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Farm Distillery


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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.

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I want to establish a farm distillery in rural Maryland am interested if there are any other farm distilleries in operation with the farmer's primary residence nearby. I want to do is use water from the springhouse and distill in the barn that's separate from the farmhouse.

dhdunbar: So you know of existing farms with a primary residence and distillery on the property?

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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.


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