The production, sale, or distribution of alcoholic beverages has unique licensing and permitting processes. Many people are familiar with the local liquor license required to sell alcoholic beverages, but few know about the federal and state licenses required to manufacture or distribute these products. The Alcohol and Tobacco Tax and Trade Bureau, commonly referred to as the TTB, oversees the issuance of federal licenses for both the manufacture and distribution of all alcoholic beverages.
To better understand the permit process, one must first understand how the TTB views the entire supply chain of alcoholic beverages. The industry is divided into a three-tiered system: manufacturers such as wineries, distilleries, and breweries; wholesalers who distribute product; and retailers who sell product to the general public. The TTB only requires a permit for manufactures and wholesalers—retailers do not need a federal permit to operate. For manufacturers and wholesalers, each state has a separate governmental entity set up to issue state permits as well. It is important to remember that both a federal and state permit is needed for manufacturers and distributors—especially for distributors! If a distributor wants to operate in multiple states, multiple state licenses will be required!
The process of obtaining a permit can be lengthy. While each state has unique requirements, the federal process is standard throughout the United States. The TTB weighs many factors for each individual application before issuing a permit. For complex business entities, the permit process can take many months to complete. Additionally, the TTB requires separate applications and licenses for a variety of unique processes involved in the manufacture and distribution of alcohol. Depending on the activity of the TTB applicant, multiple permits may be required.
The variety of processes involving alcoholic beverages that needs federal permits includes:
- Distillation of spirits
- Warehousing and bottling of distilled spirits
- Processing and rectifying distilled spirits and wine
- Producing and blending wine
- Blending wine
- Producing beer and malted beverages
- Import of malt beverages
- Import of wine
- Import of distilled spirits
- Purchase of malt beverages for wholesale
- Purchase of wine for wholesale
- Purchase of distilled spirits for wholesale
Before applying for any permit or license, it is important to carefully consider the total activities of the prospective applicant. A brewpub that wishes only to manufacture beer for sale in the physical premises of the business has very different permit requirements than a distillery that seeks to distribute their own product to all 50 states! It is best to seek out knowledgeable guidance on the permit process, as many businesses that attempt to “go it alone” find the process to be confusing and frustrating. It is very easy to unwittingly submit the wrong application type. When this happens, the TTB will simply return the application and instruct the applicant to start over.
For businesses needing assistance with the permit process, our office can help. We first conduct a consultation to review the goals of each business in order to determine what licenses and permits will be required. Additionally, we review the entire process with each prospective client so that they understand the information and paperwork involved, any bonds required as a part of the process, and then discuss further requirements for operating the business after the appropriate licenses are obtained. If you have any questions about this topic, please feel free to contact our office for more information!