dhdunbar

You state: "My idea was to open a distillery that markets brandy differently, as a whiskey flavor made from local fruit. However, I didn’t want to sound like an idiot to the industry. There are your connoisseurs that might be offended, but I also want to appeal to a different crowd." This post comes under the heading, just making sure .... I assume that you know that whiskey is made from grain, but just in case, whiskey is made from grain, not fruit. Always, alway, always look to the standards of identity for any product. Whiskey = grain. Brandy = fruit. Grape brandy must be aged in oak containers for two years or be labeled immature. So unless you are willing, and more importantly able, to wait out the two years, it will have to be either another type of fruit or a hard to swallow immature designation. Containers include tanks, and since the standard does not say what sort of oak, well ... that's what makes the "art" in artisan. I don't know where, or if, TTB would draw the line on the size of the container. I suspect it is 210 gallons, since one of its "predecessor agencies," several generations removed, ruled as follows in 1956: Historically, casks or packages for the storage of distilled spirits range in capacity up to 210 tax gallons, as evidenced by tax stamps provided in the past for such packages. Age may be claimed on brandy stored in new or reused cooperage in accordance with the provisions of section 39(b) of the Regulations relating to the Labeling and Advertising of Distilled Spirits. Such authority does not extend to oak ovals of large capacity since the contact of the brandy with the wood surface would be too limited in comparison with the quantity of brandy for the brandy to obtain proper characteristics of age. Accordingly, oak ovals or puncheons (cask or packages), limited in capacity to not more than 210 tax gallons (or equivalent of 210 wine gallons), may be used for storing brandy as original packages or packages filled from storage tanks. Where such containers are used, appropriate facilities must be provided for proper gauging and handling of the packages. Oak ovals of a capacity in excess of 210 tax gallons cannot be used either as brandy storage tanks, or as original packages or packages filled from storage tanks. I omit the details of the discussion. To see them go to https://www.ttb.gov/rulings/56-203.htm. The ruling is still on TTB's website, suggesting that no one has deemed it obsolete.

Put bluntly - you don't want to play this game. It is fraught with dangers, not the least of which is the dreaded "what you don't know you don't know (and i don't either)." If you can find one person who does it, consider why you don't find many more. There has to be a strong temptation among small distilleries to emulate wineries that have "club" programs and can ship cases to out of state customers who visit, but that is not a viable option for distillers, craft or otherwise. You need to find a different business model. If you intend to ship into any state, do so through a person licensed by that state to import spirits into the state from outside of the state. Unless you, or someone with whom you contract, hold such a license, do nothing. I have to add that this is not legal advice and I am not an attorney, so if you have a question about it, ask an attorney. I predict doing so would gobble up any potential profits, To that, I will append that the reluctance of carriers (as noted above) to take shipments reflects the uncertainty with which the carriers, who undoubtedly have attorneys on staff to answer such questions, approach state laws on the issue. The carriers would love your business, but don't want to run afoul of the local constable and end up with a truck seized because it is hauling contraband.

Be aware that your federal basic permit is conditioned on compliance with state laws. TTB has spoken on the issue of shipping in violation of state laws. Here is what it has said: The Liquor Law Repeal and Enforcement Act, also referred to as the Webb-Kenyon Act, which the Alcohol and Tobacco Tax and Trade Bureau (TTB) administers, prohibits shipments of alcohol beverages from one State into another State in violation of any law of the receiving State. 27 U.S.C.§122. The Federal Alcohol Administration Act (FAA Act) at 27 U.S.C.§203, requires a basic permit in order to engage in the business of importing distilled spirits, wine or malt beverages for non-industrial use into the United States. Likewise, a basic permit is required to engage in the business of distilling, rectifying, blending, bottling or warehousing and bottling distilled spirits or producing or blending wine for non-industrial use. Finally, a basic permit is required for persons who engage in the business of purchasing for resale at wholesale distilled spirits, wine, or malt beverages for non-industrial use. Retailers are not required to obtain basic permits under the FAA Act. The FAA Act also provides that basic permits are conditioned upon, among other things, compliance with the Twenty-first Amendment and Federal laws relating to its enforcement as well as all other Federal laws related to distilled spirits, wine, and malt beverages. 27 U.S.C.§204(d). Thus, TTB could, in appropriate circumstances, take administrative action against a basic permit holder for violations of the Webb-Kenyon Act. In 2000, our predecessor agency, the Bureau of Alcohol, Tobacco and Firearms (ATF), issued ATF Ruling 2000-1 to announce its enforcement policy relating to violations of State law that result from shipments of alcohol made directly to consumers in one State from sellers located outside that State. This ruling remains in effect and reflects the policy of TTB today. Also in 2000, Congress enacted the 21st Amendment Enforcement Act that provided the States with a specific tool to address interstate shipments and transportation of alcohol beverages in violation of State law. Thus, contemporaneous with our enforcement policy pronouncement, Congress indicated its support for States to act in this enforcement area because they likely are in a better position to interpret and defend their own laws. In Granholm v. Heald, the U.S. Supreme Court (May 16, 2005 decision) declared unconstitutional State laws that prohibited direct shipment of wine to consumers within the State from out-of-state businesses but permitted direct shipment to those consumers from in-state businesses. This decision has led to the reexamination of laws in several States. Many States are reviewing and amending their alcohol beverage rules in light of the decision, and litigation continues as suits have been brought by retailers and consumers in several States. As a result, the regulatory schemes in place in many States are in some degree of flux. We want to remind industry members who engage in direct shipping that they are responsible for remaining in compliance with current State rules. Furthermore, industry members should remember that their Federal basic permits could be at risk if they fail to comply with State rules. For up to date information on the rules in a given state, contact the appropriate State alcohol regulatory authority. I added the emphasis. The information was last reviewed, the web site says, in 2012. See https://www.ttb.gov/publications/direct_shipping.shtml

I won't go into details, but you have to be the distiller. You can't turn your equipment over to the person who wants to have spirits made and you probably would not want to do that anyway, for liability reasons. Remember that no one except a DSP can make spirits. There's no personal or family allowance. I don't know of any guidelines for distill your own programs. Here's what TTB says, in FAQ's, about brew your own operations at a brewery:, 2. TTB Brewers Operating BOPs Under some circumstances, a TTB qualified brewery may operate a BOP. All beer produced at a BOP on brewery premises is taxable under Federal law, must be labeled in accordance to 27 CFR part 25, must bear the Government Warning Statement required under 27 CFR part 16, and is subject to recordkeeping and other requirements. For further information regarding qualification of a brewery or operation of a BOP at a brewery, contact the Brewery Applications Section at the National Revenue Center, Alcohol and Tobacco Tax and Trade Bureau, 550 Main Street, Room 8002, Cincinnati, OH 45202, or by: Telephone (toll free): (877) 882-3277 Fax: (202) 453-2978 E-mail: TTBInternetQuestions@ttb.gov n.Last reviewed/updated: 03/13/2015 TTB says only under some circumstances. It doesn't specify the circumstances. You are going to have to ask TTB. And brewery and spirits are not analogous. Good luck. :

Well, if you produce 189 for use in vodka, you have a problem, because you use neutral spirits to make vodka (vodka is a type of the class neutral spirits, so ... Standards of identity are definitions of the class and type of products. Your questions really require a lot of explanation. I answer questions of general interest on the forum for free to repay the opportunity that those of you who put your money on the line to start craft distilleries give me to act as a consultant. Briefly - you do not redistill vodka in the production account. You would likely hold the vodka in bulk in the processing account, and ... its to long. I don't use the forum as a way of soliciting business - as I say, my participation is a thank you, although some people do contact me because of my participation. If you want to send me a personal message, we can talk about what I can do for you as a consultant. We are really talking about the need for a crash DSP 101 course. That takes more time and attention than I can give to the questions that arise from individual situations. I hope you understand.

Which is why definition matters so much. There is no rule that different laws must use the same terms consistently. Look at the federal statutes, in which "wine" is defined differently in the IRC and the FAA Act. Who knows how many different ways it might be defined in state law? When TTB talks about a distilled spirits plant premises, it defines the term as it uses it within part 19. States usually would not use the term "distilled sprits plant." They would define the term "distillery," or some similar designation, as they use the terms, within their scheme. So, what constitute distilled spirits operations under one law may not be operations in distilled spirits under the other. In a state's regulatory scheme, the federal definition of premises is often an apple to the state's orange, and visa versa. Therefore we keep them in separate baskets. Unless the laws create a direct and positive conflict, i.e., unless there is no way around breaking one law to comply with the other, you must do what each requires. If, using the terms consistent with the particular requirement in the particular laws, you can't do what you want to do and still do what each requires, you give up the idea. In most cases we can find a way to structure what you want to do in a way that makes it legal under federal law, but not always. Infusions made by retailers were an example. Generally, states did not object to a bar stuffing a pear into a bottle of vodka to make an infused product, i.e., change the class and type from vodka to flavored vodka. TTB did, because that was "rectification" as the term used to be used, and that required a permit as a DSP. So, what did TTB do? It declared: TTB exercises its enforcement discretion not to take enforcement action solely on the basis of violations with regard to a retail liquor dealer that mixes taxpaid spirits to produce infusions for on-premise consumption. This position does not apply to and TTB will continue to enforce prohibitions on processing with non-taxpaid spirits, bottling spirits, aging spirits in barrels, heating spirits, refilling of liquor bottles by retail liquor dealers, and with respect to any other conduct that may jeopardize the revenue." So, even when something is prohibited under one law and allowed under another, there are sometimes ways to find a work around solution. But it is going to require an official statement of the agencies position or you are going to be exposed.

Re bluesta'rs posting - I too can name you places that taste on DSP premises. I can name you a place that tastes and sells on DSP premises. I can even name you a place that a TTB investigator visited and observed, you shouldn't do that, but did not insist they not do it. That said, I can only tell you what TTB approves and doesn't if you submit. Test them and you are likely to get an answer like, "We don't let you taste because it is likely to lead to sales." Even when the sales are prohibited by state law. I think I saw that on a thread here somewhere. For my part, I think that law and regulation do not speak to tasting at all. And I think the law does not prohibit sales at a location where spirits are not produced, i.e. distilled, but are only warehoused and processed. So I think tasting is "iffy" only if TTB does not enforce its own policy uniformly. I also think that TTB can "get tough" about approving things like tasting on general premises. I think that the powers that be have probably laid down the law on that and that specialists, who live in fear of being gigged for doing something wrong, are now paying more attention to what gets approved., However, I find that the regulations are clear and unambiguous about sampling (tasting is sampling, right?. See Sections 19.434 and 19.435. They allow sampling, but only for specific purposes. Parsing those sections makes it clear that the purposes do not include consumer sampling and 19.434(d)(1) makes this clear, “the spirits [used as samples] may not be used for consumer testing or other market analysis.” What happens if the TTB auditor or investigator, who knocks on the door of someone who uses samples as a tasting room ploy, tumbles to a sampling practice that violates 19.435? Likely they will tell you to pay the taxes owed, along with penalty and interest, computed based on the sample records you are keeping as required by 19.616. Not keeping those records? That is another violation. But I doubt they would take further action, except to tell you to cease and desist in the practice and warn that if you do not, "future violations will be considered willful." Those are words you do not want to hear, because their goes your tasting room program. It can leave you scrambling if you do not have a space off DSP premises to which you can move our tasting. If establishing a tasting room involves curtailing a section of the existing DSP premises, and constructing segregation acceptable to TTB between the DSP premises and the tasting room, then welcome to the world of waiting six months for TTB to approve amendments to registrations. My point is simple. Don’t put yourself in that position. Do it right from the outset. Otherwise you are just waiting for the other shoe to fall. Because TTB does not tread often into craft distilleries, that time might never come. Re Hedgebirds posting - you express my thoughts better than I did. But this raised a question by Skaalvenn to which I mut reply. Re Skaalvenn's posting - I've heard the argument. It goes, "How are you going to relabel if you don't have general premises?" My answer is that a proprietor may return spirits to bonded premises for relabeling without having to pass them through general premises or, as far as I can see, make application to bring them onto bond for relabeling. Here is the citation - Sec. 19.453 Return of bottled spirits for relabeling or reclosing. A proprietor may return bottled distilled spirits to his bonded premises for relabeling or reclosing. When bottled spirits are returned for relabeling or reclosing, the proprietor may not claim credit or refund of tax on the returned spirits, and no tax will be due on their subsequent removal. The proprietor must relabel or reclose the bottles immediately and must promptly remove the spirits from bonded premises. The provisions of Sec. 19.363 apply to relabeling and reclosing performed under this section. § 19.363 Reclosing and relabeling. (a) A proprietor may reclose or relabel distilled spirits before removal from, or after return to, bonded premises. The reclosing or relabeling of spirits returned to bonded premises must be done immediately, and the spirits promptly removed. (b) If the spirits were originally bottled by another proprietor, the relabeling proprietor must have on file a statement from the original bottler consenting to the relabeling. (c) When spirits are relabeled, the proprietor must have a certificate of label approval or certificate of exemption from label approval issued under part 5 of this chapter for the labels used on relabeled spirits. (d) A proprietor must prepare a separate record under § 19.604 for the relabeling or reclosing of spirits. The problem is not finding a place to house them when they are returned for relabeling; if there is a problem, it is finding a place to hold them once they are "promptly removed." I think I could solve that problem somehow. Finally, I do not find a requirement that you make application to return spirits to bond for relabeling. I'm not saying it doesn't exist. I'm just saying I don't find it. This is far more than I ever meant to say about this issue :-).

You do not need general premises. I routinely submit applications where the bonded premises has the same footprint as the distilled spirits plant premises. In that regard, note that the regulations (Sec. 19.74(b)) require that you "Clearly distinguish between the bonded premises and any general premises." The word "any" is important. It is very different than requiring that you distinguish between the bonded premises and "the" general premises. The latter recognizes a requirement; the former does not. Retail sales and tasting room - If you choose to establish general premises, which basically are defined as what is left over after you subtract the bonded premises you describe on the application from the DSP premises you describe on the application (see 19.54(c)), you MAY NOT sell spirits, at retail, in the areas identified as general premises. General premises are part of the distilled spirits plant premises, and the law prohibits establishing a DSP on any premises where liquors of any sort are sold at retail - see 26 USC 5178, which provides "no distilled spirits plant for the production of distilled spirits shall be located ... on premises where ... liquors of any description are retailed." Although a reasoned reading of the law would not prohibit a tasting room on general premises - reasoned meaning the way I read it ;-),TTB interprets the law to mean that you may not operate a tasting room on the general premises. Further, the law prohibits locating a DSP for the production of alcohol. It does not address warehousing or processing and it logically follows that TTB is not prohibited by law from allowing retail sales from the general premises of a plant that does not produce spirits. But logic does not count. TTB's interpretation trumps reason. The regulations contain a much broader prohibition, stating, "A person who intends to establish a distilled spirits plant may not locate it ... where liquors are sold at retail." I will not argue that people do not have tasting areas in the bonded area. I will tell you unequivocally that it is prohibited by regulation and that TTB will not approve it if you tell them that you intend to do it. Storage on other than bonded premises - Next, disavow yourself of any notion that you may legal store bulk spirits on anything but distilled spirits plant premises. You may not. All distilled spirits operations, which is a defined term, must be conducted on bonded premises. General premises cannot be used for such operations. See Sction 19.54(c) - General premises are any portion of the distilled spirits plant described in the notice of registration other than bonded premises. A person may not use the general premises of a distilled spirits plant for any operation required under the provisions of this part to be conducted on bonded premises." All distilled spirits operations, which are defined in Sec. 19.1 to be "any authorized distilling, warehousing, or processing operation conducted on the bonded premises of a plant qualified under this part," must be conducted on bonded premises. . And bonded premises, completing the circle, are defined to be "the premises of a distilled spirits plant, or part thereof, as described in the application for registration, on which the conduct of distilled spirits operations defined in 26 U.S.C. 5002 is authorized." Now, to really close the loop, Sec. 5002 identifies distilled spirits operations as "any operation for which qualification is required under subchapter B, which leads us to Sec. 5171, which provides, "except as otherwise provided by law, operations a distiller, warehouseman, or processor may be conducted only on the bonded premises of a distilled spirits plant by a person who is qualified under this subchapter. Finally, a warehouseman is defined in Sec. 5002 as "any person who stores bulk distilled spirits. Yea, I know it is a long way around, but the only way to know what TTB requires is to know what it means by the terms it uses.

Heads, tails, and hearts held for further distillation, are all unfinished spirits. You do not include unfinished spirits in the production report unless it is the end of the quarter, when you make the required physical inventory of spirits in the production account. Then you record them in the field provided for unfinished spirits (17b). Do not enter any of them into the storage account. I say that with jumping up and down emphasis. You only enter finished spirits into storage. NSG produced for use in making gin and vodka in the processing account is finished spirits, even if you will use them to make vodka or gin by restillation in the processing account. You determine the quantity produced based on the production gauge. For some spirits, like neutral spirits that you will use to manufacturer vodka or gin in the processing account, you sometimes can skip entry to the storage account, but that is not the case for whiskey, which you will age. That is an operation that takes place in the storage account. It is really important that you understand how TTB uses words. I can't begin to explain most of that here.

Yea, that was clear. Cotherman said that too and I was just being complete. I understood. It is only the color thing that brothers me. The claim that a change in color = a requirement for a formula comes from a misunderstanding of the standards of identity, regulation and past policy as expressed in things like the beverage alcohol manual. Statements like that are undisciplined imagination that have no footing on which to stand. TTB has to implement the law through regulation and regulations are issued only after notice and opportunity for hearing. TTB then has considerable latitude to clarify and amplify the regulation by rulings. The courts give great deference to regulatory agencies in that regard. But that does not sanction individual employees fabricating from whole cloth requirements that do not exist. Rules apply to TTB as well as industry. It is the sort of thing that makes dealing with TTB frustrating at times. It's employees are too free to invent their own rules and concoct silly rationales to support them. Occasionally nonsense like the neutral spirit classification for Jack Daniels unaged rye product, which was distilled at around 140 proof, but which TTB insisted, over Daniels's objection, was a neutral spirit. It was an awkward moment. The color issue has the same roots - TTB employee's misunderstanding of TTB's own requirements - it just doesn't have the sex appeal of the Jack Daniels blunder.

This whole color things is a fiasco. Bourbon, for example, is brown, but it comes off the still clear. Just because a material or process adds color, it does not become a coloring agent. TTB's beverage manual, which I do not like to quote, since I prefer regulations, says: The use or addition of coloring/ flavoring/blending materials will not cause a change in the class and/or type if the materials used or added can be considered “harmless.” (See “HARMLESS COLORING/FLAVORING/BLENDING MATERIALS” section of this chapter) COLORING MATERIALS · STATUS nColoring materials must be approved by the U.S. Food and Drug Administration (FDA) Approved coloring materials are categorized as “certified” or “non-certified” · APPROVED COLORING MATERIALS All coloring materials approved for use in distilled spirits are listed below: Certified Colors FD&C Blue #1 FD&C Blue #2 FD&C Green #3 FD&C Red #3 FD&C Red #40 FD&C Yellow #5 FD&C Yellow #6 NOTE: The lake of each certified color, except for FD&C Red #3, listed above is an approved coloring materia. Non-certified Colors Annatto Extract Beet Extract Beta Carotene Caramel Carmine (Cochineal Extract) Elderberry Extract Grapeskin Extract (Enocianina) Paprika Saffron Titanium Dioxide Turmeric The point is that flavoring materials which add color are not coloring materials, since the above list includes all of the approved coloring materials. Therefore, if you are not required to list the flavoring material (in most cases you are), you are not required to have a formula. Gin is a good example of an exception to the formula requirement when it is produced by original distillation. Formulas for gin are required only when they are produced by redistillation of neutral spirits or by compounding. They are not otherwise required by regulation or TTB's pre-COLA evaluation procedures. I'd say resting the gin in a barrel is the equivalent of aging the bourbon in a barrel. It does not require a formula. Of course, you can't claim age on gin, but that is another argument. And the whiskey argument has a flip side. TTB is pretty damned free to adopt any policy it wants. For example, it does require a formula when you label a product "whiskey" without further designation as a type of that class. It does that under the pre-COLA evaluation guidelines. It apparently made the requirement as an internal control to combat the erroneous approvals of l"white whiskey" and "unaged whiskey" designations that became a problem a few years ago.. But certainly do not surrender to the claim that you have to state that the gin is artificially colored if it picks up color from the barrel or from the botanicals used to make it. That is pure nonsense.

Sure, but only in a hurry, because the sky is falling today. Redistillation of an existing spirit to make vodka or gin takes place in the production account. The record is a production record - see Sec. 19.602 "Redistillation records. If a proprietor redistills spirits in the processing account (as in the production of gin or vodka by redistillation), the proprietor must prepare a record of the redistillation. The record must show the kind and quantity of the spirits entered into the distilling system and the kind and quantity of the spirits removed from the distilling system upon completion of the process." I apologize for breaking my own rule that you do not say something unless you can cite the source. I was in a hurry, as I am now. Simply citing 19.602 tells the story. Thank you for calling me on that.

No, it is not correct. But kudo's on a good effort. And for recognizing that you should ask the question, because what you propose seems a bit weird. First principals first - once you transfer spirits from the production account to the the storage account, you do not transfer them back to the production account. That is a "never-ever" rule, unless you are going to redistill them - and then only when you are starting over, not when you are taking neutral spirits and redisitlling to make gin or vodka, but that is another subject. That said, you have Month 1 down flawlessly. To be sure we agree, you are correct to record the production in Month 1. TTB insists that you record production - make a production gauge and prepare a gauge record - as soon as you finish the spirits run. You are correct that, since it is going into storage, you record the transfer to the storage account at line 11. You are again correct that you enter the same number into Part 3, creating the category malt. By rule,. you must also designate the class and type of the product at the time you make the production gauge. By rule, that can be whiskey designate, if you are going to put it into wood later. But TTB should not quibble about the malt designation. And,finally, you are correct that you enter the deposit into the storage report at line 3. But that it is. You are done with the transaction. Do a happy dance. There is no need to do anything more in month 2. Note that the storage report records only "whiskey distilled at under 160 degrees." Neither it, nor the front of the processing report, track what type of whiskey you a dealing with. Indeed, except for the statistical info on the back of the processing report, .the processing report lumps together all classes and types of spirits into a total of the proof gallons receive, bottled, removed, etc.. Why? We do not ask why questions. The only answer is, "It is because that's what TTB says." That is a "tums" remedy for avoiding heartburn. The truth of the label claims, that the whiskey was produced in a manner that entitles it to the designation malt whiskey - distilled from 51% or more malt mash at under 160 and aged in new charred oak, etc., is captured in the records that you are required to keep, not the reports. So, really, are the realities of your tax liabilities. The reports are just summaries - TTB's version of the balance sheet and income statement found in financial accounting - and while they provide TTB with an overview of your operations, provide hints of strange transactions when a number for one month seems out of character, and provide TTB with information required for its preparing statistical reports that they must, by law, publish, they reports are the end of the audit trail, not a part of it. The "meat" is in the records.

I've recently addressed the issue of residences and DSP's in another thread and won't go over that again here. I'll address distance here. Distance does matter to TTB. There is no published TTB rule re separation. All you will find in the regulations (and the law) is that you can't establish a DSP in any structure that is in a yard that is connected to a residence. "Connected" matters. To get approval, you have to establish that the proposed home for your DSP is not "connected" to the home (residence) of any person. If the home is on the same tract, but two miles from the proposed DSP, arguing that the two are not connected is pretty easy. But it is not a matter of distance alone. TTB takes distance into consideration along with other matters. I was told that 200 feet was sufficient to approve without a fence or other barrier between them, but listen, that is one person in Rulings and Regulations, who are charged with making recommendations on such things, who was addressing a specific situation and who was making an informal, i.e. non binding, comment. That is not enough. I want a letter from R&R stating that they would not recommend denial based solely on the location of the proposed premises under the circumstances that we have described to them. They make a recommendation, because the decision is not theirs to make. Approval authority is delegated to the Director of the NRC. But in my experience the NRC goes along with Rulings and Regulations' recommendations. Now, I don't care what anyone else in TTB tells me, or what someone on ADI's forum says, and neither should you. Individual TTB "agents" will sometimes claim that TTB will never approve collation. That is flat wrong. And if they can be wrong, just imagine how wrong people posting to this forum can be. That includes me. But I can tell you that I've gotten approval in at least five instances. So I do speak from relevant experience. So, we have to argue, from the acts attendant to the particular case, that the DSP and residence are not connected within the reasonable meaning of that term as it is used in the law and regulation. It takes me two to three hours to gather the information, construct the arguments, and write the letter. It's one of the things I do as a consultant. But I'm willing to give away the "trade craft" here. I just can't tell you everything you might need to know about "curtilage" and how it applies to your situation. That, by the way, is a very big clue to where you have to go if you are going to get TTB approval, even if your letters never mention the word.

Yes, I have personal knowledge.. Actually, for federal purposes, it does not matter if the property is a farm or not. In fact, I have qualified DPs that are collacted on a tract of land that contains a residence in Washington, Oregon, Montana, Vermont, New York and Texas, and only one was a farm. I had one turned down after I advised the client that TTB would likely turn it down. I cannot stress enough that this is a case by case determination based on the particular circumstances attendant to the location of the residence vis-a-vis the proposed DSP. Because TTB can say no, and because it is expensive to discover that TTB has said no after the DSP has been constructed, it is best to get its approval before making an investment. I do that by seeking a private letter ruling. An answer probably will take a few months, like everything else that TB does, so it is best to ask early in the process. Most states do not get their undies in a knot over locating a distillery on the same tract that has a residence. It is not their thing. Because of the language of the Internal Revenue Code, it is very much a federal thing.

TTB's still regulations are in part 29 of Title 27. You can access them through TTB's website. That part requires: §29.47 Notice requirement; manufacture of stills. (a) General. When required by letter issued by the appropriate TTB officer and until notified to the contrary by the appropriate TTB officer, every person who manufactures any still, boiler (double or pot still), condenser, or other apparatus to be used for the purpose of distilling shall give written notice before the still or distilling apparatus is removed from the place of manufacture. Note that you only need to provide this notification when TTB has required you to do so. . Next, there are provisions about giving notice of setting up a still. §29.55 Registry of stills and distilling apparatus. (a) General. Every person having possession, custody, or control of any still or distilling apparatus set up shall, immediately on its being set up, register the still or distilling apparatus, except that a still or distilling apparatus not used or intended for use in the distillation, redistillation, or recovery of distilled spirits is not required to be registered. Registration may be accomplished by describing the still or distilling apparatus on the registration or permit application prescribed in this chapter for qualification under 26 U.S.C. chapter 51 or, if qualification is not required under 26 U.S.C. chapter 51, on a letter application, and filing the application with the appropriate TTB officer. Approval of the application by the appropriate TTB officer will constitute registration of the still or distilling apparatus. (b) When still is set up. A still will be regarded as set up and subject to registry when it is in position over a furnace, or connected with a boiler so that heat may be applied, irrespective of whether a condenser is in position. This rule is intended merely as an illustration and should not be construed as covering all types of stills or condensers requiring registration. Part 19 then comes into play. Sec. 19.79 Registry of stills. Section 29.55 of this chapter requires that every person having possession, custody, or control of a still or distilling apparatus must register the still or distilling apparatus. When a person lists a still or distilling apparatus with the application for registration as required by Sec. 19.75(b) and receives approval of the registration,that person has fulfilled the requirement to register the still ordistilling apparatus. See Sec. 29.55 of this chapter for additional provisions regarding stills and distilling apparatus. I continue to preach that the answers to most questions are in the regulations. You just have to know how to find them :-) and know what TTB means by the words it uses.

Bartlett's story is not unusual. I work with a lot of distilleries and would be distilleries. I consistently preach that you must deal with local issues first, and dealing with local issues means dealing with the people who will make the decisions. Talk with the fire marshals, the code officers, etc., before you commit to any lease or even begin looking. And make damned sure that the person to whom you are talking knows what they are talking about. It can be very expensive to rely on bad information. I work with federal requirements and I always tell clients, pay me not cent one before you deal with the local requirements. We can make things work on a federal level in nearly all cases in which a separate entrance from a public space is available, but local requirements can take a tire iron to the knees of your business plan.

Some states "justify" legislation that creates special licenses for small producers by linking them to agriculture, a far less controversial enterprise than producing and marketing alcoholic beverages. When states do this, they can, but most do not, restrict who qualifies for such a license to persons who operate the business in conjunction with farming activities. As bluestar says, the federal government does not make a distinction. A distillery is a distillery is a distillery. But you can run afoul of provisions of law that prohibit establishing a DSP in a residence or any shed or yard connected to a residence. On a case by case basis, TTB will approve collocation if you satisfy them that there is no added jeopardy to the revenue and the does not create administrative difficulties for TTB. That is a different matter, but "farm distillery" congers an image of a distillery housed in a building located on the same parcel of land as the farmer's residence, so I mention it just in case. When that is the case, we have to argue that the two are not "connected." And how I do that, when I do it, is very much case by case.

Bluestar is correct about the legal designations. But the term "rectifier," or its variants, now appears only in the Federal Alcohol Administration Act regulations, parts 1 (permits) and 5 (labeling). It does not appear in part 19, the distilled spirits plant regulations. It was banished, so to say, when congress eliminated the separate excise tax on rectification. If I recall, correctly, that was in the early 1980's. And prior to that, distillers could also be rectifiers. Small players who only rectified and/or bottled were commonly called "bottling houses." Few of them professed to craft. Most made well products that sold on the bottom shelves in liquor stores. In part 19, "rectification" has become "processing," which also includes bottling, etc. TTB approves the registration required by part 19 for distillers, warehousemen and processors. Although it will approve a registration as a distiller or warehouseman only, a processor must also be either a distiller or a warehouseman. So, in the United States, if you do not distill, but do conduct processing operations, then you must also register as a warehouseman. This terminology has not yet found its way into the permit and labeling regulations of parts 1 and 5. The permit provisions 27 CFR 1.21, provide that "no persons, except pursuant to a basic permit ... shall ... engage in the business of distilling distilled spirits ... or rectifying or blending distilled spirits, or bottling or warehousing distilled spirits." If this were rewritten in the language of part 19, it would say that except pursuant to a basic permit, no person shall engage in the business of distilling, warehousing or processing distilled spirits. Part 5, the labeling regulations, make repeated references to "rectification," or variants thereof (the terms occur 11 times), but the regulation does not define what the term means, either within the definitions section, 5.11, or in the definitions section of part 1, section 1.10. The regulations rely on the meaning of the IRC regulations at the time the FAA regulations were written. So, if you are qualified to do business, as a distilled spirits plant, in the United States, you may be dubbed either a processor or rectifier, depending on which regulation you are reading, but the bottom line is that there are no longer any operations conducted on bonded premises that are identified as "rectification." It is all processing. In my early years in college, we had a sophomoric expression, "It's all semantics." In this case, that is true. To further confuse, the mandatory statements of name and address allow for different statements depending on the operations you conduct. The bottler must state that they are the bottler. The bottler also may state that it is the distiller if it distilled the spirits, either by original distillation or by redistillation in the processing account. If the bottler is also the "rectifier" of the spirits, it may state in addition to the mandatory bottled by statement, that it blend, made, prepared, manufactured or produced the spirits, depending, as the regulation states, on whichever term may be appropriate to the act of rectification involved. By regulation, "rectified by" is not among the optional terms. I do not know what TTB does in practice (who does?), but rectify is not among the optional terms listed in the beverage alcohol manual either. I'll leave it to you to determine the differences between manufacturing, producing, making, and preparing, and what specific operations make one more appropriate than the other. I think TTB does not care. I think if you conduct a processing operation, as defined in part 19, then you could claim the right to use any of them. But this is all very far removed from the character of the spirit that is in the bottle. It is intended to inform the consumer. Long explanationslike this speak volumes, I think, to whether it actually does so. It takes a wonk, i.e, someone who takes an excessive interest in minor details of policy, to even try to get this straight. I take that interest because as a consultant, if I do the wonky work, I free others to do the real work without fear of getting crosswise with TTB. Finally, let me ask a few questions? Who in the public knows the difference between 'produced by" and "distilled by?" Would the number who know be even 1% of the purchasers? And among those who do know, what percentage would make the purchasing choice based on the distinction? You may want to point this out as a part of your marketing, but I think you market to a small percentage of buyers, in most cases probably to those who come to your tasting room or find you on social media, i.e., those who are inclined to participate in your story to begin with. You don't have advertising budgets that allow you to sway public opinion. This leads to a final observation. I'm not sure that casting aspersions at small companies that hold forth as craft players, whatever the circumstances, is good for the craft market you are trying to build. But about that I'm over my head. I'm a regulations wonk, not a marketing wonk. .

No one has a license to dictate how the word "craft" is used. "Craft" connotes more than it denotes. That means that craft is what you say it is, not what some "they" say it is. Various organizations, ADI included, want to give private definition of the term, but they have no ability to enforce their notion of what "craft" should be. That statement is not meant as a value judgment; it is a statement of fact as I see it. Here are my value judgments. You talk about buying bulk spirits to make infusions. When you infuse, you alter the character of the base product. Arguably, and I'm ready to take the flack on this from the craft community, neutral spirits produced in large, industrial stills and then used to produce small lot gins by distillation or maceration, are probably better to use as a gin base than neutral spirits produced by small distillers in stills that strain to make 190 proof. A neutral pallet on which to paint provides you the opportunity to create an imaginative products by, say, multiple fractional distillations, that take time and attention, and to blend those products in imaginative and even "artistic" ways, which requires a sensory pallet. Those with good sensory pallets can certainly "craft" better products than a those, like me, who have no taste at all. Speaking of pallet, let me argue by analogy, which is always dangerous, because analogies always will fail in some regard. But, does anyone worry about whether Picasso or Cezanne or Monet or .... whoever, you name the artist ....made their own paints and wove their own canvases. Of course not. It is how they applied the paint to the canvas that matters. It is their vision, their skill, their ingenuity, their energy that add up to "genius." Their work transcends that of producers of craft art, and a person who blends or infuses spirits or wine skillfully, can transcend craft distillers and winemakers who do so with a heavy hand. So why worry about tags. . Worry about what gets into the bottle. Consumers can then decide if you are an artist that transcends or a small distiller calls itself craft, for no other reason than it is small. Just be honest in the story you tell. And, for the record, as far as US regulation is concerned, you will be making liqueurs only if the product you put into the bottle meets the US standard of identity for liqueurs. they are " products obtained by mixing or redistilling distilled spirits with or over fruits, flowers, plants, or pure juices therefrom, or other natural flavoring materials, or with extracts derived from infusions, percolation, or maceration of such materials, and containing sugar, dextrose, or levulose, or a combination thereof, in an amount not less than 21/2percent by weight of the finished product." That definition matters, but it does not change the quality of the product either.

The TTB rep is right. First, not all of the products in your array require a statement of process. You make a statement of process only for the spirits that come off the still after the final spirits run. At that time you gauge them and designate them. Basically, coming off the still, you will produce whiskey designate, neutral spirits, rum and brandy. You could produce gin or vodka by original distillation, but most don't. Each of those is a class of spirit, with the exception of vodka, which is a type within the neutral spirits class. Next, everything you do after that is done in either storage or processing. When you age brandy, rum, or whiskey in storage, you do not need a formual. You do not change class and type. When you add flavorings, or harmless coloring or blending materials, or filter nsg to make vodka, or redistill nsg over aromatics to make gin, you change class and type. That requires a formula. Formulas are specifically for changes in class and type, with the exception of products that you will label as whiskey, without further type designation (bourbon, corn, whiskey distilled from malt mash, etc). TTB requires a pre-COLA analysis of spirits labeled only with the classs whiskey. The means you must submit a formula before you can get label approval. Ask why whiskey and why not bourbon and they will tell you, its all that white whiskey out there. That is, they want to make sure it gets aged, even if the aging is a minimal joke.If you have got away without a formula, then the specialist did not apply TTB's own rules when giving the approval. Formulas are much more detailed than statements of production procedure. How did that come to be? I suspect that the specialists who review the commodity applications, as TTB calls them, have little knowledge of the niceties of the standards of identity. So they like simple explanations. Formula specialists thrive on detail. In part, this is because the FDA and TTB impose limits on certain ingredients, etc, and required GRAS certifications. Some ingredients are prohibited altogether, and in the case of products like liqueurs, there are sugar considerations in determining whether it meets class and type standards. Most of that does not come into play with statements of production procedures, although you can hang aromatics in the gin basket when you distill the beer. In that case, simplicity should not be TTB's accepted rule. But it probably is. That is it in a nutshell. And I don't go beyond the nut's shell, because who knows what nutty formulation TTB will and will not approve.

Okay, one more comment, since Michelangelo posted just as I pushed "submit." Accuracy of Hydrometer Readings - You can read hydrometers with the precision required. When ATF had gaugers stationed at DSP's, they were required to pull samples of the proof and fill from time to time and then take samples, which went into a sample cabinet. From time to time another ATF employee would gauge each of the samples that had been pulled to confirm readings the gauger had made. This was all done with calibrated instruments. Yes, the two readings often did not agree absolutely, but it was rare to find one that was out of tolerance (after all, there had been two gauges made already). Admittedly, my eyes were much younger then, and the fact that I'm even talking about the presence of gaugers in a DSP tells you how long ago that must have been. Note, however, that in all instances we are dealing with two sets of eyes when making readings. The fact that ATF did not rely on one set of eyes suggests, as Michelangelo points out, the need for internal control over errors your eyes might make when squinting to see the meniscus., TTB's Position on Density Meters - TTB will not accept any readings made with density meters that it has not previously approved for use. See https://www.ttb.gov/pdf/2014-7-21-device-approval-guidlines.pdf, which explains TTB's position and lists the meters it has approved for use in making tax determinations. Recall that the bottling tank gauge is, in effect, a gauge for tax determination since you determine taxes based on the label proof. So, unless the meter you buy is on TTB's list of those approved for gauges used to make tax determinations (Fact: the meters it has approved do not come cheap and I think are all bench top models), TTB is not going to accept gauges made with that instrument. The SNAP 50 is not on the list. I therefore recommend that, unless you can afford an approved density meter, you make all gauges for tax determination with with a hydrometer and record the elements of the hydrometer gauge in the bottling tank record which I know you are all keeping as required by 19.599, right. Density Meters as An Internal Control - I want to emphasize, I do not mean to discourage you from using density meters. In fact, I think it is a great idea if you have the bucks needed to buy them. But I AGREE with Michelangelo that the density meter is a great internal control over possible errors in hydrometer readings. I'm sure TTB would do back-flips in celebration of the fact you are using such an internal control, but only if you are using it as a control, and not as the gauge by which you determine taxes. Gauges for other than tax determination -In 1991, in approving meters available then, ATF made a distinction in the accuracy required of meters used for tax determination gauges and those used for other gauges. See https://www.ttb.gov/rulings/91-2.htm for details on that. In that ruling, ATF approved the DMA 46 for other gauges, but not tax determinations. So,ATF applied the "previously approved rule" to all gauges, not just those made to determine taxes. I see nothing that authorizes the use of the SNAP 50 to make any required gauges, i.e gauges made that require that you make a record of the elements of the gauge. Although I think TTB would be less concerned over such other other gauges that you make using instruments like the SNAP 50, and although I suspect that TTB would not take serious issue with using a SNAP 150 for most gauges, I can't speak for them. Nor can I say whether a TTB auditor or investigator who showed up at your door would even be aware of these issues. But, as a bottom line, why not also make a gauge with a hydrometer and have the reassurance that your using internal controls that ensure the accuracy of the gauges you make?

Since bluestar comments touch on most issues, let’s take those comments “one bird at a time” and break each down: 1. Required Gauges - You are required to make two different sorts of gauges when bottling. a. The first is the gauge in the bottling tank. See §19.593. i. There is no tolerance. That is what it means by “the gauge must be made at labeling proof.” ii. If the label to be applied says 80 proof, the gauge must be at 80 proof, not at 80.05 or 79.95. That is the rule, but it is unlikely that you can gauge with that precision. Still, cut to 80 on the nose by your reading. That makes TTB happy. iii. You enter the details of the gauge on the bottling record – see §19.599. iv. You make this cut after all other operations, including filtration, are complete. v. Because of the precision, this is the gauge that can drive you bonkers vi. As others suggest, cut it high first in case your initial gauge was low, then add water as needed to get it to proof. vii. These calculations are not that hard. Some people offer programs, but you can do it with a worksheet into which you have entered Excel formulas and the chart from the gauging manual. b. The second gauge is the alcohol content and fill check. See 19.356. i. At “representative times” during the bottling, you must test alcohol content and fill to determine if what you are bottling is within tolerance. ii. Representative times is not further explained. Bottling a few cases, then at the start. Bottling all day, then several times. That’s the best I can do to explain it. iii. The general requirement is that your procedures must ensure that the proof and fill are within tolerances. iv. You must make a record of these test (See §19.600, which tells you what the record must show). v. When you are out of tolerance, you must make corrections and show that in the record. 2. Variation in Proof – This forum has beat to death the issue of proof tolerance. I will repeat it one more time. a. There is no provision for bottled proof greater than the label statement. The label proof is used as an element of the gauge for tax determination purposes (see § Sec. 19.286 Gauging of spirits in bottles). b. There is provision for a loss of proof at the time of bottling. The loss may not exceed .15% ABV, which is the equivalent of a drop of three degrees of proof. That is where the values 3.0 and .15 arise. They are apples and oranges and both are valid. Do not confuse ABV with degrees of proof. Note that in some cases, the allowed drop can be as much as 0.25% (small bottles and/or high obscuration). See 19.356(b). 3. Variation in Fill - Even though the labeled volume is also an element of the tax determination gauge for spirits in bottles, the regulations allow overfills. In fact, they demand them. Section 19.356(a) requires that “there must be approximately the same number of overfills and underfills for each lot bottled.” But it also imposes other limits. The maximum variation in fill changes with bottle size. For 750’s, it is not more than “plus or minus” 2.0%. 4. Technique - The question could be read to ask how you go about making the gauge. TTB has tutorials at https://ttb.gov/spirits/proofing.shtml. They tell you how to go about checking proof and I can guarantee this – if you don’t make a reasonable attempt to follow the techniques they show, you are going to have errors. For example, remember to temper your hydrometer and flask and wipe things down to prevent evaporation. Temperature matters and changing temperatures make things “interesting.” So it is nice to see the video where they read proof under laboratory conditions. I’ve done it dipping out of the top of a tank truck in the dead of Montana winter, at 30 below with a wind chill factor of “I don’t care what it reads right now, it’s close enough, so unload this [expletive deleted] thing and we can worry about details later.” Unless you buy tanker loads, the need for that is long past. Try getting the spirits to a stable temperature, then gauge. That is as complete as I can be. I don't intend to comment on this matter again,

If we are talking about control states only, then the wholesaler is not an issue. Generally, you would ship directly to the control state warehouse. kkbodine is correct that the rules vary. You are going to have to contact the purchasing department for each state and ask them what you need to do to get listed in their state. You can find information on line about the listing process by visiting the web sites for the individual states. For Idaho, for example, go to https://www.liquor.idaho.gov/product-listing.html. There you will find a blow by blow description of what you have to do. I did some work for a client a few years back and discovered that Idaho requires that you appoint an "Idaho Liquor Supplier Representative..," Don't know what that means? Neither did I. So I called them and asked. It is a nose and grindstone process. A couple of quick comments: Many states use a bailment system. In essence, that means you consign the spirits to the state warehouse and they do not pay you until they ship them to one of their stores or to a retail customer. Be prepared for that. At least two states that use the bailment system, Ohio and North Carolina, require that you get a federal basic permit as a wholesaler at their warehouse location. Others may to, I just don't know. The state is not going to promote the product for you and may require that you tell them what you are going to do to promote it. I think all 17 control states require some sort of code number. As kkbodine says, A number do use the National Association of Beverage Control States INABCA Code); some use their own. You have to make supplication for the NABCA number for each of your products through the NABCA. If you identify the states you'd like to which you would like to sell, you could contact distilleries in those states and ask, but I would call the state first, get its spiel, and then talk to people about how things work in practice.

By regulation, you are may not go over the stated proof on the label, which is also the proof used for making the tax determination. As TTB says in explaining the results of its market basket sampling, " Distilled spirits generally allow for a loss of 0.15% alcohol by volume; however, no tolerance is allowed for an increase in alcohol by volume (27 CFR 5.37(b))," The section cited is also clear and unambiguous about the requirement. The following tolerances shall be allowed (without affecting the labeled statement of alcohol content) for losses of alcohol content occurring during bottling (I'll not restate them here) Again, the tolerance is only for losses during bottling. This goes back at least as far as ATF Ruling 75-32, which provided: Held, where the minimum bottling proof for various classes and types of distilled spirits prescribed in 27 CFR 5.22 is 80 degrees of proof, the bottling proof of any spirits to be bottled at that proof must be set exactly at such proof in the bottling tank. However, where, through no fault of the proprietor, there is a subsequent loss of proof in the bottling process of not more than three-tenths of a degree of proof, the bottled product retains its eligibility to be labeled in accordance with the class and type prescribed. Conversely, any shading of the proof of any such product through deliberate acts or negligence on the part of the bottler which results in the product being less than 80 proof would render the product ineligible for its original designation and subject it to being labeled as a "Diluted Product." Which brings us to the real question, "In practice, what is TTB's tolerance for over proof product, since the regulations have no tolerance for it at all?" TTB's tolerance ends at the loss of taxes due to overprooofed product, but the reality is that it will probably take no action where it cannot prove that the tax due exceeds some amount if will prescribe by orders which neither you or I will ever see. I doubt that it would ever take action to suspend a permit - or to collect an offer in compromise in lieu of suspension - where it did not have solid evidence that you knowingly overproofed the product. And why would you chose to do that? That is the import of the 66% overproof figure. What did TTB do about it? It may have cited violations, but hunt the public records and you are not going to see offers in compromise or heaven forbid, suspensions, for such violations. TTB seems to have a degree of tolerance for products that exceed the tolerance for overproofing that the regulations do not grant. Please note - Seek authoritative citations. Even if it is a TTB agent telling you something, respectfully ask that they cite the regulation or ruling on which they are relying.