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Making Neutral Spirit for a brewery

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So a local brew pub approached me and asked if I could make a high proof neutral spirit for them because they are making hop extracts.

My question is where does this fall legally? I thought maybe a TIB but is this the same as two DSP's transferring spirit?

What I can mainly find is transferring beer or wine to a distillery, nothing about high proof to a brewery.

Anybody have experience with this?

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You cannot transfer spirits in bond to a brewery. A brewer cannot receive spirits on its brewery premises, even if the spirits are taxpaid. A brewer cannot produce hop extract on the brewery premises. If it wants to make hop extract, it must do so off the brewery premises.

Assuming that the brewer does not want to use taxpaid spirits to make the hop extract, it would have to qualify as a manufacturer of non beverage products. It could then acquire taxpaid spirits from a distillery qualified to produce industrial alcohol - you probably are not so qualified and would have to amend your registration and obtain an operating permit. The brewer would have to file a formula to allow TTB to determine that the extract it made was not fit for beverage use. If TTB approved the formula, the brewer could then make the hop extract - but not on brewery premises - and could file a claim for drawback of excise taxes paid on the spirits. If approved, TTB would refund the taxes less $1.00 per proof gallon.

The brewer may use hop extracts without filing a formula. See 27 CFR 25.55(a)(2) and RR 2014-4. TTB does limit the percentage of alcohol in the beer that may be derived from the extract. However, I am not familiar with the actual requirements for the use of hop extract, as opposed to say blackberry extract.

Although I speak with a seeming air of authority, this is the sort of advice you should confirm with TTB.

Finally, you should talk with the state authorities about their separate requirements. They may have special licensing requirements for persons who receive spirits in bulk, even if the spirits are taxpaid.

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