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Read this if you are new to commercial distilling


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  • 2 months later...

This is such useful advice - I'm in the process of setting up a distillery in the UK so am currently scouting for suitable locations ahead of applying for various licences. I'm still hoping to do this on the side of a part-time job to make sure I still have a steady income for the time being.

If you could go back and give yourself some advice when you first started out, what would it be? Are there any pitfalls I should watch out for?

 

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Very good advice that I think still holds up since it was posted.

I'm just about ready to get started producing here. I'm waiting on a final approval from the PA LCB since I was given prior approval.

I ran into the specific issue with the TTB regarding the presence of a residence on the property. The TTB officer assigned to my application initially was going to deny it, and quoted this regulation here: 26 US Code 5178 - Premises of Distilled Spirits Plants. Section B: 

(B) No distilled spirits plant for the production of distilled spirits shall be located in any dwelling house, in any shed, yard, or inclosure connected with any dwelling house, or on board any vessel or boat, or on premises where beer or wine is made or produced, or liquors of any description are retailed, or on premises where any other business is carried on (except when authorized under subsection (b))

The TTB has very broad authority to define what the word "connected" and "premises" means. I was told that they can consider anything located on the same parcel of land to be "connected" to the same "premises", even without any sort of physical connection between the buildings on that land. I know that is counter-intuitive to common sense, but you're dealing with the federal government. They hold the cards.

Our property is zoned AG-1, protected agricultural, not residential. So once we established that fact we were able to compromise with a fence separating the home located on the parcel from the DSP. I believe the zoning of our property made the difference between approval and denial, and our willingness to do whatever it took to meet them halfway. If your property is zoned residential I would not expect it to get approved by the TTB. Your local municipality would likely have a problem with that too, but YMMV.

My advice to anyone in a similar situation is to NOT ARGUE with the TTB officer. They have the authority to deny your application, or approve it on a case by case basis as they see it. Even if they're not right they are still right. Finding a way to compromise is going to be a lot less expensive than hiring a lawyer.
 

 

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  • 2 months later...
On 6/28/2010 at 0:33 PM, cowdery said:

Your experience is priceless, Paul, I just know what the rules say and they say nothing about property separation. Most distilleries in Kentucky have a residence on the premises because it was typical for a master distiller to live at his distillery. Separate building, of course, usually a hundred yards or more from the distillery, but not on a separate parcel.

Based on what you and others have said, TTB officers apparently have some leeway to make their own rules, if you want to call it that. Whenever you can just say "yes sir (or ma'am)" to a government official, that's your best course. But people shouldn't get hung up on this. Farm-based distilleries are encouraged, with the idea that a farmer can supply the farm's fuel needs by distilling some of the farm's produce into ethanol. What TTB primarily cares about is physical separation from the residence, not legal separation.

I was trying to set up a distillery in the garage, which is 24' from the house.  I sent a diagram to my contact with TTB to check it was OK before progressing any further. He sent it on the the National Revenue Center and I got back a response saying the distillery must be at least 50' from a residence.  I'm not sure what CFR this falls under or how the NRC fits into the regulatory scheme, but we put up a new building 120' from the house.  The house is on the same property parcel, no problem there.  The only headache was seperating with the insurance policies what is covered under the farm/home owner policy and what is covered under the distillery policy.

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  • 3 months later...
On 6/28/2010 at 10:36 AM, Valley Spirits Lee said:

Paul,

This is excellent advice. I wish it had been posted 4 years ago. But in the end it is almost exactly what I have done (only money was really out of my own pocket so I built my own equipment).

All you California folks thinking of starting a distillery, do me and a few other people here a favor and don't read this... JK - well, maybe not.

My advice to add would be;

Don't get in a hurry this takes 3-5 years. Licensing alone can take 6 - 12 months.

Reiterating the advice of one wise old codger (Bill Owens) don't quit your day job!!!

SELL, SELL, SELL, marketing and brand development can't be emphasized enough and will consume a good deal more of your time and money than you think.(thanks Bill Smith)

Distributors - wow, GREAT ADVICE COOP - thanks - I needed it.

You are your brand - clean up, speak well, get as much publicity as you can, figure out who you are marketing to and figure out how to market to them on a shoestring budget (unless you have gobs of money - if you do, we would all like to talk to you -but me first!)

Without good planning you are guaranteed to fail and with it you only have a chance of not failing - work hard and prepare yourself young padwan.

May the force be with you.

Lee

Wonderful advantage having access to all of your collective experience. Grateful you are all willing to share. Make it a point to come back monthly and re-read this thread. Thanks everyone.

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  • 4 years later...

Adding my two cents for those looking to jump into the proverbial fire with both feet … it is easier (or harder, depending on your luck) if this venture is launched with partners, with complementing skills, than as a solo stint.  Reasons are obvious, shared roles and responsibilities; possibly faster execution and, in my opinion the most important element, counter governance of limited means.  Then again, for bad partners, the opposite is true.   

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  • 1 month later...
  • 8 months later...
On 5/30/2017 at 9:38 AM, Sator Square Distillery said:

Very good advice that I think still holds up since it was posted.

I'm just about ready to get started producing here. I'm waiting on a final approval from the PA LCB since I was given prior approval.

I ran into the specific issue with the TTB regarding the presence of a residence on the property. The TTB officer assigned to my application initially was going to deny it, and quoted this regulation here: 26 US Code 5178 - Premises of Distilled Spirits Plants. Section B: 

(B) No distilled spirits plant for the production of distilled spirits shall be located in any dwelling house, in any shed, yard, or inclosure connected with any dwelling house, or on board any vessel or boat, or on premises where beer or wine is made or produced, or liquors of any description are retailed, or on premises where any other business is carried on (except when authorized under subsection (b))

The TTB has very broad authority to define what the word "connected" and "premises" means. I was told that they can consider anything located on the same parcel of land to be "connected" to the same "premises", even without any sort of physical connection between the buildings on that land. I know that is counter-intuitive to common sense, but you're dealing with the federal government. They hold the cards.

Our property is zoned AG-1, protected agricultural, not residential. So once we established that fact we were able to compromise with a fence separating the home located on the parcel from the DSP. I believe the zoning of our property made the difference between approval and denial, and our willingness to do whatever it took to meet them halfway. If your property is zoned residential I would not expect it to get approved by the TTB. Your local municipality would likely have a problem with that too, but YMMV.

My advice to anyone in a similar situation is to NOT ARGUE with the TTB officer. They have the authority to deny your application, or approve it on a case by case basis as they see it. Even if they're not right they are still right. Finding a way to compromise is going to be a lot less expensive than hiring a lawyer.
 

 

Just to point out the spectrum of possibilities: We started with a winery, 20 years later added a brewery (I know, what took me so long!), and just recently added a DSP permit, all in the same cellar located about 100 ft from our residence. Floor to ceiling walls and lockable doors were required between each entity. Sharing equipment, though possible, was more of a hassle than just keeping everything separate by making that declaration. There were no inspections required. 

My volumes are on the scale of ridiculous with a 40 gallon still that produces just over 4 cases a run. Perhaps that came into play? Perhaps they figured I'd be doing it anyway, might as well get *some* revenue from me! But I also suspect that it was the approach of adding permits that made the process easier. My friends who have started (and become quite successful) with a distillery nearby have a different story from when they started (just a distillery) 15 years ago.

A side note; the TTB site keeps a running timeframe of how long it takes before they will look at an application after submission (only available online now). Last year it took a couple weeks LESS than they predicted (48 days?), and I had permit in hand within the next week or so. Labels and formulas took only a day each.

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