paper by Michael Kinstlick, a co-founder of Coppersea Distilling, a new operation in upstate New York. The movement is following the same upward trajectory that microbrewing blazed some two decades ago, and Kinstlick foresees more than 1,000 small distillers nationwide by 2021. But already some markets are getting crowded—Brooklyn alone is home to at least 10 distillers—and a debate is commencing over what constitutes “craft" and what constitutes “local."

The hard-core, “grain to glass" distillers grow their own grain and do their own distilling, blending, aging, and bottling. That’s an expensive way to make a bottle of liquor, and the product is priced accordingly. So, understandably, they get a bit grumpy when competitors buy alcohol by the railcar and then repackage it as a “vodka handcrafted in Brooklyn" or a “Texas blended whiskey." “The next phase of the market is going to be distinguishing the makers from the fakers," Kinstlick predicts.

You might think federal regulations protect consumers from these sorts of misleading claims on labels. But you’d be wrong. Yes, the Alcohol and Tobacco Tax and Trade Bureau is particular about many things that appear on a liquor label—for example, the alcohol percentage, the category of spirit, and the font size used in the mandatory warnings about drinking while pregnant—but once you meet those requirements, “you can tell whatever story you want," observes Nicole Austin, the distiller at Kings County Distillery in Brooklyn, which makes whiskey from New York corn.

Austin doesn’t think increased federal oversight would necessarily help. “Any regulation you come up with will be instantly outdated," she says. Instead, she’s counting on better consumer education to clarify what’s truly local and craft-produced. “I want people to understand why my product costs what it does and why it’s special," she explains.

But consumer education is complicated when it comes to spirits, partly because the “craft" in question depends on what you’re making. With gin, for instance, the craft resides in the choice of botanicals and methods used to infuse flavors. For makers of blended whiskey, the art is in the blending of multiple whiskeys. And some people—people like me, for instance—would argue that when it comes to vodka, the true craftsmen are the marketers, not the producers.

That’s a lot to sort out when you’re walking through the liquor store. But Austin says she sees signs that consumers—at least those in Brooklyn—are gradually educating themselves about what they’re paying for, just as foodies do when it comes to artisanal local foods. “People want to know not just what you produce, but how you’re producing it," she says. “They’re going to look under the hood. And if you can’t back up what you’re saying, you won’t keep that customer."