Clarification on Title 27, 19.54 Other businesses

[jcameron]

Hi there - I'm still in the early stages of trying to start a craft distillery in Washington. I recently had an exciting breakthrough, when some family friends who own a business bought a new building and are offering some space in their large, new warehouse-type building, which they're currently renovating. The building would have completely separate spaces with completely separate entrances. They're renovating it to fit their office and retail spaces to lease. The space which they've offered me already has a great start with plumbing, sprinkler systems and in-floor drainage.

I was refreshing myself on the TTB website and I came across this section and had some questions:

Quote

 

§19.54   Use of distilled spirits plant premises.

(a) General. A person may not conduct any business or operation on the premises of a distilled spirits plant unless the business or operation is authorized by the notice of registration on file with TTB or authorized under §19.55.

 

Does this mean that operating a distillery in a building that has other businesses would be prohibited? Or would it only be permitted given certain requirements (like separate entrances)? Or is it fine as long as you let the TTB know? Or am I misreading this entirely?

Thanks!

[Thatch]

4 hours ago, jcameron said:

Does this mean that operating a distillery in a building that has other businesses would be prohibited?

No

4 hours ago, jcameron said:

Or would it only be permitted given certain requirements (like separate entrances)?

The space would need to be secure.  Keep in mind that the TTB is interested in protecting revenue.  As long as this space does not have easy entry by others there should not be a problem.  We have our distillery inside a malt house.  The malt house is within the confines of the DSP.  There is also another company within the building but not within the confines of the DSP.

The TTB may be your lesser challenge.  You need to talk to your AHJ about what their requirements are based on how much storage of flammables you require.  

 

[gordon]

I agree with Thatch.  Ours is in an office/warehouse building with multiple tenants.  

[dhdunbar]

Definitions matter.  When you consider §19.54, you should know what the terms it includes mean to understand what it prohibits.  As other say, you are fine.  Here is why.

The term "distilled spirits plant" is defined in §19.1.  It means, "An establishment which is qualified under this part to conduct distilled spirits operations."  A distilled spirits plant is composed of "the" bonded premises, which means that it must have such premises, and"any" general premises, which means general premises are optional. 

The term "bonded premises" is defined.  It means "The premises of a distilled spirits plant, or part thereof [the other part being the general premises if you elect to have them] , as described in the application for registration, on which the conduct of distilled spirits operations defined in 26 U.S.C. 5002 is authorized."  So the bonded premises extend only to the area you describe, which can be a portion of a building. 

"General premises" is also defined.  It means, "Any business office, service facility, or other part of the premises described in the notice of registration other than bonded premises."  Here again, it is something you describe.  If it is included general premises on the application, and the application is approved, then the general premises is within the boundaries of the DSP plant and you may not conduct other business without TTB's approval.

Any undescribed portions of the building are not DSP premises.  Since the restriction to which you refer, §19.54's prohibition on other business, applies only to the area  you have described, on your application as within the DSP premises,l all of the other businesses conducted in the rest of the building are not affected by and do not affect your application.. 

However, you must provide security that prevents persons from gaining unauthorized access to the spirits without forced entry.  That is my description; you will not find that wording in the regulations.  The regulations, §19.192,  require (1) that you provide "adequate security measures at the plant to protect the revenue," and (2) that "the buildings, rooms, and partitions must be constructed of substantial materials. Doors, windows, or any other openings to the building must be secured or fastened during times when distilled spirits plant operations are not being conducted."  And that is it. 

So you must set your DSP apart from other areas by partitions constructed of substantial materials that afford adequate protection to the revenue.  Whether what you have does so is TTB's call, but there are precedents.

TTB specialists have developed a mantra, "floor to ceiling," which they chant, and which reflects an interpretation of the separation needed that is not found in the regulation itself - for example, §19.192 itself allows outside tanks that are within an enclosure, for which a chain link fence has always sufficed and some of my clients have separated adjacent breweries and wineries for the DSP by chain link fencing that does not reach the ceiling,, after full disclosure and without objection.  But, if you have walls, then TTB is not going to object to the quilting store next door and the canoe manufacturer on the other side of the other wall.

A sidebar - TTB will insist on floor to ceiling separation of any space that is used for the retail sale of liquors (read that distilled spirits, wine or beer) and will not permit such sales on general premises.  You can taste on general premises, but only if there is no charge, direct or indirect.  An indirect charge would include charges for tours or for parking for tours, as wll as charges for tasting.  But that is usually easily enough solved. Don't put the place you sell spirits in the description of the DSP which defines the boundaries.  

To those of you who have approvals that are contrary to what I've said, and I know they exist, when you go to amend your application, you are going to have to affirm that you understand those restrictions. 

Thatch is correct.,  It is local zoning, development and fire codes that present the largest hurdle.  ALWAYS make sure that you can get that approval, for the space you propose to use,  before going to great expense only to find that complying is going to bust the budget. 

 

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