Page 80 - Craft of Whiskey Distilling

72 | AmErICAn DIstIllInG InstItutE
Once you have your business model in mind, you will need to complete two license application processes, federal and state, in order to operate a distillery. At the federal level, the Alcohol & Tobacco Tax & Trade Bureau (TTB) handles licensing for alcohol production. Before a drop of distilled spirits can be made, all distillers, regardless of size, must apply to TTB for a federal basic permit and plant registration for their distilled spirits facility. TTB requires the submission of several application forms and a bond, but there is no application fee. You can review a basic distilled spirits plans application on TTB’s website at http://www.ttb.gov/spirits/dsp_beverage_packet.shtml. Based on the distilled spirits products that you plan to produce and other factors, you may need to submit additional information and forms to TTB. As part of the application process, TTB also may require an on-site inspection of your distilling facility.
Simply submitting the required application forms to TTB is no guarantee that you will receive approval to operate a distillery. TTB has broad discretion in deciding whether to approve or deny a would-be distiller’s application. Among the many factors that TTB considers, two of the most crucial are whether the distiller applicant or its owners have a criminal history or have violated a federal or state law relating to alcohol or its taxation.
You also should keep in mind that processing times can vary considerably depending on several factors, such as whether the would-be distiller already holds a federal brewer’s notice or another type of basic permit, or if TTB identifies a skeleton in the applicant’s closet. It often takes TTB several months to issue a basic permit and registration approval. Though you may find aspects of the application process confusing or frustrating, you should always deal with TTB in a respectful and reasonable manner. As you may recall from meeting your significant other’s family for the first time, first impressions do matter and you will be dealing with TTB regularly once you start operations.
In addition to federal license procedures, you must apply to the alcohol beverage authority in the state where your distilling facility will be located for the type of license or permit that applies to your business operation. Several states have different licensing options for distillers based on production levels, use of in-state agricultural products, and other factors. States often require applicants to provide a copy of their federal basic permit. The fact that an applicant has a federal basic permit, however, is no guarantee that a state will issue the applicant a license or permit. States will conduct their own criminal background checks to see if the applicant and its owners have any cross-ownership relationships with other alcohol beverage licensees that prohibit the issuance of a state distiller’s license. Restrictions that may prevent the issuance of a state distiller’s license vary considerably among the states, so you are best served to identify these potential road- blocks early in your planning process. Also, many states require both a bond and payment of an application fee. To access information on the state alcohol beverage authorities and some basic license information, you can go to the National Conference of State Liquor Authorities website, http://www.ncsla.org/states.htm.
As you may have gathered, licensing a distillery is an involved and time-consuming process. Planning ahead and knowing the rules will help you reduce the risk of expensive delays and successfully navigate the complexities of federal and state licensing procedures.