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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Special Events Permits Come to Washington Breweries!

Thanks to efforts by the Washington Brewers Guild, brewers can expand the ways they sample and sell their beers. Special Events Permits enter the landscape in 2016!
Thanks to efforts by the Washington Brewers Guild, brewers can expand the ways they sample and sell their beers. Special Events Permits enter the landscape in 2016!

Good news from Olympia! Very soon, Washington Brewers will be able to get Special Events permits to expand the way they can sample and sell their beers. Thanks to House Bill 2605 (signed by the Governor on 3/31/16 and effective 6/9/2016), brewers can seek out a special events permit up to twelve times a year. The permit lets breweries hold an event offsite from the brewery or taproom where they can sample and sell their beers directly to consumers. Brewers must seek out the permit ten days in advance of the event, and must post the permit at the premises where the event will be held.

How might Washington breweries take advantage of the Special Events permit? One example, aptly pointed out in coverage by the Washington Beer Blog, explains the scenario where a brewery on one side of the pass wants to reach out, sample, and sell to its fans on the other side of the pass. Rather than find a retail location for a tap takeover, the brewery can put together its own event to not only pour but also directly sell its beers. Breweries could also use allotted permits to serve at corporate events or other gatherings.

Ultimately, under the new law, the Special Events permit would give breweries one more way to reach out into the public, and they can do so up to twelve times per year. The permit cost is $10.00.

We’re excited to report this one, but also a little bummed it’s taken this long for breweries to get this privilege. The law revises RCW 66.20.010, where you’ll note that the present RCW 66.20.010(13) grants essentially the same right to distilleries and RCW 66.20.010(14) grants the same right to wineries, so it’s something our spirits-, cider-, and mead-making friends have been able to do for a while now. We’re proud the Washington Brewers Guild got it done, but would also support a collaborative, evenhanded approach to pushing the RCWs along in favor of all producers the future.

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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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Introducing: Washington State Liquor and Cannabis Board!

And just like that the Washington State Liquor Control Board has become the Washington State Liquor and Cannabis Board. Here’s Reiser Legal’s warm welcome to the agency we know and love, under a fresh new moniker. I suppose it’s only fair, given the rise of the cannabis industry—and in this the Evergreen State, at that. Maybe few have noticed and few will ultimately care. But, I like the new name! And, mostly, I’m just glad I can still affectionately think of them as the LCB (because LMB just wouldn’t have that same authoritative ring).

For those wondering when the change happened, it looks like the confetti fell on July 24, 2015, when a number of LCB-related bills went into effect after this last legislative session. Turns out, a section of the Cannabis Patient Protection Act (Senate Bill 5052) which we hadn’t been tracking was what made the change (which, LCB reports, is the first change to the name since the Liquor Control Board was established by the Steele Act back on January 23, 1934).

Here’s a header from their homepage taken just now:

Introducing, the Washington State Liquor and Cannabis Board!
Introducing, the Washington State Liquor and Cannabis Board!

And, here’s an old snap from April or so, thanks to the Wayback Machine:

 

Screen Shot 2015-07-29 at 3.38.27 PM

 

 

 

 

 

Nothing but hard-hitting news here on the Brewery Law Blog!

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Can a Washington Brewery Sell Cider?

Recently signed Washington Bill, H.B. 1342 gives a big hug to  the beer and cider industry, allowing microbrewery sales of cider for consumption and to go, starting in late July 2015.
Recently signed Washington Bill, H.B. 1342 gives a big hug to the beer and cider industry, allowing microbrewery sales of cider for consumption and to go, starting in late July 2015.

 

Edit (5/9/2015): You all are astute readers, and it’s awesome. Thanks to a comment I received via email from one such reader, it appears there *has* been a tweak to the 25% rule. Although, it seems to be more of a sensical one to help keep taproom managers from breaking out calculators. I’m grateful for the note; and in my laser-like focus on the cider stuff, I didn’t cover this nuanced tweak. See my strikethroughs and underlined additions below; and I’ll be making a new post specific to this change where I also will point out some wonderfully inconsistent quirks in the bill. Look for that in the next day or so. -DT

Guest taps are a great thing. But, what about a cider guest tap in a State of Washington taproom? Can a Washington brewery sell cider? The reality right now is no (but if you can wait until July, I’ll have a different answer…read on).

Today, a brewery cannot legally have cider guest taps unless that Washington brewery is also a restaurant meeting certain food minimums (and even then you need a proper endorsement). This has been a bummer for cider fans of course, and also those needing and seeking to avoid gluten in their diets. It’s also kept beer and cider producers, who share a similar ethos, from doing a bit of teamwork to get presence in the marketplace. Of course, it’s also been an untapped revenue stream for both sides.

In any event, I have some good news for you. This legislative session, we saw House Bill 1342 introduced, which aimed to remedy just that. Thanks to our craft-savvy government, H.B. 1342 swiftly moved through the House and Senate and was recently signed by the Governor. H.B. 1342 not only permits cider guest taps, but it also allows sales for off-premises consumption. So, whether by the glass, growler, or packaged to go, cider has the forthcoming green light at Washington breweries, now with no extra regulatory or food-prep fuss.

When can you expect cider to (legally) pour at Washington breweries? The effective date is July 24, 2015.

A few last notes. Keep in mind that nothing about House Bill 1342 changes the 25% rule on guest taps, covered over in this recent post, and it’s a welcome change in favor of common sense.

 


What Changed About the 25% Rule (Added 5/9/2015)

If you recall my first post on the 25% rule, you’ll remember that it was a weird rule. Under it, guest taps couldn’t exceed 25% of a brewery’s own on-tap offerings. It sounds great in theory, but the technical wording is actually annoying to apply. To make numbers easy, say you have 100 beers on tap. You could have 25 additional guest taps. Why? Because you have 100, you can have 25 guest taps (for 125 totals taps) because the additional 25 is no more than 25% of your own brands. As you can see, the law was confusing. So confusing, it’s hard to write out here. It would make a lot of sense if you could just count the taps, and not commit more than 25% of those taps to guests. For example, have 100 taps? Great, you can have 25 of them as guests—and that’s what I believe House Bill 1342 has done, even if it perhaps wasn’t its main intent.

Here’s the relevant part of H.B. 1342 with respect to this point:

(3) Any microbrewery licensed under this section may also sell from its premises for on-premises and off-premises consumption:

(a) Beer produced by another microbrewery or a domestic brewery ((for on and off-premises consumption from its premises)) as long as the other breweries’ brands do not exceed twenty-five percent of the microbrewery’s on-tap ((offerings of its own brands)) offerings; or

(b) Cider produced by a domestic winery.

So, what’s up with these changes? A couple of things. First, it becomes notable that if you have cider on tap, it’s a part of your “on-tap offerings”, so having cider on tap becomes part of your offerings for the purposes of your 25% calculation. Maybe that’s the only thing the law was written to do. I’d like to believe, though, that it was also intended to eliminate the weird calculation problem above. Even if not, it appears to do so. Read the excerpt again. You can sell beer produced by another brewery, as long as guest taps don’t exceed 25% of your on-tap offerings. You can’t commit more than 25% of your total tap share to brewery guests. Interestingly, though, the law doesn’t say split about restricting your cider offerings. I’ll report separately about that (as well as another implication about the 25% rule I’d like to note…so stay tuned if you’re into this stuff).

Whatever the case, House Bill 1342 is a bit of a win for anyone who (1) doesn’t want to break out the calculator to compliantly allocate guest taps and (2) wants to allocate a bit more to guest taps. Let’s apply it. Under the new law, it seems that if you have 100 taps, 25% can be guests. So, 75 of them must be your beer or ciders, and then 25 can feature your favorite third-party breweries. Compare this to the old setup. Let’s say you had 75 of your own beers on tap. The old law said guests couldn’t exceed 25% of that. We know that 25% of that is 18.75. So, they compare this way:

Compliant Under New Law: 75 house taps or cider taps, up to 25 guest taps.

Compliant Under Old Law: 75 house taps, 18 guest taps.

Clear as mud? I’ll follow up soon to cover this, and a few other notable notes.


 

Last, bear in mind that H.B. 1342 also was specifically focused on getting cider flowing, and did nothing (but pave the way for the bright craft future) to get wine flowing at a non-restaurant microbrewery with a proper wine endorsement. In any event, it still counts as another win for the Washington beer industry, and our kindred cider-producing spirits. Though, speaking of spirits…well, we’ll leave that for another day. Here’s a link to the passed bill.

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