Congratulations on setting out to establish your distillery! The journey you’re about to embark on is a thrilling one, filled with challenges and the promise of crafting exceptional spirits. While starting any new business can seem overwhelming, launching a distillery presents unique complexities. That’s why Lindsey Zahn P.C. has created this invaluable guide for new distilleries. Below, you’ll find the top ten business and compliance considerations to kickstart your spirits venture.
Top Ten Legal and Compliance Considerations When Starting a Distillery
- 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 distillery 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 distillery.
- 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.
- Ensure Accurate Business Information: Review and update all business information filed with your state, such as Articles of Incorporation or Organization. Outdated ownership information can lead to significant delays in permit processing.
- Secure a Bond: A bond is a legal guarantee for the payment of federal excise taxes on the spirits produced or stored at your distillery. Depending on your distillery’s federal excise tax liability, your company may need a bond before commencing the federal distillery application. It is also possible that a bond may be required when completing your state alcohol license application.
- Complete the Federal TTB Distillery Permit Application: Distilleries that manufacture, process, and/or pack or bottle distilled spirits in the United States must obtain a federal TTB distilled spirits plant (“DSP”) permit with the TTB. The application process can be time-consuming and typically involves a wait of at least three months for TTB approval. Consider working with an attorney who focuses on alcohol beverage law to streamline this procedure.
- State Distillery License Application: In some states, you can apply for a distillery 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.
- Formula Approvals: Some spirits require formula approvals from the TTB. Familiarize yourself with these requirements, especially if you plan to produce spirits like flavored vodka, flavored gin, cocktails, etc. 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.
- Label Approvals: Federal approval of spirits labels is essential and can take time. While TTB’s processing time can fluctuate, it is ideal to budget for a few weeks to navigate the label application process. Guidance from an alcohol beverage law professional can help avoid delays and navigate label submissions more efficiently.
- FDA Registration: Generally speaking, domestic distilleries within the U.S. must be registered with the Food and Drug Administration (“FDA”). This is a requirement that is often overlooked, but Lindsey Zahn P.C. can guide you through the process.
Please note that while these are critical considerations, there are other aspects to contemplate when starting your distillery, such as — but not limited to — trademark searches 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 distillery 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 distillery venture begins on a solid foundation. For more information about our services and how we can assist your distillery, please contact us at info@zahnlawpc.com or 929-ZAHNLAW.