Can I License a Brewery at Home?

Ever wondered if you could start a professional brewery in your shed or garage? Might be possible! Here are the issues typically at play for the would-be professional homebrewer.
Ever wondered if you could start a professional brewery in your shed or garage? Might be possible! Here are the issues typically at play for the would-be professional homebrewer.

Here’s part two of our homebrew series. See part one if you’re curious about the legality of homebrewing generally, and the common questions we see about homebrew-related activities. This part is for the dreamers out there who see an opportunity to potentially go pro, without excessive startup costs.

We are often asked, can I brew commercial beer at my house? Can I open a brewery in my garage? Will TTB license my outbuilding as a brewery? Is it possible to open a brewery on residential property?

The answer is a resounding…maybe! But that’s more promising than a no, right?

We totally get the desire to try to open a brewery at home. You avoid costly commercial leases. You can build out on a leisurely timeline. Wear rubber boots over your pajamas if you want. It seems like a tantalizing way to cost-effectively start producing beer, and then sell kegs into the local market. That way, you may be able to generate a bit of brand recognition and see how it goes, before committing to bigger expenses. (And, of course, having a professional homebrewery comes with bragging rights, doesn’t it?)

First, here’s a bit about the federal perspective on licensing a brewery on residential property. Then, keep reading, as we’ll dive into issues that may lurk on the state and local side of things.

TTB’s Approach to Home Professional Breweries: “Dwelling House”

From TTB’s chair, a brewery may not be established in any “dwelling house.” That’s in the code. So what in the heck does that mean? Keep in mind that TTB Brewer’s Notice applications are reviewed on a case-by-case basis. But what is worth noting is that TTB typically analyzes the residential issue in the following way.

A brewery typically may be located on residential property in the following circumstances (though TTB has final say):

-Ideally, if the building is detached from the residence. The proposed brewery premises would be in an outbuilding, for example. The outbuilding would need to be secure, with locking doors and windows. We have helped clients obtain approvals for these kinds of properties.

-What about an attached garage? Well, TTB may allow this, although it is subject to even deeper scrutiny. Here, there could not be access between the residence and the would-be brewery. So, for example, if there is a door into the residence, that would have to be walled off or blocked. If the garage connects to the residence through a breezeway of sorts, it is a closer call. As of the time of writing, we have not had anyone decide to give this a shot.

-Lease allowing the activity. Keep in mind also that TTB requires that applicants have the legal right to operate a brewery at the specified premises. If you personally own the property, but you have an entity (such as an LLC) that is going to operate the brewery, then the entity needs to have lease rights to this location. Moreover, if there is a lease in place, the same rule applies. TTB will need to make sure the entity has rights, via a lease, that allow the production of alcohol. If a landlord is not cool with this setup, then it’s not going to fly.

State and Local Issues with Home Professional Breweries

We’ve noted the general TTB concerns. However, it is worth mentioning that even if TTB would be okay with licensing a premises, state or local concerns may get in the way. Indeed, TTB is a federal agency. In issuing an approval, TTB is not going to make sure all of the state and local ducks are in a row. TTB makes its independent decision. There is the concern of state regulators, of course. However, there are also potential zoning and code issues to consider.

State Regulators: In Washington, for example, LCB often takes the same approach as TTB. Detached residential (outbuilding) tends to work. A garage is a closer call, but with the above-noted steps, plus TTB approval, it seems likely LCB would follow TTB’s lead.

Zoning Concerns for the Professional Homebrewer

Here may be the catch. When you operate a brewery, you are making a form of commercial use of your property. Zoning restrictions may or may not allow the operation of a brewery at the residence. It is an absolute must that the would-be professional homebrewer investigate the zoning of the property.

In general, the more rural the property, the more uses like these are possible. The less rural, the trickier it gets. If the zoning of the property is residential, it may nevertheless be possible to go through a “Home Occupation” process of sorts whereby you apply to operate a business at your home. If you meet certain conditions, the local zoning folks may issue you approval. Nevertheless, pay attention to the home occupation requirements, if applicable. It may be that if your neighbors take issue with the smell of the operation (even if you aren’t brewing at a bigger scale than you were homebrewing), they could put the kibosh on your home occupation. They may also receive notice of your plans and have the opportunity to object up front (so, it goes without saying, that you’ll want to have a good relationship with those around you). Beyond that, the zoning office itself may try to frame your business as too industrial, and not within the uses allowed for these kinds of businesses. It may take some explanation, some tap dancing, some selling.

Furthermore, if a pro brewery at home is allowed, then local zoning will dictate the things you can and cannot do in the operation of your brewery. You may only be able to receive deliveries during limited hours, or a certain limited number of days of the week. In some instances, you cannot have any employees, rather, only those living at the residence may operate the busines. You may not care to operate a taproom at the location, but local zoning would also speak to that. It’s likely that unless you are in a rural area, a taproom will be a no-go, and you would only be able to have a limited number of visitors for the purposes of the business. Parking is also an issue. If you are going to have visitors, you may have to provide off-street parking for them. So, if you were going to compliantly take advantage of a mobile-canning service for your wares, this parking issue could rear its head, depending on the configuration of the residential property.

Despite all these caveats, it is well worth exploring the option of licensing a home brewery. Before you sink money into a commercial lease, why not see if the space you have already could fit the bill, and give you a cost-effective way into the wild, rewarding ride of operating a professional brewery? If all goes well, you’ll outgrow the space quickly. Even so, it’ll be fun to one day reminisce about your startup’s humble roots.

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Can I Sell Homebrew? Can I Make Pro Brew at Home?

Can you sell your homebrew? Can you make pro brew at home? In this series, we dive into the details of the legal aspects of brewing at a residence.
Can you sell your homebrew? Can you make pro brew at home? In this series, we dive into the details of the legal aspects of brewing at a residence.

A special post on homebrewing, in honor of all our friends at Homebrew Con 2016 (it’ll always be NHC to me!) who are out there kicking tires on new gear while enjoying the camaraderie and great array of homebrew seminars (and no shortage of homebrew…) out in Baltimore right now. Another homebrew-related post coming tomorrow.

So, we know you can homebrew. But can you ever sell your homebrew? In other words, can you brew beer at “home” and sell it? Could you run a bona fide brewery business out of your home; make pro brew in your garage? Let’s unpack these common questions, and we’ll do it in two parts.

Homebrewing is legal in all fifty states (thankfully, for our friends in the South, Alabama finally came around!). Federal regulations allow adults to brew up to 100 gallons of homebrew a year if living alone, and up to 200 gallons of homebrew per year for a household. As you might imagine, it’s pretty hard to police that figure, but for this risk-averse attorney, that means my 3.5G weekly batches cleanly put me under that household threshold (for 200G/year, it comes out to about 3.8G/week). Whew.

And for anyone who has thought about going pro, costs are often daunting. Many wonder, could I produce beer at my home somehow, and turn around and sell it? That would mean I could avoid spendy commercial leases, and use the space and gear I’ve got. We’re here to say maybe, and with a lot of caveats; as we don’t represent our dear readers, you should always seek an opinion of counsel in your home state. That said, we have successfully helped people open commercial beverage businesses at their residences. If you’re in the right locality, with the right separations at your premises, it may well be possible. Note, though, that commercially brewing at home as a licensed producer is one thing. That’s sanctioned “Pro Brew” (more on that next time). However, selling “homebrew” without a permit is another, and that’s always a no-no. Here are the issues at play.

First and foremost, absent federal licensure (and applicable state/local permits), you cannot sell alcohol made anywhere. Not no way, not no how.

If you’re interested in opening a commercial brewery at your home, or licensing an outbuilding as a brewery, stay tuned for our next post. If you’re curious about other aspects of homebrew, read on for frequently-asked homebrew questions.

I’m a pro brewer in planning, can I charge for homebrew at an event?

We get asked a lot about charging admission for an event hosted by a brewery in planning. Typically, the would-be brewer wants to woo investors and build up a fanbase before going live. At these events, they want to serve or sell their homemade wares. Keep in mind that the more you edge closer to money and homebrew, the more you’re walking that fine line. Homebrew simply cannot be sold, so a monetary transaction for the beer is not possible. And, in many states, including Washington, to “sell” has a particularly broad definition (including even bartering and exchanging it which may be difficult to enforce but is nonetheless the law). Homebrewers would be well-advised to seek experienced local counsel before serving homebrew anywhere beyond the home or at a friend’s house. Indeed, even pouring at festivals may require notice to applicable regulators.

Can I bring my homebrew to a wedding?

Typically, homebrew is okay at private events. The places where friends, family, and loved ones gather. Just as no one regulates the service of homebrew at your house party, these sorts of events tend to fall in this category. Technically, the federal language refers to homebrew as to be for “personal or family use and not for sale.” Thus, of course, again the standard no-sales caveat applies again. If someone wants to run a business of making custom beer for private events, we’re talking about a licensed business, and not a homebrew operation. Unlike other industries, such as baking or candy-making which can often be conducted right out of the kitchen with minimal permitting, brewing alcohol for commercial purposes is highly regulated. It needs a permit, taxes must be paid on production and, as we’ll touch on tomorrow, it may or may not be possible at a residence.

I’m 18, can I make homebrew….?

According to federal regulations, any adult may produce homebrew. Further, federal regulations clarify that an adult is someone aged eighteen or older. Of course, drinking age laws still apply. Moreover, states can also restrict production of homebrew to those older than 21. But, if your state allows 18+ production, a Mr. Beer Kit for high school graduation is a viable gift idea for your favorite niece or nephew, although probably frowned upon by mom and dad.

Are the gallon limits for beer only, or does wine count?

Cheers to diversifying your homebrewing interests. If you’re seeking a compliant homebrew path, but the 100G/200G homebrewing limitations aren’t enough to keep the whistle wet, you might consider making wine (which includes wine, cider, and mead). Federal regulations give you an additional 100G individually/200G household allotment for winemaking. Brew on.

What about home distilling, can I do that?

Not legally, no way. Home distilling is illegal. Over cocktails, I’ve pontificated about what a licensing process for this might look like, maybe involving permitting and training (and, of course, a healthy fee to the applicable regulators for the classes and annual right to do so). It hasn’t happened yet (and I hope somewhere, someday, someone is reading this and the law has changed). But, take note! At the time of writing, there’s activity in the House and Senate that may help make a path possible. This effort is thanks to the efforts of the Hobby Distiller’s Association.

We’ll add other Homebrew Law FAQs as they come to us.

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Understanding Kombucha Law: Legally Selling Hard Kombucha

Kombucha law can be mystifying—here, we discuss whether a permit may be needed, spot sources of risk, and touch on steps to be compliant.
Kombucha law can be mystifying—here, we discuss whether a permit may be needed, spot sources of risk, and touch on steps to be compliant.

My fascination with kombucha started in the kitchen, as I raised my first SCOBY from a bottle of GT’s. As she grew, so did another fascination with kombucha—the issues involved in kombucha law. Do you need a federal license to produce kombucha? What about a state license? Can you make kombucha at home and then sell it? Or, do you need a commercial premises to make and sell kombucha—must that be your own commercial space, or could you make kombucha at a commercial kitchen and then sell it? I found that the answer, responsive to so many questions in the law, is that it depends.

As a preliminary matter, though, the first thing to consider is what the alcohol content of the kombucha is (or will be). When producing traditional kombucha, the alcohol content often drifts above .5% ABV (that is, one half of one percent). A product that consists of .5% ABV or more is legally considered alcohol, and a permit is required from the federal government. Moreover, a TTB permit is required even if the ultimate final product is less than .5% ABV. For example, if a producer makes anything beyond .5% ABV—even if the producer plans to dilute that later in the final product—a permit is still required. Of course, there’s no “kombucha permit”—at least not yet!—and so the options for alcohol permits are the ones you would expect. The federal government (the Alcohol and Tobacco Tax and Trade Bureau, or the TTB for short) has three kinds of alcohol permits. There is the brewery permit, the winery permit, or the distilled spirits plant permit.

Through vigil efforts, a kombucha producer (side note: I often think of them as a professional “kombuchery,” and I’m seeing others are starting to use the term as well!) may keep the ABV below .5% at all times. If this is the tact the producer is taking, a permit is not required, and sales would not be limited to those of legal drinking age. Nevertheless, because of the steps involved in making kombucha, it is often not a product eligible to be made at home under the cottage food laws in each state. Moreover, keep in mind that if the product drifts above .5% ABV while it is on the retail shelves (perhaps due to unrefrigerated storage and continued fermentation), then the producer is liable for alcohol taxes, and is essentially producing alcohol without proper licensure. Not good. Indeed, this issue spawned a recall of kombucha products five or so years back, and caused a few entrants into the kombucha market to reconsider. More regulation, federal taxes (at the time of writing $7 for every 31 gallons, also known as a barrel, on the first 50,000 bbls), state taxes (depends on the state), a regulated premises, sales to those 21+ only, potential placement in the alcohol aisle of the grocery store (and many natural foods stores lack permits to even sell alcohol), and so on. It’s a lot to deal with and more risk—especially when dealing with unpasteurized kombucha with live cultures, which for many producers and consumers is the very point—there’s far more inherent risk than when selling a pasteurized orange juice.

If you are making traditional kombucha, or want the ability to produce a line of .5% ABV+ kombucha, then the TTB brewery permit is what tends to fit. Without drilling too far into the legal nitty gritty, a TTB-approved brewer is able to produce alcohol through extracting sugars from malted barley, or using any number of approved substitutes . Sugar is one of those substitutes. Moreover, a TTB-approved brewer is able to use various adjuncts in flavoring the final product—and so this is how tea and various herbal seasonings may be introduced into the product. Keep in mind, though, that a beer product—or any food product—may only contain ingredients that FDA deems “Generally Recognized as Safe,” or GRAS.

Key, though, is that if a TTB-approved brewer is making a product that lacks malted barley and hops (which defines beer under the Federal Alcohol Administration Act), then the product is not subject to TTB Certificate of Label Approval requirements. This may seem like a boon, but it’s a bit more complicated than that. Because the product is not TTB “beer,” it may not be subject to COLAs, but it is subject to labeling requirements of the Food and Drug Administration (FDA). Thus, nutrition facts would be necessary. (And, notably, laws prevent producers from dropping in just a tiny bit of  hops and malted barley to get around this requirement.)

Further, depending on the composition of the kombucha, a formula approval may be required. However, if all the ingredients come from the exempted list, then the formula approval may be avoided.

All in all, the legal requirements for making kombucha are nuanced. They also can vary by the state. For someone interested in opening a kombucha brewery, it is well worth learning about the legal requirements involved in producing kombucha—and forming a plan for a compliant launch of your new business endeavor. If you are going the the traditional permitted route, then obtaining federal, state, and local permits may affect your kombucha company start-up timeline, not to mention your start-up costs.

This kicks off a series of posts we’ll be making about kombucha law, including diving into more detail about the above issues we’ve already noted.

 

 

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Are Minors Allowed at a Washington Brewery?

Can Washington breweries have minors on the premises? What does a brewery need to do?
Can Washington breweries have minors on the premises? What does a brewery need to do?

If a Washington brewery wants minors on the premises, what does it need to do?

The question comes up quite a bit. Can families spend time at a brewery? We’ve seen kids at breweries, but is it legal? Can we get into trouble? As the law and regulations stand right now, the answer is fairly straightforward.

First things first. Federal laws and regulations don’t have a say. So, we don’t need to worry about the Alcohol Tobacco Tax & Trade Bureau (TTB) when thinking about minors on a brewery premises. TTB cares about the premises layout, a lot. But they don’t dictate who comes onto it.

The state perspective, however, does matter. Here in Washington, we have the Revised Code of Washington (RCW) which includes law created by our legislators. We also have the Washington Administrative Code (WAC) which includes regulations. The Washington State Liquor and Cannabis Board (LCB, formerly the Washington State Liquor Control Board) is the regulatory agency that creates the relevant regulations for the alcoholic beverage industry here.

Between the RCW and WAC, here’s what we have. The base license to operate a brewery in Washington State is the Microbrewery License or the Domestic Brewery license, depending on your volume of production. For most reading this, the Microbrewery license applies (60,000 bbl annually).

The base license is treated as a non-retail license. That is, licensees—those who have the licensee—are not treated like “retailers.” This is the case, even though we all know breweries in Washington are allowed to sell beer at retail, just like retailers.

Importantly, though, there is no age restriction imposed at a non-retail premises. Therefore, when a Washington brewery uses its built-in retail rights—under its “non-retail license”—the Washington brewery can allow families and minors on the premises. Of course, the brewery can’t serve alcohol to those minors. And best practice would be to have prepackaged snacks available.

Can a brewery obtain a retail license to supplement its non-retail rights? Yes. But at the location licensed with the retail license, the brewery is subject to food minimums or age restrictions. Retail licensees do have additional obligations to have minors on the premises.

We’ll touch on why a brewery might want a retail license in our next post. As it stands, though, a Washington brewery can have minors on the premises—without burdensome or, truly, any food requirements—so long as the brewery is using its built-in rights to retail beer.

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Brewery Startup Series #8: Timeline to Opening

Going from vision to lights on and taps open can't be done overnight, but this brewery startup timeline gives you a good estimate of the timeline from idea to frothy fruition. (Pictured? That's Burial Beer Co., the vision of Doug Reiser of Reiser Legal, a craft brewery located over in Asheville, NC. Stop by and say hi to Doug sometime.)
Going from vision to lights on and taps open can’t be done overnight, but this brewery startup timeline gives you a good estimate of the timeline from idea to frothy fruition. (Pictured? That’s Burial Beer Co., the vision of Doug Reiser of Reiser Legal, a craft brewery located over in Asheville, NC. Stop by and say hi to Doug sometime.)

How long does it take to open a brewery? I’ve put together resources as a part of our Brewery Startup Series in the past. I thought it was time to revisit the milestones we’ve provided, putting the brewery startup process into a helpful timeline for those thinking about getting started. This is a sketch of what it looks like for most emerging alcoholic beverage businesses, getting at how long it takes to open a brewery:

8+ months out:
-Business Planning: Put together a business plan, consider whether investors are needed. If so, you may need to add to the timeline, to compliantly raise funds and bring those investors onboard.

7-8 months out:
-Business Setup: Form your entity, obtain an Employer Identification Number, Open a Business Bank Account, Fund the Account. This comes first.
-Get an Operating Agreement together that guides decision making, transfers of interests, and sets forth the business and management structure.
-Take steps to clear your brewery name.
-As soon as the entity comes together, file for protection for your selected and cleared brewery name. (Can do this up to 3 years or so before you open, but best to wait until the entity is in place.)

5-6 months out:
-Begin seeking out space, negotiate a lease.
-Once a lease is in place, kick off federal licensing as much as is possible.
-Order equipment.

1-2 months out:
-Tee up the state licensing process as much as possible so that when federal comes in, you’ll be ready to submit.
-Obtain federal approval and submit to state.
-Submit label approvals to TTB or the state, if required.
-Clear and protect all important brand material, such as the brewery logo and flagship beer names.

There are many sub-steps of course, and the scope of the project and commitments of the founders may affect the timeline a good bit, but those are the big milestones. If you have a good idea of your team, a handle on brewing, and a vision of what you want to do, this is a realistic look at how it works for many brewery startups. We’re here to help for those who have questions or are looking to fill in the gaps.

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