Starting a cidery is a dream for many cider enthusiasts, but it involves navigating various legal considerations to ensure compliance and success. From licensing and permits to labeling regulations and interstate shipping laws, understanding the legal landscape is crucial. That’s why Lindsey Zahn P.C. has created this invaluable guide for new cideries. Below, you’ll find the top ten business and compliance considerations to kickstart your cider venture.
Top Ten Legal and Compliance Considerations When Starting a Cidery
- Employer Identification Number (EIN): Obtaining an EIN from the IRS is one of your initial steps. This number is crucial for tax purposes and is required for the federal permit application through the Alcohol and Tobacco Tax and Trade Bureau (“TTB“).
- Business Organization: Choose the right business structure – whether it’s a sole proprietorship, partnership, corporation, or LLC. Each comes with its own tax implications, so understanding these is vital. It may be ideal to consult a tax professional and/or a corporate attorney to better understand the business structure that will best suit your cidery.
- Business Name Registration: If your business name differs from your personal name (for sole proprietors) or the registered name of your LLC or corporation, you’ll need to complete a “Doing Business As” (DBA) registration with your state government.
- Review TTB Federal Permit Requirements: Before producing and selling cider, you must obtain a federal basic permit from the TTB. The application process involves providing detailed information about your cidery, including ownership, location, and cider production methods.
- State License Application: Review state level requirements for starting a cidery in your specific state. In some states, you can apply for a state license while your federal application is pending. Other states may require the submission of your TTB federal permit at the outset of your state license. Ensure compliance with your specific state’s regulations and plan accordingly.
- Orchard and Fruit Source: Review and understand the regulations regarding orchard and fruit source disclosures on your cider labels. Some states require you to provide information about the origin of the apples used in your cider production. In certain instances, a state may also require that all fruit — or a certain percentage of fruit — be grown in the state.
- Distribution and Sales: Research and understand the laws and regulations regarding cider distribution and sales within your state. Familiarize yourself with the laws regarding self-distribution, the use of wholesalers, direct-to-consumer sales, and any restrictions on shipping cider across state lines.
- Contracts and Agreements: Establish contracts and agreements for fruit sourcing, distribution partnerships, retail relationships, and other business arrangements. Work with an attorney specializing in cidery law to ensure your contracts protect your interests and comply with applicable regulations.
- Formula Approvals: Some ciders require formula approvals from the TTB. Familiarize yourself with these requirements, especially if you plan to produce ciders that contain additional flavors after fermentation. Formula applications can often be daunting and it may be best to work with an industry professional, such as an alcohol beverage lawyer, to navigate the formula application process and advise you of any potential issues or missing items.
- Determine Label Jurisdiction of Your Cider Product(s): Review the different requirements between the Food and Drug Administration (“FDA”) and TTB to determine which agency will have primary jurisdiction over your hard cider. While the two federal agencies may work together to promote similar goals, only one agency will have primary jurisdiction over the hard cider product depending on the final alcohol content of your cider. It is important to familiarize yourself with the labeling requirements of both agencies as they do vary significantly.
Starting a cidery is an exciting endeavor, but it requires diligent attention to legal considerations. Obtaining the necessary permits, licenses, and complying with federal and state regulations is essential for a successful and compliant operation. By addressing these top 10 legal considerations, aspiring cidery owners can navigate the legal landscape and establish a solid foundation for their business.
Please note that while these are critical considerations, there are other aspects to contemplate when starting your cidery, such as — but not limited to — environmental issues, local laws, and addressing employment and contractual matters. The “Top Ten” list serves as a reference guide to help you on your journey.
At Lindsey Zahn P.C., we understand that establishing a cidery involves dealing with various federal and state agencies, which can be time-consuming and complex. We have extensive experience working with the TTB, FDA, and state agencies, allowing us to save you time and reduce expenses during the permit and licensing processes. Our firm can guide you through every step, ensuring your cidery venture begins on a solid foundation. For more information about our services and how we can assist your cidery, please contact us at info@zahnlawpc.com or 929-ZAHNLAW.