“I discovered that this waste product is an issue in Canada and around the world, and is a huge problem for the environment. I wondered if something could be done about it,” McDonald explains.

The serial entrepreneur worked with a professor in the University of Ottawa’s biology department to perfect the process of converting milk sugar into spirits. Meanwhile, he cold-called various dairy farms around Ottawa to find a supplier of milk permeate.

To McDonald’s delight, the final product was a vodka that’s tasty, lactose-free and more energy-efficient to distill than spirits made from grains or potatoes.

When the COVID-19 pandemic began, a new application for milk permeate emerged. Funded by a $455,000 grant from the Ontario government, the company pivoted to create hand sanitizer for Ottawa hospitals.

“When a hospital calls and asks for something, there’s really only one answer: how much, and when?” McDonald says.

Dairy Distillery is currently working on expanding into Quebec and British Columbia. The distillery is also constructing a new 6,000-square-foot production facility, which McDonald says will allow the company to triple both its output and the number of employees.