TTB Retail Licensing in large multi vendor building

[kansftb]

Seeking a lease in an historic location in Kansas City. All the buildings in the area a big 4-5 story brick buildings so the owners would like to lease to multiple vendors (zoning is all industrial). Potential site owner is hesitant about leasing to manufacture & retail distillery and not being able to use the other floors for say leasing to restaurant that has a liquor license.

My question is basically - if I own a building and lease to a distillery, could I also lease to a restaurant w/ a liquor license(on a different floor)? If I have no controlling interest in the distillery (ie. I just lease, no ownership) would the TTB restrictions prevent any other retail licenses for that location.

http://www.ttb.gov/pdf/ttbp51008_laws_regs_act052007.pdf

Any help or suggestions are much appreciated.

Thanks,

Alex

[daveflintstone]

A distillery can share a building with anything but residences.

[kansftb]

Thanks Dave. One additional question - in terms of "interested parties" would the TTB consider it fine if I leased first floor and the owner of the building also leased to a restaurant with a liquor license on the second floor? Just wandering where that line can be drawn in terms of the building owners "interest" (ie. if he owned the restaurant I could see that being a conflict - but if he is just providing space then I would think its ok?)

[Silk City Distillers]

The local fire marshall is going to have more to say about an assembly occupancy being located on a second floor above a potentially hazardous occupancy.

[daveflintstone]

Why would the TTB care who owns the building, who owns any other business in the building? They don't do that.

[Falling Rock]

Slightly dif take...They would only care if the owner of the building had an ownership in both the distillery and another liquor license. But it wouldn't matter who owned the building, just the liquor permits. And it doesn't matter if they are in the same building or different buildings.

You can not have ownership in a distillery and a retail liquor permit. Most States also have statutes against this. Some States even go further. If my name is on a distillery permit, my immediate family can not hold a retail liquor permit. Doesn't matter if they are in the same building or not.

[Huffy2k]

Agree with Flying Red Pig. In fact we have experienced this exact scenario at two buildings we were looking to lease. In both cases the building owner also had his name on a Restaurant Liquor License - that is absolutely not permitted.

[daveflintstone]

The OP is speaking of TTB not local authorities. I can own a distillery and any other liquor license in my area. I can also own a donut store and a Radio Shack franchise. oh wait...

[Falling Rock]

I agree he is talking TTB, but there will be some local involved at some point.

Wow...http://www.honolulu.gov/liq/licensingpermits.html

PART III. LICENSES AND PERMITS, GENERAL PROVISIONS §281

Class 1. Manufacturers’licenses. A license for the manufacture of liquor shall authorize the licensee

to:

..............................................excerpt......

(4) Other specified liquor.

It shall be unlawful for any holder of a manufacturer’s license to have any interest whatsoever in the license or licensed premises of any other licensee. This subsection shall not prevent the holder of a manufacturer’s license under this chapter or under the law of another jurisdiction from maintaining any interest in the license or licensed premises of a wholesale dealer licensee under this chapter.

------------------------------------------------------------------------------------------------

Not sure that applies to all of Hawaii...but most States do not allow anyone to have even a minority interest in multiple liqour licenses/permits.

I am in a Two tier and a Three tier State and niether will allow me to have interests in more than one license/permit.

[daveflintstone]

Thanks for looking up our local laws, which I am well aware of. Your interpretation is not valid though. 100% ownership is not considered to be an "interest" by our relevant authorities. Once again, I can own a distillery, a bar, a restaurant, a liquor store, a nail salon, a flying piggery, etc.

Asking TTB related questions is relevant here. Providing generalities that cannot possibly apply to every local jurisdiction is not. And providing legal interpretation for locales you are not familiar with is plain silly.

[Falling Rock]

Alex...you're o.k. with the Feds, but you'd better look at your own state laws.

[kansftb]

Yes this is all very helpful! The guy I'm trying to lease from is well aware of our local jurisdictions but was kind of green (as am I) around the minute variables of the TTB regulations. You've all given me a lot to chew on. Thank you all. Hopefully I'll be getting an permit application in soon.

Alex

[dhdunbar]

The issue is clearly local.

1. TTB does not care if a distiller owns a retailer 100%. From you rlink, you are looking at tied house laws that say an industry member (read producer/wholesaler tiers) may not induce a retailer to buy its products to the exclusion, in whole or in part, of similar products offered for sale by others in interstate commerce. Simply put, one cannot induce oneself. If TTB does not care about that, it cares less about a landlord renting to persons in different tiers, unless of course someone like Diageo owns a premises that it leases to someone like Caesars and in return Caesar's puts Diago products in the well, etc. But that ain't you. Nor does it care how many persons on the same, or different tiers, occupy separate spaces within a retail complex. Nor does it license retailers. Retailers are required to register with TTB under an arcane law, I'd bet dollars to donuts most don't, and I can assure you that TTB is not canvassing the countryside looking for persons who do not comply. Given their responsibilities and resources, it would be absurd for it to do so.

2. Partial ownership is a potential problem with stress on the potential - if you are small, why would TTB bother looking at you, when they have major players engaged in major violations? I pursued those in a past life. I would never have pursued you.) A person (in the broad sense to include LLC's/corporations/ etc ) engaged in business as an industry member (producer/wholesaler tier) can't own or lease a premises to retailer if doing so induces the retailer to buy from the industry member to the exclusion, in whole or in part, blah blah blah. The blah, blah, blah is what makes it unlikely that TTB would even look at a small producer's trade practices. There are too many elements to prove and too few people to do it.

2. States often care. Most states' regulatory schemes have some provision against persons in one tier holding an interest in persons in another tier. This varies - in some a person's third cousin twice removed - okay, I exaggerate - could be relevant. But husband and wives are - or at least were - relevant in some states. In others, its pretty much wide open. One state, for example, prohibits ownership at more than one level if it results in "undue influence." Really? What might that be? The state's interpretation is pretty much that if someone who holds an interest, in a supplier, also holds an interest in a retailer, and that person uses threat to force the retailer , in which he has interest, to buy from the supplier, in which he has interest, that crosses the line into undue influence. However, that same state will not allow a person who owns a distillery to own a brewery or a wholesaler outright. It will allow the same person to be the sole member of two LLC's, one of which is a distiller and one of which is a brewer, but ... does it make sense. Don't try to make sense of it. The point - this is going to vary from state to state. There is no single answer. And the answers you get may well not make much sense to you.

3. Here is the single most important piece of advice I can offer you about these issue. Do not listen to what I say about it, or what anyone else says about it on this forum. Instead, contact the state ABC, or its functional equivalent, and ask them. If you have no idea who that is, visit TTB's website. They give you contact information.

3. Here is the second most important piece of advice I will give you. Before you ask a question of a state official, do your homework and try to find out what the state rules say about the matter. You can get bad answers from state agencies. Repeat - you can get bad answers. Be prepared, if you can, to question those answers.

4. If something is really important to you, and you are not comfortable asking questions because you do not know enough, then inquire about what someone like me, who does consulting, will charge to get an answer. But I stress, do this only if it really matters to you. Do I know the rules of every state? I do not. I know very few rules of very few states. I do know how regulatory schemes are structured. That can help identify the questions to ask. But I would never deem it appropriate for me to give you an answer about any state law without asking the appropriate official first. Abut federal law I'm more comfortable. But I routinely ask for confirmation if there is any doubt at all about how to interpret a provision.