opening a legal distillery in the U.S.

[Uncle Jesse]

spent hours on the phone today. ordered the grain mill, got the insurance company started on the bond. talked to the ATTTB for about an hour to clarify some questions i had regarding the application information.

[Uncle Jesse]

getting a bond is a hassle. you have to have a bond to cover all taxes owed on liquor you have produced or onhand for which you havent paid taxes. they charge you taxes on proof gallons, a u.s. gallon at 50% ABV. federal taxes are currently at $13.50/proof gallon and california state taxes are at $3.30/proof gallon. this means that for every gallon i have in house, bottled or aging i have to carry $16.80 worth of bond.

also the first 1k doesn't count as it goes toward withdrawal coverage taxes. so, for a $50,000 bond you get $49,000 worth of coverage which would cover 2,916 proof gallons, or 14,580 fifths at 100 proof.

[oldpete]

what do distilleries manage to get a good aged first product? float overhead until it ages enough to be bottled or just find a way to make an unaged product at first?

[Big J]

getting a bond is a hassle...

Hee hee, sounds just like when I deal with US customs for importing. A mountain of obscure paperwork and orwellian requirements, but eventually you figure it out. Good luck.

Cheers,
J

[Uncle Jesse]

what do distilleries manage to get a good aged first product? float overhead until it ages enough to be bottled or just find a way to make an unaged product at first?

good questions. a combo of both for me.

[Uncle Jesse]

Here is the first form to be filled out in the process for getting a licensed distillery. Doesn't look too rough, right? Well, look at page 2, supplemental documents to be filed with the application.

http://www.ttb.gov/forms/f511041.pdf

each required bit of info is enumerated more clearly here:

http://www.ttb.gov/spirits/27cfrpart019.htm#19.1

for anyone who really cares to look up the minutiae.

[maze48]

Here is the first form to be filled out in the process for getting a licensed distillery. Doesn't look too rough, right? Well, look at page 2, supplemental documents to be filed with the application.

http://www.ttb.gov/forms/f511041.pdf

each required bit of info is enumerated more clearly here:

http://www.ttb.gov/spirits/27cfrpart019.htm#19.1

for anyone who really cares to look up the minutiae.

Hey Uncle Jesse, I'm sure the reward will payoff big time.

[bpitt]

Uncle Jesse, new guy here, kinda in the same dilemma. I, too, am seeking to have a legal distillery. I contacted the Feds first, they refered me to my state ABC. I called 3, maybe 4 different people there and got that many different answers. One was shocked that I was seeking a legal way to make whiskey. One told me no, another told me no, until I started reciting state code and recent legislation that lowers the manufacturers permit fee. He then told me he would look into it and call me back, I'm waiting on my call. I really don't think they are taking me seriously, but between you and me, I don't mind plopping down the cash for the permits and such, I just want to do it LEGALLY!

[Uncle Jesse]

start with your city. if they won't approve your location, well, that's step one. talk to the fire guys, planning, environmental health. they'll all want to know what's up first.

[Big H]

i'm new in stills but I have experience in selling things

Purple is a color of trust makes them trust your drink
green makes them spend more money
red makes them hungry maybe drink your drink while they eat
yellow is the first color they will see making them look at your bottle first


NEATNESS SELLS the number one rule in business


a clear bottle might help too because it looks neater

just some tips that might help you sell more

[Blueraven]

UJ,

Congrads on the jump 'ole stick..Your ahead of me dang it! I've researched it alot and its quite a deal to do.

One guy here in the Northern Brew Club just opened a Meadery..

Well when i get the house and strip built i'm prob gonna do it too and see what the market can bear. From the folk who have tasted product no probs selling. My prob is getting the grain. I'll have to import from Canada prob, hopefully by the train car load to keep the price down.

We'll see i reckon.

I wish you best of speed and don't forget to let us know where we can get a small sample long distance..Opps!!


Blueraven

[riff42]

getting a bond is a hassle...

Hee hee, sounds just like when I deal with US customs for importing. A mountain of obscure paperwork and orwellian requirements, but eventually you figure it out. Good luck.

Cheers,
J

don;'t get me started on that governmental BS.
50$ to OPEN a crate? *grumble*

and this was all 8 years ago, and I'm still mad!!

[bourbonbob]

Will you be looking for official tasters........I can work cheap.

[dubnluvn]

I am a photographer...you will be needing one.

[Uncle Jesse]

OK.

1. leased a warehouse and am working with my architect to complete the plans and then to get city approval.

2. warehouse has everything but no gas hookup, after my plans are approved by the city I submit them to the utility company to start the process of getting gas run to this building for my boiler.

3. got my theft and liability insurance.

4. got an alarm without which I couldn't get theft insurance.

5. got in touch with the locksmith for the "panic" or "explosion" bar I'll need on one exit to suit the fire marshal. they are also going to supply me with padlocks which meet the federal standard so I can secure the roll-up doors according to federal standards.

6. keep reading the minutae of Title 27.

7. contacted the ATTTB (Alcohol Tobacco Tax and Trade Bureau), formerly 2/3's of the ATF (Alcohol Tobacco and Firearms) for more detailed info regarding the specific hydrometers I will need to purchase.

8. Got the paperwork for my assurity bond but I'm going to wait until I actually need it before I start paying.

9. working on all the paperwork I need to file for my federal permits.

10. 10 bbl still is in the works and should be done soon.

11. moved my other equipment including boiler, fermenter, mash/lauter tun to the warehouse.

12. spoke to local winery about possibility of contract work on brandies etc.

13. spoke to local orchard about availability of seasonal "seconds" fruit which can't be sold because of poor appearance but which makes great brandies. they also grow many apples and I will experiment to find an applejack recipe I enjoy.

14. contacted bottle wholesaler to get samples of a few bottle styles I like.

15. working with design company for label/logo ideas, waiting for bottle samples to move forward with this.

16. had phone and DSL run into the warehouse.

that's my recent work on the distillery, off the top of my head.

[stoker]

looks like you'r doing well to start distilling in some weeks?

[Uncle Jesse]

looks like you'r doing well to start distilling in some weeks?

months from now, at the earliest.

[level Joe]

Sounds like youre way past the point of no return. Glad to hear everything is still moving forward for you. If I ever "come into money" and can afford to travel, I would like to see/tour the place (I might get west of the Mississippi some day ).

[Husker]

I am bored, and am starting to read 27-CFR (the distillery regs). Jesse, in secton 19.34 (effective tax rates), it "looks" like you pay tax on the finished distilled product AND the wines? Is that correct, or are they refering to using "untaxed" drinkable wines, and distilling them into brandies and such?

Sec. 19.34 Computation of effective tax rate.

(a) The proprietor shall compute the effective tax rate for
distilled spirits containing eligible wine or eligible flavors as the
ratio of the numerator and denominator as follows:
(1) The numerator will be the sum of:
(i) The proof gallons of all distilled spirits used in the product
(exclusive of distilled spirits derived from eligible flavors),
multiplied by the tax rate prescribed by 26 U.S.C. 5001;
(ii) The wine gallons of each eligible wine used in the product,
multiplied by the tax rate prescribed by 26 U.S.C. 5041(b)(1), (2), or
(3), which would be imposed on the wine but for its removal to bonded
premises; and
(iii) The proof gallons of all distilled spirits derived from
eligible flavors used in the product, multiplied by the tax rate
prescribed by 26 U.S.C. 5001, but only to the extent that such distilled
spirits exceed 2\1/2\% of the denominator prescribed in paragraph (a)(2)
of this section.

Specifically 19.34.a.1.i and ii. I can understand adding in any "proof" gallons you which result from added flavorings (in part iii), but part ii seems strange. I guess it could mean that if you mix distilled, with untaxed wines, that you add in those proof gallons, but I simply do not read that in the section.


H.

[Uncle Jesse]

yes i believe in that instance you'd have to pay taxes for the wine, covered under one bond, and the final spirits, covered by another bond. these are two distinct products and i believe the fact that the wine is used means that tax needs to be paid.

you're not taxed on any distilled spirits until they are sold. they mention here in part (3) "but for it's removal to a bonded warehouse." this means it was removed from it's bonded wine warehouse which normally means tax had to be paid on the product at that point - EXCEPT - in this case you are removing the wine and taking it to another bonded warehouse for spirits so no taxes are paid for this move. naturally, since there isn't any sale involved at this point. but, at the spirits warehouse, you destroy the wine, in effect, without taxes having ever been paid on it. they want their tax money for the wine and for the spirits produced from the wine.

[Uncle Jesse]

even deeper into title 27 here http://www.washingtonwatchdog.org/docum ... html#30.22

here's the official list of real proof hydrometers or alcoholometers or whatever you want to call them. these are the real deal, not something you buy from any average online beer or spirits making store.

http://www.labsafety.com/store/Lab_Supp ... ers/38946/

after a week of calls around the country i have found that i do not need to purchase all of these, but i do need to purchase any that i will be using and as most of you can tell, i need most of them so i bought the entire set.

when i put spirits into my gauging tank they have to be gauged perfectly. this also requires a $250 NIST approved thermometer. at any rate, once in the bottle i am allowed a bit of deviation on different products. so for american whiskies i label 40% but i'm allowed +/- .2 so 39.8% is allowed. when in the gauging tank where tax is determined, however, i must be exact.

[Husker]

with your 300 gallon still, what are you listing as your statement of production capacity? Also, how long do you think (I assume you have not tested it yet) to run a batch of wash? and what about a 2nd run (time)? Also, are you thumping, or multiple running?

H.

PS, thanks for informing the curious out here just what flaming hoops you have been jumping through to get this done.

[Uncle Jesse]

I haven't really gotten to the estimated production capacity yet. I believe I'll go with 100 proof gallons/day max but that's a ridiculous amount which assumes 2 runs in a day. Realistically I hope for more like 3 runs a week to start out. 300 gallon still, I'd estimate what, 45 gallons max of good product if I'm not distilling low wines? I think that's reasonably conservative.

I'm considering a bond for $50,000.00 which will allow me to warehouse 2,916 proof gallons at any time. That includes spirits aging in casks and so on.

[Uncle Jesse]

bear in mind that we're talking about proof gallons here. A proof gallon is a gallon of distilled spirits at 100 proof (50% ABV).

[Uncle Jesse]

Also admire my $250 NIST certified thermometer:

http://www.hbinstrument.com/product_detail.php?p=1203

[Big J]

="Uncle Jesse"
even deeper into title 27 here http://www.washingtonwatchdog.org/docum ... html#30.22

Damn, looking at that really makes me appreciate the metric system.

-J

[speedfreaksteve]

At those levels wouldn't you wish to be putting out as much as possible early on so that you can age it? Having to wait 5 years before you have 5 year old whiskey ready for sale is a long time!

Also, is distress aging ever used commercially?

I'm considering a bond for $50,000.00 which will allow me to warehouse 2,916 proof gallons at any time. That includes spirits aging in casks and so on.

C'mon, are you sure that's not all for personal consumption?

[Husker]

I imagine you are planning on storage mostly in oak casks. Are you going to build these inhouse, or have you contracted with an existing cask company for these casks. If you have a "contract", what price did you get them for?

I would think it woud be cheaper to build or have a cabinet maker or someone with those type of skills to build them, but that may not be the case. I figure, someone who knows what they are doing, and with a helper (lower paid, "unskilled" but good with his hands helper), could probably put out 4 to 8 barrels a day. Problem may be in getting aged oak.

H.

[Uncle Jesse]

why doesn't our quote function work I wonder?

you have to age whiskey 2 years in oak barrels at not more than 125 proof to be called straight whiskey. so for 2 years I will have to find other ways to make revenue. Obviously 2 years isn't a magical number and whiskey has to age properly. I find that smaller casks mature more quickly and I plan to start some of those as well as some larger casks.

I plan to try to sell some of my whiskey as moonshine though who knows if that will work, while I age most of it. We all know my moonshine is a high quality product which can be sipped all night without fear of hangover like some commercial corn whiskies I won't name, but educating consumers about this is a herculean task. I don't want to market to the frat boy drinkin' crowd. I'm looking for an educated spirits drinker who will pay a few bucks more for a hand-crafted, single-batch product.

I also figure there are other spirits which require no aging which I can make to bring something to market. I live near the breadbasket of California and there are unlimited fruit brandy options literally down the road from me.

Also I am going to discuss contract work with local wineries.

[Husker]

Uncle Jesse
why doesn't our quote function work I wonder?

It kinda of does, but you have to "fix" the default. The default this site "builds" works on most other forums, but not this one. Probably some bug in the phpBB you are using.

H.