FIVE x 5 Consulting

Nothing's officially changed yet. I expect a final rule in 2024 but there's no guarantee.

Till then, old "Malt Whiskey" requirements would generally apply: Whisky produced at not exceeding 80% alcohol by volume (160 proof) from a fermented mash of not less than 51 percent malted barley and stored at not more than 62.5% alcohol by volume (125 proof) in charred new oak containers

Hard problem! 
St. Augustine down in FL has one solution, pretty clever. Looks like a pretty standard beer tap (not even a Perlick). It's not actually coming from a barrel, but it looks like it is...

If you want help with the regulatory compliance side of this plan, drop me a line. I've helped a few distilleries execute "fill your own" experiences (there are some major gotchas you may not have considered).

Hi!  We make Whiskey Systems so I thought I'd pop in and give you some answers.

1.  Yes, some folks indeed use external inventory tracking, but I would call it a small percentage.

2. QBO integration does not cause your Whiskey Systems inventory to appear in QB.  Instead, it causes your financial transactions (dollars, not units) to appear in QB.  QB integration likely wont help you get better inventory insight.

3. "Managing inventory" is a little broad and everyone's got different needs. To help you out here, I'd love to hop on a quick (no charge) call to discuss your specific needs. I'll PM you a link to book that consult in case you'd like to!

Interesting question. There's a free monograph for USP ethanol from the Bad Old Hand Sani days: https://www.usp.org/sites/default/files/usp/document/health-quality-safety/usp-hand-sanitizer-ingredients.pdf

However, US Distilleries do not need to follow this monograph unless they want to label their neutral spirit as USP.

I don't know that there's a hard limit specified for acetaldehyde. You have an obligation to avoid "adulterating" your products from FDA regulations.  At what point would acetaldehyde cause a product to be considered (by FDA) to be adulterated? I don't know. Here's a survey of acetaldehyde levels from a 1983 study:

https://www.ncbi.nlm.nih.gov/books/NBK531662/table/p5-T33/?report=objectonly

Acetaldehyde is present in most fermented products and will carry over when distilling. Small producers typically don't even have the means to test for it.  I'm not sure how TTB or FDA would go about regulating & enforcing such a limit.

As for mandated levels of ethanol, the minimum is 0.5% ABV (1 proof degree).  Below that point, it is not considered or regulated as an alcoholic beverage.

"NDP" or "Non-Distilling Producer" is another common name for these operations.

On 1/18/2024 at 4:38 PM, Pursuit Spirits said:

That does print the correct way at 6x4 but doesn't print the SCC code unfortunately. 

Sorry for the delay in responding!

The NABCA spec wants the bottle GTIN in the bottom left. An SCC code (case code) would not fit the NABCA spec, which is what this label is intended to match.

If you also need an SCC, that's a requirement beyond NABCA standards. You can meet that spec through the "Print State Label" function in Whiskey Systems, which has both bottle GTIN and case SCC codes on it:

See NABCA spec here:

Just curious, who or what state is asking you to use SCC instead of UPC on the 6x4 checkerboard control state label?

You could use it as a base for most any kind of "distilled spirits specialty" product. Think cocktails/RTDs, seltzers, liqueurs, amaro, aquavit, bitters.

You can also use it as a base for Distilled Gin (but not Compound Gin, which requires neutral > 190).

Finally you can bottle it as-is and it'll fall under Distilled Spirits Specialty with a Statement of Composition - something like "Spirits Distilled from Sweet Potato".

I'm with Silk City. Setting aside the fact that it's a normal production process all over the world, here in the US it is technically not Rum if you have fermentables other than cane products - doesn't matter the quantity. If fruit and/or sugar derived from fruit makes it into your ferment, you're in distilled spirits specialty territory.

Yeast, enzymes and treatments like oyster shells are not fermentables and are not material to this analysis.

I'd sure hate to put a ton of effort into a product like this only to find out later that you cannot call it Rum on your label!

4 hours ago, risenshine said:

I have a similar question but with the reverse outcome. 

What if I observe maturation increases my Proof? so I have 50 gallons at 110 proof at the date of filling (55 pg)
after maturation I have 48 gallons at 125 proof (60 PG)

How is that recorded for ttb?

If I dilute to 90 proof, I have actually increased my bottle output from the date the cask was filled 

It's certainly possible for proof to increase over time in a barrel as it ages.

However, the scenario you have posited (where proof gallons increase over time) is not possible.  Where did the 5 PGs of additional ethanol molecules come from?  The air?  The wood?

You can only lose proof gallons over time, not gain. PGs are a separate measure from the proof of the spirits.

There is a fully-NABCA-compliant 6x4 option in Whiskey Systems under "Print CSC Label" - it was added in the last year or two. Give it a try?

Hi there,

If you're using DISTILL x 5 or Whiskey Systems distillery management software, it can generate these labels for you automatically.

WS: https://whiskeysystems.zendesk.com/hc/en-us/articles/10167742008343-Print-Control-State-Case-Labels

Dx5: https://support.distillerysolutions.com/hc/en-us/articles/115004225805-Inventory-Setup-Print-Control-State-Labels-Read-Time-2-mins

TTB asked for letters on that very topic last year, and not a lot of folks responded.

https://www.regulations.gov/document/TTB-2023-0005-0001

I got nothin', then. Very curious to hear how this shakes out, hope you'll keep us updated!

That's a noodle-scratcher!

The first thing that comes to mind is your gauging methodology.  Are you measuring your outputs volume by weight or by sight glass?  Hydrometer/thermometer method for reading proof, or something else?  If you have multiple operators and temperature swings, the chances of this varying increase.

I had a client recently tell me about a discovery they made. Starting gravities were substantially lower than expected for some cooks.  Looked like some wacky process thing that they needed to investigate.  Turned out it was a new operator that was leaving rinse water in sampling vessels and diluting the wash pre-measurement. All was well, it was just a measurement error. 

There's a quote from TTB's website stating: 

Quote

Generally, storage is when you hold bulk quantities of product without specific plans for further processing.

But there is no specific regulation I'm aware of that actually requires you to use Storage or Processing in any particular scenario.

The advice I will give here is therefore based not on regulation but on my personal opinion, informed by my experience.

I would show all of your white dog production on the Production report. The PGs that went into the two 15 gallon barrels would be deposited into cooperage in Storage. The remaining PGs would be Dumped into Processing Bulk (Pt I), without going through Storage first.

The quantity that you bottled would move to Processing Pt II while the quantity in stainless awaiting bottles would remain in Processing Pt I until you bottle it.

This is the ol' Speakeasy Switcheroo.

While the website appears to be DTC, bottles are actually fulfilled by Speakeasy's network of retailers. Lots of US-based distilleries have the same thing going on... it looks like DTC but peer carefully and you will see that it is not truly DTC.

12 hours ago, Guest MC Mountain Man said:

Hello,

  I enjoy buying cheap vodka or brandy and tincturing good fruit in it. Sometimes I add sugar syrup.  Either way I make amazing liqueurs and brandies. No distillation requires. I currently give these away as gifts to friends and family, but I would like to sell them. Are there any federal laws that would apply since I buy the vodka at retail?

 

Thank you,

MC Mountain Man

If you want to produce and sell the product within the 3 tier system (i.e. to wholesalers and/or bars/restaurants/liquor stores) then you'll need to qualify as a distilled spirit plant. The fact that you do not distill is not material to this analysis. Your infusion/tincturing is a processing activity that requires a Basic Permit (i.e. full-scale production permit).

A workaround that is legal in some states but not all would be to buy a bar and do your infusions behind the bar. Then you can sell them as mixed drinks. Some states even let you sell those mixed drinks to-go. This would entail getting a retail permit from you state/municipality.

Fundamentally, you will need SOME kind of licensing in order to legally sell alcohol, full stop.

In the US we draw the line for "neutral" at 190 proof (distillation proof). EU and some other countries set that bar at 192 proof off the still. 

As others have stated, you can still get some character from your fermented base when collecting at 190 proof.  (It is harder to do so at 192 proof, since you're pretty close to azeotrope).

Even before the change was made, there were an absolute TON of products on the market that were labeled as vodka but were decidedly not neutral. In my humble opinion, TTB making this change was just adjusting the regs to match what distillers were already doing.

Pedantic note - the allowance to add sugar and citric to Vodka is actually quite old... here's a ruling from 1997 on the topic: https://www.ttb.gov/images/pdfs/rulings/97-1.htm

A quick reading of Florida Statute 561.42 appears to preclude you from owning both a retail  (“vendor”) license (e.g. bar/restaurant/liquor store) and a manufacturer’s (DD/craft distillery) license.  Language that prevents you from participating in multiple tiers within the 3-tier system (manufacturing, wholesaling, retailing) is typical- many states have similar prohibitions.

http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0500-0599/0561/Sections/0561.42.html

There’s more.  561.22 explicitly forbids you from gaining a vendor license if you are manufacturer, and vice versa: http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0500-0599/0561/Sections/0561.22.html

With that said, it appears that 561.221 pokes some holes in 561.22 and allows you to have some limited retail interest if you are a wine producer or a beer producer.  However, this exception does not appear to apply to distilled spirits. http://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0500-0599/0561/Sections/0561.221.html

I am not a beer/wine consultant so take this with a grain of salt.

I think the answer to all your questions is “no” or “moot” – since you cannot hold the DD and retail/vendor licenses simultaneously.

These questions came in from an anonymous ADI member:

1.) Can an individual who holds an 8COP liquor license in Florida own a distillery as well?

2.) Can an 8COP be used alongside a CMB, 2COP, and a DD license from the Florida DBPR at the same location? 

3.) Would the 8COP need to be used at a different location?

4.) In order to distribute from one location to another location(manufacturing facility with tasting room to a bar/music venue that we own as well), would we need to create a distributorship in a spouse's name whose name is not on any of the manufacturing licenses?

Hi!  Great question!

Your exports to Canada would indeed be withdrawn without payment of tax. The PGs that you remove for export would be reported on Line 36 of the Processing report (instead of Line 33 for domestic removals).  So, there would actually be a change in your monthly operational reporting.

After the end of the quarter, you would simply exclude Line 36 PGs from your excise tax computation/return.

Additionally, you must file TTB F5100.11 as a notice and retain evidence of exportation for 6 years in order to substantiate your relief from excise tax liability.

Once your products have been exported, you must also send in export documentation to TTB (acceptable forms are listed in the Industry Circular 2000-4 you referenced previously).

All of these items are non-optional.

Here is some guidance from TTB: https://www.ttb.gov/itd/exporting-distilled-spirits-untaxpaid

TTB "International Affairs Division" has good people who can answer your questions.  Contact them and confirm what I've told you - its always best to get it from the horse's mouth, so to speak: https://www.ttb.gov/contact-iad

As for Industry Circular 2004-3 -- I wouldn't worry about it right now.  If you find yourself regularly exporting to Canada then it would make sense to apply for the variance offered in that circular, but for your first shipment, I wouldn't bother. (the variance allows you to retain your "proof of export" documentation at your DSP instead of mailing it in).

Temporary CBMA provisions from 2017 allowed unlimited/unrestricted transfers of bottled spirits in bond from 2018-2020.

As of Jan 1, 2021, you may only transfer in bond Bulk Spirits (i.e. 1 gallon or larger). This was also the case prior to 2018.

The citations for this mess are not in CFR, they are in US Code: https://www.law.cornell.edu/uscode/text/26/5212 (see the history section at bottom)

I prefer to rely on dhdunbar's old adage: it is this way because TTB says it is this way.  Their guidance is pretty clear:

Transfers of non-bulk beverage distilled spirits are limited

Beginning January 1, 2021, the law prohibits the transfer of bottled spirits in bond except:

• between bonded premises belonging to the same person or members of the same controlled group, or
• if the distilled spirits are transferred in bond from the DSP who distilled or processed the spirits to another DSP for bottling or storage and returned to the transferor for removal, but only if the transferor retained title during the entire period between such distillation, or processing, and removal.

I will only add that I have seen TTB authorize, as a one-off, the transfer of bottled spirits in bond when a DSP is closing or opening. 

@jocko TTB standards require bench distillation above 6g/L dissolved solids, full stop. Even the expensive benchtops from Anton Paar and Rudolph Research are not TTB approved for proofing of obscured spirits.

With that said, you can potentially get a variance from TTB Scientific Services Division to allow you to use an alternative method instead of bench distillation. Such a variance could apply to GC/MS, AlcoDens LQ method, a benchtop or any other method that you can demonstrate is sufficiently accurate.

Accuracy of meerkat's calculator is utterly dependent on your instrument quality and lab skills. If you use a $9 hydrometer and a $14 refractometer, you're going to get a reading but it's probably off by 2-3% ABV.  I personally like the EasyDens/SmartRef combo that meerkat mentioned ($399 / $279 respectively) which can reliably get you within 0.5% ABV or maybe a bit better in ideal conditions.  If you want to achieve 0.1-0.2% ABV +/- levels of accuracy, then you need the precision offered by a benchtop density meter with temp control + benchtop refractometer with temp control (not temp compensation).  This is what the expensive benchtop instrument combos from AP/RR offer.

On 11/13/2023 at 6:34 AM, jocko said:

You cannot measure ABV of an obscured spirit unless you do to TTB distillation test, or have an expensive tabletop machine like an Anton-Paar designed to do such things. 

While this used to be true, earlier this year meerkat added functionality to AlcoDens LQ that allows you to do the tabletop-type calculation yourself. You just need a density reading (e.g. from a hydrometer) and a refractometer reading (e.g. from a brix refractometer). I think this is really cool and kind of a big deal that we can do this analysis for a few hundred bucks - those benchtop instruments cost $30k+ and they were previously your only option.

5 hours ago, Silk City Distillers said:

very easy for it to very convincingly cite incorrect information.

Just about every answer I've seen is subtly wrong, if not profoundly. Even yours, which is pretty solid overall, has some convincingly-stated patent falsehoods like "no specific proof requirement for straight whiskey" (um, proof at distillation, barreling proof and bottling proof are all regulated) and "straight whiskey must be aged in charred new oak barrels" (hello, Straight Corn Whiskey?). 

That said, it's a good place to start your research if you're interested in untangling the web of CFR cross references and are able to look at citations carefully. One big issue I've seen (among many) is that the bot will happily cite beer/wine-only regs when asked about DSPs.