In the US, it’s legal to distill your own booze, which’s a fabulous passion project for booze enthusiasts. But if you wish to make more batches or plan to venture into making beer for profit, you may soon be subject to legal difficulties. Eventually, many homebrewers will find that they are encouraged by friends, local demand, or recipe success to consider commercial brewing. Along with that transition comes government oversight, federal, state, and local, and licensing, labeling, recordkeeping, and production requirements.
The brewing industry can profit from knowing these regulations in advance, as they can safeguard the investments in brewing equipment, ingredients, and process development, and make the transition from a homebrew system to a professional brewery a breeze. Being compliant is difficult and can get complicated when expanding into markets. This guide explains how to help you maneuver the rules of local government, your state’s Alcohol Beverage Control (ABC) agency, and the Alcohol and Tobacco Tax and Trade Bureau (TTB) rules.
Clearing Local Regulatory Hurdles
Local approval comes first because, depending on the state and federal regulations, the requirements for your brewery may depend on whether its location is permitted to operate a brewery. Everything you do to promote your business will stall out until you get approval locally. There are several different licenses and permits required, depending on the jurisdiction, and many jurisdictions have departments that issue these licenses; most homebrewers will require the following six approvals:
- Zoning permit: Validates whether a brewery can operate in an area based on existing land use laws. Can be challenging in areas of low to medium yard density in the residential setting, particularly if you intend to continue brewing on your property.
- General business license: Allows you or your business entity in one jurisdiction.
- Local liquor license: Enables locals to embrace your brewery’s operations in their region.
- Building permit: Allows you to build, renovate, or remodel your property if warranted.
- Certificate of occupancy: Shows that your brewery survey complies with the building code and is safe for its intended purpose.
- Health and environmental permits: Ensure your brewery will meet public health requirements and will dispose of waste properly.
Finding Your State’s ABC Agency
Individual states primarily regulate alcohol within their jurisdictions, and the rules can change drastically from one state to another. This patchwork makes multi-state expansion complex for commercial brewers. An ABC is a regulating agency responsible for the production, distribution, sale, and public drinking of alcohol. This agency exists in all states, but the name may vary. The Alcohol and Tobacco Commission in Indiana, for example, or the Alcohol & Marijuana Control Office in Alaska, or the South Carolina Department of Revenue in South Carolina, is responsible for alcohol. It is renamed, but the position doesn’t change.
Common State-Level License Types for Homebrewers
ABC agencies issue different licenses for commercial brewers depending on what you intend to do. The scope of your operations determines which license type you need, and each comes with its own requirements and restrictions. California’s Department of Alcoholic Beverage Control provides a useful example of how granular state licensing can get. Here are the license and certificate types relevant to brewers:
- Type 01: Allows breweries to produce over 60,000 barrels per year
- Type 23: Greenlights microbreweries and brewpubs to produce fewer than 60,000 barrels per year
- Type 26: Permits out-of-state beer manufacturers within the U.S. to sell to licensed importers
- Type 73: Lets brewpubs sell alcoholic beverages for on-site consumption with a limited brewing privilege
- Type 84: Grants Type 01 or Type 23 licensees to sell sealed beer containers for off-site consumption at certified farmers’ markets
- Type 91: Enables licensed beer manufacturers to sell up to 124 gallons per catering event
The level of detail in these categories shows just how much paperwork different business activities require. Your state likely has a similar breakdown with its own production thresholds and operational restrictions.
Obtaining a Brewer’s Notice
A brewer’s notice is a basic requirement for any homebrewer who wants to go commercial. The TTB issues this permit at no cost, and it allows the agency to enforce federal laws, collect excise tax, and regulate labeling. Without it, you cannot legally produce beer for commercial sale anywhere in the U.S.
Requirements for a Brewer’s Notice
The TTB won’t process your application without proof of your business structure and tax compliance. Gather these materials first:
- Business structure: Documentation varies based on how you’re set up, sole proprietor, partnership, limited liability company, or corporation.
- Employer identification number: Your federal tax ID from the IRS, required for excise tax payments, which you can receive immediately when you apply online, in four business days via fax, or in about four weeks by mail.
- Bond: This guarantees excise tax payment and requires periodic renewal to avoid reapplying for a brewer’s notice.
- Brewery diagram: Represents the size of your facility, such as production space, storage space, and any retail or tasting rooms.
Permits, certificates, or licenses from the State and local government officials may be required. Approval is a good first step to take for any homebrewer looking to ramp up production levels before purchasing additional packaging equipment, larger brewing systems, or more ingredients. Completing state and local requirements first brings in a great base for the successful switch to commercial brewing and for ongoing operations.
Brewer’s Notice Application Process
The TTB only accepts brewer’s notice applications when your brewery is ready to open for business. Online applications get faster approval, though the agency provides downloadable packets if you prefer to apply by mail.
Securing Your Certificate of Label Approval (COLA)
The TTB reviews labels to ensure they are clear and accurate. Federal regulations must be adhered to on every beer label; otherwise, you can’t legally sell your product. However, labels containing unusual claims, ingredients, or branded elements can take much longer to be approved as there is more that needs to be examined. Wisely, health benefit or therapeutic claims are subjected to more stringent inspection before they can be used on a label. Nonalcoholic and alcohol-free come with more rigorous definitions, in which there are specific requirements based on the alcohol content, like less than 0.5% or 0%.
This can also create complications because non-malt drinks can possibly be regulated by the FDA on their food labels rather than being regulated by TTB. While some ingredients derived from hemp are legal in some states, the Bureau does not approve of some ingredients and other controlled substances. AlcSource provides labeling and formula approval consulting services to streamline compliance. Expert assistance is instrumental in handling TTB scrutiny and avoiding costly label rejections.
Understanding Your Federal and State Tax Obligations
Breweries typically have to pay excise taxes at the federal and state levels. Things can get more confusing when you decide to have a presence across multiple states. Your production and sales volumes determine how frequently you should file. Missing a filing deadline or submitting incomplete documentation compounds the problem. AlcSource specializes in recordkeeping and documentation support for alcohol producers. Its expert crew of professionals can assist you in preparing and filing your federal and state excise tax returns, and minimize the chances of compliance mistakes that could slow down your business.
Frequently Asked Questions
Below are the answers to common questions about alcohol licensing.
How long does the Entire Alcohol Licensing Process Typically Take?
The licensing process can usually take a lot of time, particularly if your brewery is not ready to open. Understanding which requirements can be pursued at the same time expedites the process.
What are the Most Common Mistakes to Avoid When Applying for an Alcohol License?
Mistakes to avoid when the application for an alcohol license comes to mind are failing to submit any incomplete paperwork and missing deadlines. These errors can delay the process.
Who Provides Alcohol Licensing Services in the U.S.?
AlcSource licenses in the USA. The company specializes in the challenging and continuously changing licensing landscape of the alcohol industry, including all aspects of the process from obtaining the initial permits to ongoing compliance audits and in providing support during permit renewal.
Compliance Is an Unavoidable First Step Toward Going Commercial
From homebrewer survey to commercial producer, several steps must be carefully monitored for regulatory considerations. A proven recipe is only part of the process for successful breweries; they make compliance a part of their process as well. For those exploring new ideas for homebrewers, understanding the legal framework behind scaling production is just as important as refining recipes.
Often, state and federal agencies depend on local approvals to advance projects; solving local problems first provides a better base for future success. With informed legal assistance and careful planning, brewers have the ability to concentrate on recipe improvement, production improvements, and expansion without having to worry so much about regulatory hurdles.
