Do I need a DSP license to purchase, brand, and sell NGS

[LADistiller]

Can I buy NGS and then sell it without a DSP license? Do I need a still to obtain a DSP license and how big does the still need to be? if not, what license would let me purchase NGS and sell under my brand?

[John McKee]

LADistiller,

The answer is yes and no...then more details:

The "yes" part:

• A DSP is a "Distilled Spirits Plant", not a "Distillery License". Meaning that you can do what you're asking above, without a still, based upon Federal Law, provided you get a Basic Permit.
• There may be a caveat in CA law that requires a production or distillation volume on local premises. For instance, here in MT, in order to operate a tasting room you have to distill 90% of everything you sell onsite. If you elect not to have a tasting room, you are not required to distill anything.
• To only bottle you'll need a Basic Permit with the "warehouseman and bottler" checkbox selected. However, if you go the route of a Basic Permit, you might as well check all the boxes as it requires the same amount of work in the end.

The "no" part:

• So, based upon bullet 1 & 3 above, you could bring in NGS and bottle, provided you get a Basic Permit.
• However, without at least a Basic Permit, you cannot do what you ask.
• You can however, contract another group with a Basic Permit and to perform your contract bottling for your brand. This has become more common in the industry, "Starting a brand by having it co-packed elsewhere, make sure it has legs in the market, then using the money to finance a distillery construction and operation".

Hope this is as clear as mud. If you want to have a more detailed conversation, please feel free to PM me. Also, I'll be at ADI next week, we can talk then if you'd like more information.

Cheers,

McKee

[dhdunbar]

You must get a basic permit and you must register as a distilled spirits plant. If you plan to bottle, you need to register as a processor and warehouseman, since by rule a processor must also be qualified to either produce or store. You will also need a bond to cover the storage and processing operations, at a minimum of $5,000 for each operation, or $10,000 total, plus a removals bond.

Any spirits transferred to you by someone else must be transfered in bond and your operations bond has to be sufficient to cover that liability plus the liability on any other spirits on your DSP premises. Further, it is illegal under the FAA Act to transfer, sell, etc, any beverage spirits in bulk (in containers of more than one gallon) to anyone who is not a distilled spirits plant.

Always look to the regulations for your answers. Who knows, I could be inventing everything I say here or misstating what the regulations require. So:

Sec. 19.71 Registration and permits in general.

Except as otherwise provided in this part, a person may only conduct operations as a distiller, warehouseman, or processor of distilled spirits on the bonded premises of a distilled spirits plant. In order to establish a distilled spirits plant, a person must register the plant with TTB and obtain an operating permit and/or a basic permit. This subpart covers the requirements for registering a plant and obtaining an operating permit under the IRC (you do not need an operating permit unless you are dealing in industrial alcohol) . Part 1 of this chapter covers the requirements for obtaining a basic permit under the Federal Alcohol Administration Act.

(26 U.S.C. 5171)

Requirements for Registering a Plant

Sec. 19.72 General requirements for registration.

(a) Establishment. A person who wishes to establish a distilled spirits plant must intend to conduct operations as a distiller, as a warehouseman, or both. A person cannot establish a distilled spirits plant solely for the processing of spirits.
( Registration. Before beginning operations as a distilled spirits plant, a person must submit an application for registration and receive approval from TTB.

§1.21 Domestic producers, rectifiers, blenders, and warehousemen.

No person, except pursuant to a basic permit issued under the Act, shall:

(a) Engage in the business of distilling distilled spirits .. or blending distilled spirits ... or bottling, or warehousing and bottling, distilled spirits; or

( While so engaged, sell, offer or deliver for sale, contract to sell, or ship, in interstate or foreign commerce, directly or indirectly or through an affiliate, distilled spirits or wine so distilled, produced, rectified, blended, or bottled, or warehoused and bottled.

You do not short cut federal requirements by doing away with the still, but as others observe, you might lose privileges that the state extends to persons they deem to be small or craft. The basic permit alone is never enough unless you are having someone contract bottle for you, in which case you would purchase the bottled spirits for resale and would need a wholesaler's basic permit.