What Are the Differences Between a TTB Brewery and a Brewpub?
At Lindsey Zahn P.C., we frequently receive questions from clients about the distinction between a brewery and brewpub with respect to the Alcohol and Tobacco Tax and Trade Bureau (“TTB“). In the alcohol beverage world, it is a very common misconception for folks to tell us that they want to open a brewpub without realizing that TTB has a significant tax differentiation between a brewery and brewpub. While the terms may seem similar, the differences at the federal level are significant. It is also important to note that individual states may have their own definitions and requirements for breweries and brewpubs, but this article focuses solely on the federal (TTB) regulations. For example, some states differentiate breweries from brewpubs based on whether or not food is served, but for TTB purposes, this is not a factor.
TTB Definition of Brewpubs vs. Breweries
According to TTB regulations (27 CFR 25.25), a brewpub is a tavern or similar establishment operating on brewery premises, and it is subject to specific federal rules. A brewpub must have a method for measuring the beer it serves, such as a meter or gauge glass, which is typically the tax-determination tank. This is crucial because taxes must be determined before the beer is dispensed into a container for consumption.
A brewpub may use one or more tax-determination tanks, but each tank must comply with specific requirements, such as being durably marked with the words “tax-determination tank” and ensuring that taxes are determined each time beer is added to the tank. Additionally, a brewpub cannot simultaneously pump beer into and out of the tax-determination tank.
Additionally, brewpubs can store tax-determined beer on their brewery premises for sale at the tavern, provided they meet all federal requirements outlined in 27 CFR Part 25.
A premises classified as a brewpub is allowed to store tax-determined beer on the TTB premises, provided the beer is intended for sale at the tavern and all requirements under 27 CFR Part 25 are satisfied. This differs from traditional breweries (i.e., those not classified as brewpubs), which are generally not permitted to store tax-determined beer on their TTB-bonded brewery premises.
TTB Breweries
Breweries (i.e., those not classified as brewpubs) are required under 27 CFR 25.155 to remove beer for consumption or sale in containers such as barrels, kegs, or bottles. These containers must be taxpaid or tax determined at the time of removal, as outlined in 27 CFR 25.159(a). Regulations in 27 CFR 25.156 and 25.157 cover tax determination for kegged and bottled beer, while 27 CFR 25.158 addresses tax computation for bottled beer. Unlike taverns, the regulations for breweries do not permit breweries to remove beer through tanks.
How TTB Classification Works
How a brewery is classified by the TTB largely depends on the types of containers used to remove beer for consumption. These classifications are closely linked to the associated tax requirements. Understanding these distinctions is crucial for compliance with federal regulations. Far too often, we have unfortunately seen folks who have mistakenly applied for one classification while operating as the other.
If you have questions about setting up a brewery or brewpub, Lindsey Zahn P.C. can help you navigate the federal regulations, including obtaining the appropriate licenses and understanding TTB classification requirements. Contact us today for a consultation at info@zahnlawpc.com for an initial consultation.
How Lindsey Zahn P.C. Can Help Your Brewery
Lindsey Zahn P.C. focuses on assisting breweries with obtaining the necessary federal and state permits and alcohol beverage licenses. The firm has years of experience working with TTB and has handled hundreds of original TTB permits and amendment applications. We can help you determine whether a traditional brewery or brewpub license is the best option for your business and provide guidance on regulatory compliance, both at the federal and state levels.
To discuss your brewery’s needs and how we can assist you, contact Lindsey Zahn P.C. at info@zahnlawpc.com for an introductory consultation.