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Everything posted by dhdunbar

  1. dhdunbar

    Hopped whiskey??

    Those who state it is not whiskey, but a specialty item, are correct. Speciality items are items for which no standard of identity exists. No standard of identity (27 CFR 5.22) exists for a product distilled from a grain mash to which hops have been added. Specialty items must be labeled with a fanciful name, which you invent, say Hoppy-wisk, and yes I know that is bad, "followed by" a truthful and adequate statement of composition (5.35). And what might a truthful and adequate statement of composition be for our mythical "Hoppy-wisk?" It can't be whiskey flavored with hops, but it gain be; Joe's Distillery (Brand Name) Hoppy-Wisk (Fanciful Name) Spirits Distilled from Malt Mash and Hops Finished in Oak Barrels (Statement of Composition) It must be finished, not aged, because you cannot make age statements on specialty items (5.40(d)) Peruse category 649 on the TTB's public COLA database for examples. Use %hops% in the brand/fanciful name field.
  2. I just posted about this on another thread, which had a last entry in July 2017, and wondered why it showed up today (6/14//2018). Now I know. The rules changed 1/1/2018. Here is what TTB says about the changes (the emphasis is mine): Reduced Distilled Spirits Tax Rates General: The Act provides for reduced tax rates on distilled spirits distilled or processed and removed during the calendar year or imported by the importer into the United States during the calendar year. These rates are equal to $2.70 per proof gallon on the first 100,000 proof gallons removed or imported, and $13.34 per proof gallon on the next 22.13 million proof gallons removed or imported. The tax rate for distilled spirits not subject to the reduced rates is $13.50 per proof gallon. Foreign Manufacturer Election: In the case of distilled spirits produced outside the United States and imported, the Act provides for foreign distilled spirits manufacturers to assign the reduced tax rates to importers who elect to receive them. Amendment of Section 7652(f)(2): The Act amends section 7652(f)(2) of the IRC to provide that the reduced rates of tax for distilled spirits are not taken into account when determining the amounts covered into the treasuries of Puerto Rico and the U.S. Virgin Islands. Transfer in Bond of Non-Bulk Distilled Spirits: The Act authorizes the transfer in bond of distilled spirits between distilled spirits plants irrespective of whether the distilled spirits are transferred in bulk or non-bulk containers. See https://www.ttb.gov/alcohol/craft-beverage-modernization-and-tax-reform.shtml Beware. If you remove spirits that you neither distilled or processed (bottling is a processing operation), the reduced rate does not apply. I said that with confidence, but it is late and I've tried, in vane, to find it in writing. I will check the law tomorrow. For now, take it as a question you want to ask. This is not a contract bottling issue in the sense that TTB used that term prior to 1/1/2018. Don't confuse what it says about contract bottling prior to that time with the rules that apply after that date. Regarding labels - the bottler gets the label approval and applies the label. If the bottler transfers the bottled spirits, in bond, to another DSP, the transfer record must show the serial numbers on the cases transferred and provide documentation to support the label claims. Further, the the bottler has to send a copy of the label approval to the receiving DSP. No removal of labels is required. DSPs who transfer distilled spirits (consignors) and DSPs who receive such transfers (consignees) must keep records required by the regulations, including the transfer records required by 27 CFR 19.620 and 19.621. The transfer records must contain all of the information required by these regulations, including the serial numbers of cases transferred and, if applicable, information about calculating the credits for the use of eligible wines and eligible flavors. Additionally, the consignor should send, and the consignee should keep on file, any applicable documentation to substantiate label claims. The bottler must apply for the Certificate of Label Approval (COLA) for the distilled spirits and should provide a copy of the COLA to the recipient of the bottled spirits transferred in bond. If the labels contain all information required under the regulations, no additional coding or other marking is required to be added to labels on bottles transferred in bond.
  3. dhdunbar

    TIB Bottles?

    This thread is showing up on the forums first page (6/14/2018) today for reasons unknown. The rules changed. You may now transfer bottled spirits in bond. But beware of possible tax consequences. If the person receiving the bottled spirits in bond neither produced or processed them, they are not eligible for the reduced rate of tax. TTB says - the emphasis is mine: Reduced Distilled Spirits Tax Rates General: The Act provides for reduced tax rates on distilled spirits distilled or processed and removed during the calendar year or imported by the importer into the United States during the calendar year. These rates are equal to $2.70 per proof gallon on the first 100,000 proof gallons removed or imported, and $13.34 per proof gallon on the next 22.13 million proof gallons removed or imported. The tax rate for distilled spirits not subject to the reduced rates is $13.50 per proof gallon. Foreign Manufacturer Election: In the case of distilled spirits produced outside the United States and imported, the Act provides for foreign distilled spirits manufacturers to assign the reduced tax rates to importers who elect to receive them. Amendment of Section 7652(f)(2): The Act amends section 7652(f)(2) of the IRC to provide that the reduced rates of tax for distilled spirits are not taken into account when determining the amounts covered into the treasuries of Puerto Rico and the U.S. Virgin Islands. Transfer in Bond of Non-Bulk Distilled Spirits: The Act authorizes the transfer in bond of distilled spirits between distilled spirits plants irrespective of whether the distilled spirits are transferred in bulk or non-bulk containers. See: https://www.ttb.gov/alcohol/craft-beverage-modernization-and-tax-reform.shtml
  4. dhdunbar

    Case Sales Database

    TTB collects the data (think of the back side of the processing report, where you state how many wine gallons of spirits you removed by type, which is all information used to prepared the statistical data), and publishes the aggregate figures. Because the reports are "tax return information," that is, they are required by the Internal Revenue Code, TTB is prohibited by law from disclosing the figures for individual distilled spirits plants. Under 26 USC 6103,. it is a felony; the equivalent of disclosing information from your Form 1040. Guaranteed confidentiality means that you cannot fail to report the proceeds of illegal activities on the grounds that it would be self-incriminatory. I might add, with a smile, that I'm pretty sure there are a lot of errors in what gets reported to TTB 🙂 . Shaken publishes some figures, but I've never seen them, because they cost more than I am willing to pay, so I do not know how deeply down they drill. I'm certain that they can't know what most small distilleries do unless the small distilleries volunteer the information.
  5. dhdunbar

    spirit holding tanks - codes?

    Southernhighlande makes an interesting point - nothing precludes you from having outside tanks. You must include them on your registration (19.72 - Describe each building and outside tank that will be used for production, storage, and processing of spirits ...). The security requirements (19.192(c) )are simple, "Outdoor tanks containing spirits, denatured spirits, or wine must be individually locked or locked within an enclosure when they are not in use." I have had barrel storage approved in a roofed structure with two of the four sides made of chain link. As always, past approval is no guarantee of future approval, but assuming that a shed with two chainlink sides is still approvable, I can't believe that one with four chain link chain sides would not also be approved.
  6. dhdunbar

    spirit holding tanks - codes?

    Those who say this is not TTB's bailiwick are correct - sort of. When TTB says plastic totes are okay, it speaks only to what is within its jurisdiction, which in the case of the storage of distilled spirits, is established in the Internal Revenue Code. Because jurisdiction springs only from the IRC, TTB's tank rules reflect revenue concerns. I think that the rules - as written as opposed to as enforced - go back to times when the DSP system was closed, i.e., to times of cap seals and government locks, when the proprietor was allowed no unsupervised access to spirits, until the spirits were first were gauged, in bulk, by a government employee, for tax determination. Only then were they removed from government lock and key and turned over to the proprietor for rectification and bottling. So, access to tanks had to be restricted. Changes to the IRC, made in 1980, created the all in bond system under which you conduct operations today. You now have unfettered access to the spirits on your premises. Even so, today's rules would seem to exclude totes, for a variety of reasons, that include lack of attached means to gauge and the inability to lock them (visit Section 19.182 to see the full list of what is required). I suspect that the ubiquitous totes are a horse that got out of the barn, while TTB slept, and that TTB does not want to cause the hubbub and trouble that attempting to corral them now would cause. I could, if required, argue a rationale, for purposes of a variance, that would allow totes, either plastic or stainless, it does not matter, with a capacity of more than 101 gallons. But I suspect that they are now allowed, under a don't ask - don't tell policy, with which I chose to silently comply, out of fear of starting something that would cost me nothing and you guys a lot. It's been so far so good on the TTB front, but you may have difficulty constructing rationales that provide a way around the state and local safety issues - the picture above of melting totes spilling their contents further to fuel a fire. I'd be a bit uneasy betting that don't ask don't tell could survive a possible avalanche of enforcement in the wake of such a blaze. Again, I think you listen to the experts – this is no place for amateurs like me – and then decide on what risks you want to take. Perhaps ADI could, as a service to the industry that makes it’s “,com” business possible, contract with a consultant to produce a usable document, written in plain English, that explains it all in ways most can understand.
  7. dhdunbar

    How many of each bottle size

    Follow the advice of the small distillers who know their markets. My experience is that the 1 liter bottles historically were used by large suppliers as a way around offering the same products for sale in monopoly states and open states, since the monopoly states often required affirmation pricing, i.e. a statement that the suppliers weren't selling to anyone, anywhere, for less than they were selling to the state. Generally, suppliers did not offer both 750 and 1 liter sizes in the same market. But it has been some time since I've had occasion to look into that. Affirmation led to some interesting invoicing schemes to hide the price that open state retailers were paying when the supplier wanted to produce promote in some markets but not others. As I recall, the larger sizes were also used in on premises sales and for some products that people tend to buy - and consume - in bulk , like inexpensive vodka
  8. dhdunbar


    nabastic hits squarely on what is "wrong" with aged vodka and barrels on a vessel. At the risk of "going all philosphic: - see earlier posts 🙂 - there is nothing wrong with a system that doesn't define vodka as a neutral spirit distilled at over 190 proof, etc, or with one that does not contain a specific provision like the one found in 5.40 (d), "Age, maturity, or similar statements or representations as to neutral spirits (except for grain spirits as stated in paragraph (c) of this section), gin, liqueurs, cordials, cocktails, highballs, bitters, flavored brandy, flavored gin, flavored rum, flavored vodka, flavored whisky, and specialties are misleading and are prohibited from being stated on any label." But that is the system we have adopted to inform the consumer, which is a notion that dates back to the early 1900's and is sort of ingrained into our contemporary noggins as a good thing. The standards of identity were devised to provide a shorthand means of providing a lot of information. Rather than saying, "In this bottle you will find a spirit that is distilled only from grain, has at least 51% corn, was distilled at less than 160 proof, was aged in new charred oak barrels, for at least two years, at not more than 125 proof, and was bottled at 80 proof or more," you get to say "Straight Bourbon." That is the economy of definition. While standards are touted as protection of the consumer, the consumer never had much say in what made it into the regulations. The battles that were fought over what would qualify as whiskey, for example, were between economic interests - those who at the time made whiskey that was aged in barrels vs. those who made a clear liquid that was rectified to provide flavor - and government officials who wanted to stake out a realm in which they had power and prestige. It was sausage. Today, because we have had the standards for so long, we think that adding prune juice to vodka to make whiskey is unethical, but in the late 1900's, 90% of what was called whiskey was a rectified product. That was what people expected. With the standards, we have established new conventions. That there is no natural law defining whiskey is obvious. But there is "positive law," which is law that is written, in this case, by the legislature, formulated into a code of regulations by the administration, and ruled on by the judiciary. That process could have established other conventions, but it didn't. Congress says protect the consumer; the conventions that do so are established by regulation. The shorthand "bourbon" designation, for example, were formalized, , in the regulations after public hearing and comment. Disputes go to court, and make case law. Which is how we get to where we are today. Aged vodka is "wrong" only because it is outside of the conventions on which people rely when they make a purchase. NSG aged in oak is not vodka. You may like it, but it is not vodka. It is a specialty item, which can be identified as vodka finished in oaks casks. Why? Because the regulations say so. Why? Because of economic interests. Why, because that is the way life is. The value that suppliers have built into identities like, oh bourbon, for example, is something they will not easily surrender. Because the standard is both process and material, a list of ingredients won't suffice. If you toss out the standards, then you are going to have to use the long hand description of the methods and processes for which the standards provide a shortcut. But that ain't going to happen because the names bourbon, rye, gin, brandy, etc,,, have to much value for the producers to allow that. Bourbon is economical both as a shorthand description and as a way to make a buck or two. All of that applies just as much to vodka as it does to bourbon. So, make what you want, but if it is innovative, it more than likely is going to be a specialty item, labeled, under 5.35, with fanciful name and truthful and adequate statement of composition; e.g. "Oakshervod,: "Vodka finished in used sherry barrels." It has sort of a Russian ring, right, with a modern twist. Chuck Cowdery once warned on this forum, I think, that making regulations was not for amateurs. I think he is correct. I am an amateur, but I've got some notion of how the sausage gets ground. Be careful what you propose to put into the grinder. That's practical advice - add another smiley face here.
  9. dhdunbar

    Micro-Distillery in building attached to a residence.

    Okay, one final "final" comment - my message is simple and completely in line with what others say. It can be done; it has been done; and will be done in the future. Further, it "may" be done - in the sense that is allowable, not just possible by sleight of hand - with full disclosure to TTB, if you can convince TTB that TTB's right of access to the DSP is not infringed by the residency. I have tried to provide, here, a do it yourself guide to getting approval - or to a decision that it is risky to build under the circumstances you propose. Getting past the absolute prohibition expressed in 2009 is a battle I fought beginning in 2012. As recently as 2015 a TTB specialist argued, in the presence of and over the objection of a TTB attorney, that the specialist would never, under any circumstances, approve collocation. Those days, I think, are now gone. I may or may not have had a hand in overturning the "woodlot" attitude that prevailed in TTB then. It is equally possible that TTB had inadvertently approved enough of these that it had to find an after the fact policy that kept egg of its face. But, how we how we got to where we got is not as important as the change, itself, from 2009's stated absolute prohibition to a" you may if you convince us that it will not cause problems" policy. My experience is somewhat different than Conejoe 148. I have found no rules, like the 50-100 foot rule he cites - one person in Regulations and Rulings once told me 150 feet or less required a fence delineating. Experience tells me that that is not always the case. However, it is always a possibility you must consider. The rule is that is case by case is the rule and it is determined by the weight of the combination of attendant circumstances, including the predilectionstions of the specialists into whose hands your application falls. I think we all agree on that. It also depends on TTB's diligence. I know of a case where TTB approved, without one question asked, a disclosed separation of 38 feet, with no fence or other barrier between them, common drive, shared power, and shared water, at the same post office address. It then approved a change of proprietorship of that DSP, again, with full disclosure , via the diagram showing both the residence and the DSP building and clearly stating the distance between them. I sweat out that change. I used to play mother-may-I games with Regulations and Rulings Division. I think it is no longer necessary to do that. I know of at least one instance in which the NRC made a referral to R&R before it would proceed. TTB's policy is that the NRC refers, to R&R, questions which have not been decided, but once they have been decided, the NRC may approve or deny without going to R&R for an opinion (the NRC always had and does have the final say, but it looks to R&R for opinions). There is now considerable precedent., I also think it is no longer necessary to argue that collocation, per se, does not endanger the revenue. Those arguments have been addressed. My understanding is that TTB's field operations became gunshy of collocations when some fuel alcohol permittees started to consume product intended for their tractors. I argued that the case was not similar for beverage DSP's, because the producer was not also the consumer, that record trails existed to customers, and that tax evasion could as easily occur from a commercial facility located in downtown any-city-USA by carrying the cases out the door at the loading dock and drive off, justy as a DSP would do in any commercial transaction. That, I think, is a hurdle already cleared. If a specialist does raise that question, remember my argument. So go for it, but remember the guidelines I site. Also pay attention to the experience of the others who post here who have been down the road already. Those are the attendant circumstances that see matter, even if the specialist has no knowledge of how that came to be.
  10. dhdunbar

    Micro-Distillery in building attached to a residence.

    My final comments. When I asked about the legislative history of the prohibition, a former TTB chief counsel told me I'd not find it, since it dated to the around the 1870's. He said to look to the issue of curtilage. I did and I have not looked back. Curtilage is a common law concept that got enshrined in the Constitution's fourth amendment. The most recent case law that I find is a Supreme Court decision from 1987, United States v. Dunn (1987), 480 U.S. 294. It was a drug case and had nothing to do with TTB jurisdictions. In that case, the court cited four factors it considered in determining whether a barn was part of the curtilage of the home located on the same tract of land. The Court held that “Extent-of-curtilage questions should be resolved with particular reference to the following four factors, at least to the extent that they bear upon whether the area claimed to be curtilage is so intimately tied to the home itself that it should be placed under the home's "umbrella" of protection: (1) the proximity of the area to the home; (2) whether the area is within an enclosure surrounding the home; (3) the nature and uses to which the area is put; and (4) the steps taken by the resident to protect the area from observation by passersby. For those with a serious bent toward the law, see https://supreme.justia.com/cases/federal/us/480/294/case.html I always argue from those case specific factors, though I never cite the court case when doing so unless I'm talking directly to an attorney. To any attorneys following this thread, I apologize for wading into your pond. To others, I am not an attorney and this should not be considered as legal advice. I recall that, on one, previous occasion, someone on a thread expressed great relief when I proclaimed that I was through commenting on an issue. Well, I've got nothing more to contribute to the question of DSP's and residences. My well is dry.
  11. dhdunbar

    Micro-Distillery in building attached to a residence.

    I think it is fair to say that TTB has an evolving position on this issue. When I first took it on, directly, in 2012, if I recall correctly, the common wisdom, as expressed by a TTB investigator at TTB's 2009 Expo, was that the prohibition was more or less a statement of absolute prohibtion. Here is a copy of a slide from that presentation; Whoa! I apologize for the size, but I do not know how to shrink it and I have not made it screamingly large to try to emphasize my point. I'd cut it down if I could. Since that time, I have successfully obtained approval of DSP's located in land behind the wood lot, in outbuildings on the property, and in a commercial building with attached apartments or condominiums. It can and has been done. But the circumstances of each case are specific. I recommend that you not rely on anecdotal evidence of approvals granted to others. Finding that TTB objects to a label that is the same as one it had approved for others is one thing; finding that it objects to the DSP you have constructed in a premises above your residence is quite another. And TTB does sometimes ask. Twice this year, I have had a specialist specifically as about this. A specialist requested, after submission and before approval, that we state how far a proposed premises was from a residence, since looking at Google Maps, it appeared to the specialist that the DSP was located in a residential area. That was a rural area, in Maine, not a suburb, and the lots ran six or more acres, as I recall. We were able to state that there was no residence on the property, since prior to the construction of the DSP, it was a vacant lot, and that satisfied the request (we also were able to show that the nearest residence, which was not on the property, was something like 400 feet away.. On another occasion this year I had a specialist ask that we affirm that a DSP in a commercial building in a downtown Anchorage was not in a building in which there were also residences. Again, we could state that there were no residences. Those are anecdotal, but they say that TTB has not yet abandoned consideration of the restrictions on location. It's position is evolving, not extinct. The level of risk you feel comfortable assuming is for you to decide. I can only report the facts as I know them.
  12. dhdunbar

    Micro-Distillery in building attached to a residence.

    There is no simple answer to the question you ask. TTB's position, as stated in a private letter ruling I received from Regulations and Rulings Division, is as follows: _________________________ Section 5188(a)(1)(B) of the Internal Revenue Code (26 U.S.C. 5178(a)(1)(B)) provides that “[n]o distilled spirits plant for the production of distilled spirits shall be locted in any dwelling house” or “in any yard, or inclosure connected with any dwelling house. TTB’s regulation in 27 CFR 19.52(a), which is promulgated under this statutory provision, provides that a “person who intends to establish a distilled spirits plant may not locate it …n any residence, shed, yard, or enclosure connected to a residence.” TTB applies these provisions [the provisons of the IRC and on a case-by-case basis in circumstanses where a person seeks to establish a DSP on property that includes a residence in a separat structure. When applying these provisions, TTB considers the distance between the residence and the DSP, whether any physical barriers separeat the residence and the DSP, and any other relevant factors. _________________________ Therefore, no one can say, with certainty, that if condition A exists in both Case X and Y, then if TTB approved in Case X, TTB also will approve in Case Y. Most simply put, in Case X, the conditions may have been A, B and C, whereas in Case Y, the conditions may be A, D and E. Since TTB decides on a case by case basis and other relevant factors, when taken in conjunction with condition A, conditions B and C might lead TTB to approve, but conditions D and E might lead TTB to deny. When the connection is a common wall (ceiling or floor), the distance between the residence and the DSP is obviously minimal. If the two are separately owned and controlled, then the distance between them is of little consequence, unless other circumstances indicate the the persons who occupy the residence have standing to assert that the curtilage of the residence extends to the DSP, or to the entry, from public space, to the DSP. This is perhaps better stated, "Might TTB conclude that the circumstances might interfere with TTB's right of access? It is likely that TTB will be very conservative in determining that it will not interfere. You will have to build that case it is not contrary to law and will not lead to administrative difficulties. One comment on the school issue - whether a "preschool" is a "school," for the purpose of a local statute, is a matter of the intent of the legislative body that passed the prohibition. If the intent is not clear from the language of the code, the decision will be left to the agency responsible for enforcement and, if challenged, to the court. Indeed, there may be existing administrative provisions or case law that answers that question. There is no alternative. Ask and get an answer in writing.
  13. dhdunbar

    TTB regs and a sink in distilling area

    I'll add a more general comment. For the most part, TTB is unconcerned about any health or safety issues. The only health issue that comes to mind is the requirement that all ingredients be "generally recognized as safe" by the FDA. They are not concerned about sanitation, or fruit flies, or hand washing habits. GRAS is their issue only because of the dual jurisdiction that FDA and TTB share over beverage alcohol, which the law considers a food. By a memorandum of understanding, TTB's labeling regulations apply to most alcoholic beverages and all spirits. So TTB agrees that it will police, for the FDA, the GRAS standards, which FDA determines. For GRAS, TTB is the tail and FDA does the wagging. This is not to say that TTB employees don’t care about health issues, but it is a personal concern. There is a first principal at play here - TTB can have official concerns only about things which are contained in laws over which Congress has given it jurisdiction. While you cannot know, unless you have my sort of intimate familiarity with those laws and the regulations "promulgated" under them, what you may not know you do not know about what TTB requires, one trick is to find searchable versions of parts 5 and 19 of the regulations and do a search for a word like "sink" or anything else about which you might be curious. The DSP regulations - part 19 - are issued under the Internal Revenue Code. Think about that. Every business in the country is subject to the provisions of that code. Every business, profit and nonprofit, sole proprietor, partnership, corporation, LLC - none of that matters. The IRC is a hefty document, not hernia heavy, but if it were to include concerns about health, etc., lifting it could become an event in the strongest persons in America competitions. The FAA Act, the other principal stature under TTB's jurisdiction, is concerned with what you say on the label, your trade practices, the need for permits, and the requirement that you submit formulas. The formula requirement touches on GRAS issues, because TTB evaluates the ingredient use to see if the FDA has said they are GRAS as used. But that is it. However, you must register your facility with the FDA and it is subject to FDA inspection. That is the federal agency that is going to enforce the health standards, if anyone is. About what FDA requires, I am as ignorant as most everyone else in the country is. And, as Silk City points out, state and local authorities enforce their own codes. How do you determine what you do not know you do not know about such things? You must identify the agencies that have jurisdiction and ask them.
  14. dhdunbar

    Cannabis Grow

    I do not know TTB's position on issuing a permit to someone who grows cannabis in violation of federal law. Whether the non-intervention policy that appears to be in place today has that wide an umbrella, I do not know. Whether the non-intervention policy will continue is anyone's guess. Prudence would suggest that if one is going to invest in a DSP, one would want to know how TTB will respond to the question you ask. That is not an answer that anyone on this forum can give. Contact and attorney and have the attorney ask an "I have a client who ..." question. Or ask yourself, if you don't mind calling attention to your interest in the answer,
  15. dhdunbar

    Doing Bitters In House

    I'll chime ... 99.9% leaves a 0,1% chance of being wrong, so ... we have to get a handle on the meaning of terms. Bitters can be either a beverage product, which you make on DSP premises, or a nonbeverage product, which you cannot make on DSP premises (19.344(b) - " Nonbeverage products on which drawback will be claimed, as provided in 26 U.S.C. 5111-5114, may not be manufactured on bonded premises. Premises used for the manufacture of nonbeverage products on which drawback will be claimed must be separated from bonded premises." I'll add that if you decided not to claim drawback on the nonbeverage product, which would be economically dumb, you could not use the DSP premises because the manufacturing of nonbeverage products is not an authorized distilled spirits operation. Next, assuming you would be making a nonbeverage product, you would not be denaturing. Denaturing makes things poisonous. A denatured article is not fit for consumption, although some articles can be used in foods (for example formulas 3-A, 23-A, 35-A, an 45 can be used in candy glazes). But if you are making nonbeverage bitters, you are making a "nonbeverage" product. There is no provision for transferring spirits in bond for use in nonbeverage products. Instead, the DSP proprietor pays taxes on the spirits when it withdraws them from the DSP to ship to the facility where they will be used to make nonbeverage biters. Manufacturers of nonbeverage products are eligible to receive spirits in bulk (see 27 CFR 1.80 and following for the restrictions on bulk sales), so you could remove them in packages of more than one gallon. When you taspaid spirits to make nonbeverage bitters, you may claim drawback of taxes on the spirits you use to make them. The amount of the drawback is one dollar less than the tax paid on the spirits when the DSP proprietor withdrew them from the DSP. Nothing precludes a person from being both a DSP and a manufacturer of nonbeverage products. However, the the operations must be "separated" as required by 19.344. You could, however, alternate DSP bonded premises for use as a facility for the manufacturing of nonbeverage products. See Section 19.143(d)(4). TTB regulates nonbeverage products under part 17, which you can access through the link on TTB's website: https://ttb.gov/other/regulations.shtml. If you question whether a product, as formulated, will be a beverage or a nonbeverage product, contact TTB's formulation section and ask for their advice and comment. The beverage alcohol lab - 240-264-1665 - and the nonbeverage products laboratory - 240-264-1594 - should be able to provide assistance with that. Finally, someone said that GRAS issues pop up with FDA. Alcoholic beverages are food products and are governed by the same GRAS rules as other foods. I also suspect, but do not know, that you would have to register, with the FDA, the nonbeverage facility separately from the DSP, which we all know must be registered, right. The devil in this is in the details. It will all be governed by specificcircumstance. I've only given the general rules.
  16. dhdunbar

    3 Tier and owning real estate not allowed?!?

    Texas is a bitch on this. Most states are not as strict in their interpretations. My general advice is that if Warren Buffet can't grind them down, there is not much chance that you can. That said, I have had some discussion with the ABC about it in a particular circumstance. I'd have to go back and look at what they said - I don't recall - and the issue was not husband-wife related. I'm not sure how wide a family net they cast. I'm sure it would not reach to 4th cousins twice removed, or everyone would be tied up by tied house restrictions. Texas probably has some specific rules/precedents on husband-wife situations. In most state where family restrictions exist, husband-wife arrangements jump to the fore. That said, don't rely on any advice you receive from anyone, attorney or some consultant giving random answers on a forum, that does not come with a citation of a source you can use to verify the advise you are receiving. Some attorneys know the law well; others not so well. Make them cite the source.
  17. PM me and we can discuss this - no charge for the first talk. You are right to be concerned, but it is certainly doable. That said, every situation is different and I don't like to offer specific comments in the forum, because I am pretty sure that at least some people would misunderstand how they might apply to their different situation. That said, all situations are similar in that, in all cases, the principal issue is curtilage, a term that TB does not employ, but it is nevertheless at the heart of the matter. You can look it up in a legal dictionary. I've helped maybe ten persons through the process. That includes mixed use buildings and DSP's in a separate building on the same tract of land as a residence. I've also posted about this on other threads in this forum, but have no idea how to find them. I will say that safety is not a TTB concern. Safety is a state and local issue. State and local come first. Then TTB.
  18. dhdunbar

    How to add sugar to VODKA

    By regulation, you must make the cut to bottle proof after all other operations have been completed, which includes sugar additions. When you should do that , from an operational standpoint, is a matter about which I am not competent to comment. Here is what the regulations say: Sec. 19.346 Determining obscuration. A proprietor may determine, as provided in Sec. 30.32 of this chapter, the proof obscuration of spirits to be bottled on the basis of a representative sample taken from a storage tank before the transfer of the spirits to the processing account or from a tank after the spirits have been dumped for processing, whether or not combined with other alcoholic ingredients. The obscuration will be determined after the sample has been reduced to within one degree of bottling proof. Only water may be added to a lot of spirits to be bottled for which the determination of proof obscuration is made from a sample under this section. The proof obscuration for spirits gauged under this section must be frequently verified by testing samples taken from bottling tanks before bottling. Sec. 19.353 Bottling tank gauge. When a distilled spirits product is to be bottled or packaged, the proprietor must gauge the product after any filtering, reduction, or other treatment, and before bottling or packaging begins. The gauge must be made at labeling or package marking proof, and the details of the gauge must be entered on the bottling and packaging record required in Sec. 19.599. I'm glad it is easier to search the regulations for answers than it is to do accurately what they require
  19. dhdunbar

    Organic Certification Requirements

    Check out - https://ttb.gov/faqs/alcohol_faqs.shtml#oa. You may have done so since you cite the 95% rule, but if you haven't, read through the information that TTB includes there. Note that the Department of Agriculture is the agency to whom you must turn for answers. § 5.71 Use of the term “organic.” top (a) Use of the term “organic” is optional and is treated as “additional information on labels” under §5.33(f). (b) Any use of the term “organic” on a distilled spirits label or in advertising of distilled spirits must comply with the United States Department of Agriculture's (USDA) National Organic Program rules, 7 CFR part 205, as interpreted by the USDA. (c) This section applies to labels and advertising that use the term “organic” on and after October 21, 2002. That is not much help, but it is the best I can do. Beyond that, I know nothing.
  20. dhdunbar

    Blending/ Proofing tank

    You are inviting trouble if you cut to bottling proof by volume. All gauges for tax determination must be done by weight, or approve flow meter, because that is more accurate than gauges by volume. See 19.183 (a) "Except as otherwise provided in paragraph (b) of this section, if the proprietor uses a tank to determine the distilled spirits tax imposed by 26 U.S.C. 5001, the tank must be mounted on scales and the contents of the tank must be determined by weight. The scale tank also must be equipped with a suitable device so that the volume of the contents can be quickly and accurately determined." Then the (b) exception, "The requirement to mount tanks on scales does not apply to tanks having a capacity of 55 gallons or less. Such tanks may be moved onto an accurately calibrated scale when a tax determination gauge needs to be made." Yes, I know that the mounting rule that is usually not observed, and that the bottling tank gauge arguable is not a tax determination gauge, but it arguable is. Since the tax is determined on the basis of the label proof, the cut in the bottling tank determines whether the label proof is accurate as a gauge. Note that TTB says that the cut in the bottling tank must be at exactly the label proof. There is no tolerance. See ATF Ruling 75-32, (https://www.ttb.gov/rulings/75-32.htm): Whoa! Is TTB likely to enforce that? I think it is unlikely in practice. But this is more than a wonky distinction. Practically speaking, cutting to bottling proof by volume is not going to be as accurate as cutting by weight. You are faced with inaccuracies on the calibration of the tank that do not occur when you gauge by weight. And it is a lot easier to get a scale recalibrated than it is to get a tank recalibrated. Proof of that? Check out the yellow pages.
  21. dhdunbar

    Solera Aging Whiskey

    Silk City is correct. It is the age of the youngest spirits. So you say, "Solera Finished," "Aged not less than 1 year," or whatever. Also, the spirits are going to be introduced into used barrels, not new, so you get whiskey distilled from malt mash rather than malt whiskey and disguise that in the clever way you break the lines on the label, not that I think most consumers would care. Of course, having said all that, I can quickly find a TTB label approval for a product that claims to be solera bourbon - bourbon being a product about which TTB be is more label-claim picky than other American type whiskeys - and which also states no age, which means it should be four years old and straight to boot, which also can't be treated, as bourbon can't be, in ways that are not traditionally employed, in TTB's opinion, in the production of the product. Since I insist on citing authorities, see Section 5.23 and TTB Ruling 2016-3, which addresses general use formulas, but strays into the realm of bourbon identity to give BAM statements about the sanctity of bourbon a higher level authority. I give all of this what I've what I've come to call my label approval shrug. I think a marketing shrug may be appropriate too. I think producers sometimes think that consumers care about issues like age and new charred vs. used barrels more than the consumers do care. "Solera" may be a hook for those who are seeking new experiences. The sales from novelty well might outweigh the sales lost from a one year age statement on whiskey, some of which has been aged four years. In a tasting room, it would create curiosity. You could express all the virtues that are attributed to the process with sherry and rum and even Scotch. Did I say that I am a notoriously bad judge of marketing strategy? Well, I am.
  22. dhdunbar

    Joint Venture with local Brewery

    You can receive beer removed from a brewery without payment of tax. The answer to that is found in the brewery regulations, not part 19. "Sec. 25.201 Removal by pipeline. A brewer may remove beer from the brewery, without payment of tax, by pipeline to the bonded premises of a distilled spirits plant which is authorized to produce distilled spirits and which is located contiguous to the brewery." Yea,I know, pipeline, etc. As I think I've explained on another thread in the past, at least once., the brewery regulations are hopelessly out of date on this. A brewery can remove to any distilled spirits plant and it need not be done by pipeline. The law on that change in 1997, or sometime around then, removing the adjacent and pipeline restrictions. 26 USC 5222 (b)(2) - Under such regulations as the Secretary may prescribe, fermented materials to be used in the production of distilled spirits may be received on the bonded premises of a distilled spirits plant authorized to produce distilled spirits .... beer conveyed without payment of tax from brewery premises, [or] beer which has been lawfully removed from brewery premises upon determination of tax. The without payment of tax provisions is the one you would want to use. The after payment of tax was used to receive, on DSP premises, taxpaid beer that had been removed from sale because it had spoiled or had exceeded its age date, , allowing it to be distilled for use, generally, as industrial alcohol. The DSP then follows the rules at 19.296, etc...
  23. dhdunbar

    Final proofing documentation for TTB

    I'll add something here. You need to make sure that the gauge record records the kind of barrel into which you place the spirits. If you examine what is required in the storage record, you will find that you must keep tank records and package records. If you examine the information that the package record must include, you will find, much to my surprise, I'll add, that it does not include the type of barrel in which the spirits were stored. In general, you must keep records of the receipt into and activities in the storage account (19.590). Focusing on barrels, you record spirits received into the account in barrels, filled into barrels from a tank, and transferred from one barrel to another, and the addition of oak chips, if any. You must keep package summary records (19.591). A package summary record is a separate records of each kind of spirit – separated too by domestic and imported and VI or Puerto Rican origins - in packages that show the spirits deposited in, withdrawn from, and in the storage account. The regulations then require that they be arranged in a certain order. For domestic spirits, that is alphabetically by State and by the plant number and name of the producer or warehouseman. For most of you, that is easy probably easily enough done with a sortable spreadsheet or database, or not a problem because you only get spirits from one or two sources. But I mention it to show what is required, but also what is not. The package summary records must show the date of the transaction, the number of packages and proof gallons covered by the summary record,and any gains or shortages disclosed by inventory or when an account is closed (19.591) and the balance on the summary records (remember this is for each type of spirit) in the account at the end of the month. These are the figures that feed into the report of storage operations you send to TTB each month. As an aside, you are not required to inventory spirits that are in packages, so the shortage on inventory would be the loss of a package. You will record losses when you empty the packages, something the regulations seem to omit. You must also” consolidate” the records at the end of each month, “, to show, for all types of containers (barrels, totes, tanks, etc.) and kinds of spirits, the total proof gallons received in, withdrawn from and remaining in the storage account. That’s it. Well, you may say, it seems that is certainly more than enough. But where is the requirement that you show whether the barrel in which you have stored spirits produced from a corn mash are being stored in new charred, used, new uncharred, or used oak, or stainless steel or plastic totes? Oops, follow these requirements to the letter, and you cannot prove, from these records alone, to the inquisitive TTB, that the product you are labeling bourbon was stored in new charred oak, or that the product you are labeling corn whiskey was not. In fact, you can’t even show that it touched oak, so you can’t even prove its whiskey. That is where the gauge record comes in, because the gauge record, and as far as I have found, only the gauge record requires that you show the type of package into which you place the spirits. You must prepare a serial numbered (the serial number is important for tracking purposes) package gauge record (19.619) when you enter spirits for deposit into the storage account, package spirits from a tank in the storage account, The gauge record must include, for each package, among other things, “Cooperage identification (``C'' for charred, ``REC'' for recharred, ``P'' for plain, ``PAR'' for paraffined, ``G'' for glued, or ``R'' for reused, and ``PS'' if a barrel has been steamed or water soaked before filling). And, because you also must show “the identity of the related transaction form or record, and its serial number – if it has one – your records show that the the bouyrbon was stored in new charred oak. There you have the only required record, again, as far as I can determine, that is going to show that. Further, because the gauge record is going to show the proof of the spirits, it will also show that the bourbon was stored, as required by the standard of identity (5.22) at 125 prof or less. I’ll add another aside, when you gauge packages you must do so by weight (19.619). Finally, although it cannot be used to trace spirits through the system, if you transfers spirits from one package to another, you must give the package the same package identificaitohn number as the original, but must also affix, to the head of the new package, a sign or label “in the following form: The spirits in this ------------ [kind of cooperage: barrel or drum], package identification No. --------, were transferred from a ---- -------- [kind of cooperage: barrel or drum], on -------------- [Date], -------------- [Proprietor].” (19.468). Strangely, as far as I can determine, when you first put the spirits into a package, this information is not required. You need only assign a package identification number (19.485), which does not include any indication of the type of cooperage. I’ve not found an explanation for this. Out of curiosity, I'd be interested in knowing if this sort of compendium, of the various sections, into one place, is of interest to those of you who operate distilled spirits plants? Would it be useful, for example, to have, in one place, a description of all of the information you need to know if you are bottling bourbon, making bitters, using wine as a flavoring agent, etc? Does it answer a need? And would you pay for that, say, in the form of an online tutorial, from which you could pick, like items off a menu,. as need? Would, for example, a discussion of vodka be worth $30, one of bourbon $40, and TTB's stance on GRAS,, something else? Would an all access option be attractive? It would be a chore to do that. It would take a lot of time. And like textbooks, it would have a specialized audience - even narrower than a text book - and so could not be published as a book for $50.00. The ROI on my time would not be there. This answer, for example, took me a couple of hours to compile in useable, I hope, form. I did it because I think it is important information. But I've got a life, both commercial and personal. If you have an opinion on this, I'd like to hear it by PM, to keep the forum free of liter. Thanks.
  24. dhdunbar

    Final proofing documentation for TTB

    Not a member, so I don't know. TTB does not supply them. You've got two gauge records to deal with - bulk gauge and package gauge.
  25. dhdunbar

    Inventory Requirements - barrels

    This is getting a bit specific, but ... Tank vs. package is not account dependent. Further, there is nothing in the regulations that definitively differentiates a tank from a package. One part of the reg (19.75 maybe) says something don't need to list portable bulk containers of less than 101 gallons unless they meet the criteria for a tank under 19.182, but 19.182 only says, if you have a tank, then you must equip it with ... and totes have none of what is required by 19.182. Nor do barrels or drums. That does not say that a metal container of some size, say a million gallons, noit so equipped, would qualify as a drum. It would certainly be a tank, and if it didn't have what 19.182 required, it would be in violation of that section. But beyond that we have anomalies that TTB has not chosen to address, as far as I know. Webster - Tank - a large receptacle or storage chamber, especially for liquid or gas. Large? TTB may intend that anything larger than 101 gallons be equipped as required for tanks. They have not said so. Their de facto acceptance of 275 gallon and larger plastic totes may be taken as an answer not otherwise given. The same question could apply to how large an oak barrel can you have to store whiskey? At what point does an oak tank not serve as a container fit for aging? That is a question I will not ask until I have to answer a question for a client. Finally, a metal drum is a package and need not be inventoried. The section for processing inventories is Sec. 19.371 "A proprietor must take a physical inventory of all wines and bulk spirits (except packages) held in the processing account at the close of each calendar quarter." Holler by PM if you want me to go still further into this on your behalf :-).