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Restaurant, Winery and Liquor
Wineries & Microbreweries
RESTAURANT, WINERY, AND
LIQUOR LICENSES AND LAW
WINERIES AND MICROBREWERIES
IP FOR RESTAURANTS, WINERIES, AND MICROBREWERIES
RESTAURANT, WINERY, AND LIQUOR LICENSE LAW INFORMATION
[WINERIES AND MICROBREWERIES]
“God made yeast…and loves fermentation just as dearly as He loves vegetation.” – Ralph Waldo Emerson
Winemaking, malting and brewery are some of the world’s most traditional industries and man’s oldest biotechnology. In alcoholic beverage market, beer accounts for 53% and wine accounts for 15%. The beer industry contributes almost 200 billion to the US economy, provides 1.7 million jobs and $36 billion in tax revenues to the government.
Learn More About Wineries And Microbreweries:
A winery is a premises that manufactures wine from any fruit or brandy distilled as the by-product of wine. With a winery license, you are allowed to:
Manufacture wine from crushed grapes or grape concentrate.
Bottle wine received in bulk from its parent winery located outside New York State.
Sell wine to wholesalers or retailers in sealed containers of not more than 15 gallons each.
Sell wines in excess of 15 gallons to food, wine, vinegar and pharmaceutical manufacturers, provided a non-beverage manufacturer permit is first obtained from the Authority.
Manufacture wine from honey.
With a winery license, you can also apply for a license to sell wine at retail for consumption on the premises. This is a separate application and is not included in the winery license. Rules and regulations regarding retail on-premises licenses would apply.
Winery License Options
If you are planning to manufacture and sell wine, there are several licenses you can acquire, depending on how you plan to operate your business. Your options include:
A winery license allows you to manufacture wine. It authorizes the sale of wine manufactured by the licensee to licensed wholesalers, retailers and permittees in the state. Out-of-state delivery is pursuant to the state laws where the sale or delivery occurs. It also permits wine tastings of New York State labeled wines on the licensed premises, and the licensee is allowed to charge a fee for the tastings. With a winery license, you are also permitted to engage in a “wine by wire” service, whereby a NY winery makes deliveries on behalf of other NY wineries.
Farm winery license
A farm winery is a premises located on a farm in New York state that manufactures and sells wine. The license also allows the licensee to sell in bulk to any other licensed winery or farm winery, distiller or permittee. Out-of-state delivery is pursuant to the state laws where the sale or delivery occurs. The licensee is further permitted to act as a broker in the purchase and sale of New York state labeled wines for a fee or commission. The licensee can maintain a warehouse on the premises, as long as the licensee is compliant with the SLA regulations governing warehouses. The holder of a farm winery license does not need to obtain a trucking permit to deliver or transport wine. A farm winery is limited to manufacturing no more than 150,000 gallons of finished wine annually.
Temporary winery or farm winery permit
A temporary permit is available for wineries and farm wineries that have a permanent license application pending and the beginning of the harvest season for grapes or any other fruit or product necessary for the production or manufacture of wine for the premises will occur within 30 days. A temporary permit is also available for individuals or entities negotiating or under contract to purchase an existing winery or farm winery. In order to obtain a temporary permit, the applicant must be likely to receive approval of the permanent application by complying with SLA licensee requirements and have substantially complied with requirements necessary to obtain the permanent license. The SLA must grant approval or denial within 45 days of receipt of the application. The temporary permit is valid for six months, but a three-month extension is available for an additional fee and is subject to SLA approval.
This license permits the manufacture of wine or cider up to 1500 finished gallons of wine annually. If you hold a micro-winery license, you cannot obtain a license to sell wine at retail for off-premises consumption. A micro-winery licensee must sell or manufacture wine made completely from grapes or other fruits or agricultural products grown or produced in New York State only.
Wholesaler’s wine license
This license permits the sale of wine at wholesale on the premises in original sealed containers of not more than 15 gallons each to licensed manufacturers, wholesalers, retailers and permittees in New York.
Federal Regulation Of Wineries
In addition to State Liquor Authority rules and regulations, a winery must also comply with those of the Alcohol and Tobacco Tax and Trade Bureau (TTB). The TTB administers and regulates the operations of distilleries, wineries, breweries, importers and wholesalers.
There is also a separate set of TTB forms that must be filled out and supplemental documentation that must be included in order to qualify as a winery. The application screening and processing usually takes 60 days from the receipt of a completed packet.
The TTB is also responsible for collecting federal excise tax on the sale of wine for consumption. There are both semi-monthly and quarterly taxes due.
Wine for tasting may qualify as tax-exempt. In order to qualify for tax-free wine for tasting, you must record the quantity of wine transferred to the tasting area. You must only pay tax on any wine transferred and not used for tasting. If you also plan to sell wine for visitors to take home, that wine must be tax-paid. Producers of not more than 250,000 gallons of wine are eligible for a Small Domestic Producer’s Credit which lowers the tax due on the first 100,000 gallons of wine taxably removed each calendar year. Non-producing wine premises and companies which produce more than 250,000 gallons per year are generally not eligible to use the Credit when making taxable removals. The exception is when the Credit is transferred by an eligible small producer to another taxpayer (a “transferee”), to be used on its behalf. A transferee is often a Bonded Wine Cellar (BWC), but it may be any bonded wine premises. The wine regulations define “produced” as wine produced by fermentation and any volume increases to wine due to amelioration, wine spirits addition, sweetening, and the production of formula wine.
If you charge for a winery tour (in order to taste the wine) or for the wine that you serve in the tasting room, or if you sell wine to visitors to take home, you are considered a retailer.
Unlabeled Bottled Wine
When unlabeled bottled wine (“shiners”) is transferred among two or more bonded wine premises for aging or labeling, the bottler must provide a copy of the approved Application for and Certification/Exemption of Label/Bottle Approval (COLA) TTB Form 5100.31 under which the wine was bottled. The transfer in bond record which accompanies the wine must be accurate and specific, and the label information record for the wine must fully support any claims made on the label to be affixed to the wine. The responsibility for transferring accurate label information is not that of the producer alone; it is the responsibility of all holders of the wine from the time it is produced until it is removed from bond for consumption or sale.
Bonded Winery/Wine Cellar
The person who pays the tax on the wine is the qualified proprietor of a bonded winery or bonded wine cellar, and not a wholesaler, wine broker, agent, negotiant, retailer, consumer or, necessarily, the actual owner of the wine. Bottled wine may not be removed from bond (i.e., tax paid) without a COLA (TTB form) and an approved product label being affixed. If the labeled wine is transferred in bond to another bonded wine premises for taxable removal, it must be accompanied by the transfer in bond record which contains accurate and specific information which substantiates the label claims. All records must be retained for a period of not less than three years from the record date or the date of last entry required to be made in the record, whichever is later. Six years is recommended since the TTB may require records to be kept for a period of three additional years.
Home Winemaker's Centers
A home winemakers’ center is a place that collects a fee for customers to use space and equipment to make wine for personal or family use. A home winemakers' center may operate without qualifying under federal rules as a bonded wine cellar or paying federal excise tax on wine produced at the center by individuals under the following conditions:
The operator of a home winemakers' center must learn and comply with any permit, license or tax requirements of State and local law and conduct operations in compliance with State and local law.
The customers who make wine at the center must be qualified to produce wine for personal or family use under federal, State and local rules. The individual must be 18 years of age or the legal age to purchase wine in the locality whichever is older. The individual may produce, without payment of tax, per household, up to 100 gallons of wine per calendar year if there is one adult residing in the household, or 200 gallons if there are two or more adults residing in the household. The individual may remove wine from the place where it is made for personal or family use, including use in contests or tasting. The individual may not produce wine for sale or offer wine for sale.
The operations must never "cross the line" to commercial production or sale of wine. Proprietors and employees of Home Winemakers' Centers:
May furnish space, equipment, ingredients, bottling supplies and advice to customers.
May provide certain assistance to customers including:
Moving containers of wine between storage areas.
Cleaning, maintenance, and repair of equipment.
Climate and temperature control.
Disposal of wastes.
Quality control (including laboratory analysis and tasting of wine for quality control purposes).
May not provide physical assistance to, or on behalf of, customers in the production, storage, or bottling of wine; for example, employees may not ferment juice, filter or bottle wine, add ingredients to wine, or provide other physical assistance in producing or bottling wine.
May not provide non-tax paid wine to customers or prospective customers for sampling or other reasons.
A viticultural area is a designated wine grape-growing region that has distinguishable geographical features and boundaries that have been recognized by the TTB. A viticultural area should be based on unifying features that affect the growing conditions of the area (climate, soil, elevation, physical features). The East Coast AVA includes the New York AVAs of the Finger Lakes, Seneca Lake and Cayuga Lake regions. To establish a new viticultural area, a person may petition the TTB in letter form that includes:
Evidence that the area is known by the proposed name;
Historical or current evidence that the proposed boundaries of the viticultural area are correct;
Evidence that the geographical features of the area produce growing conditions which distinguish the proposed area from surrounding areas;
A narrative description of the boundaries based on features which can be found on United States Geological Survey (U.S.G.S.) maps of the largest applicable scale. The narrative description of the boundaries should be detailed enough so someone with the same U.S.G.S. maps could draw the viticultural area's boundaries by following the description. Political boundaries, survey lines, constructed features (such as roads), contour lines, and any other such features may be used as boundaries where they reasonably coincide with the actual geographical or viticultural limits of an area; and
A copy of the appropriate U.S.G.S. map(s) with the boundaries marked in any prominent color.
On receipt of a petition for establishment of a new viticultural area, the Regulations Division in TTB Headquarters reviews the petition and may contact the petitioner for more information. Once the petition is complete, TTB publishes a notice of proposed rulemaking and provides an opportunity for interested persons to comment on the proposal. If the petition, evidence and comments support establishment of the area, TTB publishes a final rule that amends the regulations to define the new viticultural area.
Guidelines For Organic Wine Labels
In today’s market, labeling a product as “organic” has become a driving force for the trendy, health-conscious or environmentally-aware consumer. The following information will help you determine if you can include “organic” on your label, or what you would need to do to qualify:
Made with Organic Ingredients
Made with Organic and Non Organic Ingredients
Brand Name/Class & Type
USDA Organic Seal
Certifying Agent Seal
Brand Name/Class & Type
USDA Organic Seal
Certifying Agent Seal
"Made with Organic..." Statement
Certifying Agent Seal
"Made with Organic..." Statement
Certifying Agent Seal
USDA Organic Seal
USDA Organic Seal
What constitutes 100% Organic Wine?
When labeling your product as “100% Organic,” it must contain 100 percent organically produced ingredients and have been processed using organically produced processing aids, not counting added water and salt.
What constitutes Organic wine?
When labeling your product as “Organic,” it must contain at least 95 percent organically produced ingredients, not counting added water and salt. In addition, your product must not contain added sulfites and may contain up to 5 percent non-organically produced agricultural ingredients allowed (provided your accredited certifying agent has determined the ingredients to be not commercially available in organic form), and/or other substances allowed.
What constitutes wine made with organic ingredients?
When labeling your product as “Made with Organic Ingredients” (or a similar phrase), it must contain at least 70 percent organically produced ingredients, not counting added water and salt. In addition, wine may contain added sulfites and may contain up to 30 percent non-organically produced agricultural ingredients and/or other substances allowed.
What constitutes wine made with organic ingredients and non-organic ingredients?
When labeling your product as “Made with Organic and Non-Organic Ingredients” (or a similar phrase), the label must indicate the presence of non-organic grapes in the “Made with Organic…” statement on the label, and such wine must contain at least 70 percent organically produced ingredients, not counting added water and salt. In addition, wine may contain added sulfites (in accordance with 7 CFR 205.605) and may contain up to 30 percent non-organically produced agricultural ingredients and/or other substances.
Explanation of Terms:
BRAND NAME/CLASS & TYPE: The term “Organic” may be used to modify the brand name and/or class and type statement on the principal display panel, information panel, or other panel.
SULFITE STATEMENT: “Organic” products cannot use added sulfites in production. Therefore, since no added sulfites are present in the finished product, the label may not require a sulfite statement. In these cases, a lab analysis is necessary to verify that the wine contains less than 10ppm of sulfites.
PERCENTAGE STATEMENT: The phrase “X% Organic” or “X% Organic ingredients” may be included on the labeling. Such statements may appear on the principal display panel, information panel or other panel.
INGREDIENT STATEMENT: Products certified as “organic” may show a complete ingredient statement. The term “organic” may be used to identify the specific ingredients. Water and salt included as ingredients may not be identified as “organic.” This statement may only appear on the information panel.
CERTIFICATION STATEMENT: “Certified Organic by ---” or a similar phrase must be listed below the name and address of: the bottler, for domestic wines; or the bottler or importer for imported wines. This statement must be on the INFORMATION PANEL and may include the agent’s business address, telephone number, or internet address.
CERTIFYING AGENT SEAL: The seal of a USDA-accredited certifying agent may be placed on the label of a product that is certified as “organic.” This seal may appear on the principal display panel, information panel or other panel.
USDA ORGANIC SEAL: The USDA Organic Seal may be placed on the label of a product that is certified as “organic.” This seal may appear on the principal display panel, information panel or other panel.
PDP -(PRINCIPAL DISPLAY PANEL)
That part of the label that is most likely to be displayed, presented, shown, or examined under customary conditions of display for sale.
IP -(INFORMATION PANEL)
That part of the label of a packaged product that is immediately contiguous to and to the right of the principal display panel as observed by an individual facing the principal display panel, unless another section of the label is designated as the information panel because of package size or other attributes (e.g., irregular shape with one usable surface).
OP -(OTHER PANEL)
Any panel other than the principal display panel, information panel, or ingredient statement.
IS -(INGREDIENT STATEMENT)
The list of ingredients contained in a product shown in their common and usual names in the descending order of predominance.
A microbrewery may produce or brew up to 60,000 barrels of beer annually. It may sell to licensees (wholesalers and retailers), but NOT to the general public without a brewer's retail permit. It may also apply for an on-premises liquor license in or adjacent to the brewery. Often times microbreweries run a bar or restaurant along with the manufacturing of beer. In these instances, an on-premises liquor license or brewer’s retail permit would be needed. Each of these is a separate license application.
Different Types Of Breweries
If you consider yourself to own a brewery, are you aware that there are several types of breweries depending on the structure of your business, its output and its business model? Consider the following:
A microbrewery produces less than 60,000 barrels annually.
A brewpub sells the majority of beer on-premises.
A contract brewer hires another brewer to manufacture its brand.
Microbrewery License Options
If you are planning to open a microbrewery, there are several licenses you can acquire, depending on how you plan to operate your business. Your options include:
This license allows a person to brew beer within the state of New York for sale. It authorizes the sale of beer brewed by the licensee to licensed wholesalers, retailers and permittees in the state. Out-of-state delivery is pursuant to the state laws where the sale or delivery occurs.
This license permits a brewer to sell beer at retail to a person for consumption in his home.
This license allows a brewer to sell beer at wholesale to duly licensed wholesalers, retailers and permittees.
This license permits the sale of alcohol at retail for consumption on the licensed premises. You can apply for an on-premises beer (includes wine) or an on-premises liquor if you would like to have the ability to serve liquor on the premises, as well. A retail on-premises license is typically sought when the microbrewery also runs a restaurant or pub in or adjacent to the microbrewery. Brewers often choose an on-premises beer if they would like to allow customers to consume their beers (and sometimes other brands, as well) in the restaurant or pub. Other brewers try for an on-premises liquor license when they would like to offer customers a larger selection of alcohol beverage options.
This license allows the microbrewery to sell beer at retail for consumption off-premises.
In cities with a population of one million or more, an individual can apply for a license to sell beer as a vendor. This allows the vendor to sell beer at retail from the licensed premises for consumption in a person’s home. It authorizes the use of one vehicle for delivery, but it does not permit the sale of beer to any person or licensee for resale.
Federal Regulation Of Microwbreweries
In addition to State Liquor Authority rules and regulations, a microbrewery must also comply with those of the Alcohol and Tobacco Tax and Trade Bureau (TTB). The TTB administers and regulates the operations of distilleries, wineries, breweries, importers and wholesalers.
There is also a separate set of TTB forms that must be filled out and supplemental documentation that must be included in order to qualify as a brewer. The application screening and processing usually takes 60 days from the receipt of a completed packet.
The TTB is also responsible for collecting federal excise tax on the sale of beer for consumption. There is a reduced tax rate for microbreweries, currently at $7 per 31-gallon barrel.
Federal Regulation On Labeling
There are federal laws and regulations concerning labeling which are governed by the TTB. Most notably, any beer sold in containers must be properly marked, branded and labeled. Each label must be submitted to the TTB for approval and must include the brand name, class, name and address, net contents and alcohol content. There are specific regulations for each of these requirements, so it is important to know your product well and understand the TTB laws governing labeling before investing in a label.
On the brand label or back label, if relevant, there should also be:
any importer, bottler or packer information, if relevant
a statement that the product contains FD&C Yellow No. 5
Declaration of sulfites (“Contains sulfites” or “Contains sulfating agent(s))
Declaration of aspartame as follows: “PHENYLKETONURICS: CONTAINS PHENYLALANINE.”
Brewers may also choose to voluntary disclose major food allergens. Keep in mind that if any one major food allergen is voluntarily declared, then all major food allergens used in the production of the beer (including fining or processing agents) must be declared. The declaration must be stated as: “Contains ______.” Major food allergens consist of milk, egg, fish, Crustacean shellfish, tree nuts, wheat, peanuts, soybeans, or a food ingredient that contains protein derived from the above-stated foods. For tree nuts, the specific type of nut (walnut, almond, etc.) must be provided. In the case of Crustacean shellfish, the specific species (crab, shrimp, etc.) must be listed.
Any use of the term “organic” must comply with USDA National Organic Program rules.
If the TTB approves your brewer’s label packet, you will receive a certificate of label approval. You may not bottle, pack or remove any malt beverage unless there is an approved certificate of label approval. The certificate must be available for inspection at all times, should a government official demand to see it.
A microbrewery may provide small samples of beer or malt beverages produced by the microbrewery at the premises. Each serving at tastings can only be served by the brewer or an employee. Each consumer is limited to only two servings of three ounces or less each.
Survivability Of A Microwbrewery Or Brewpub
Brewpubs rarely survive on beer sales. The food sales are the income that keeps these businesses economically viable. The two things that should be in a brewpub’s business plan are a great chef and a good banker.
Taxes account for 27% of the cost of beer. One of the other largest costs is transportation. Beer is 90% water. Economically, the most cost-effective business model is often for a brewer to franchise or contract its brewing to local manufacturers. These situations require strict control to ensure consistent quality.
The failure rate for microbreweries and brewpubs is 1 in 3. It is important to have solid advice as you make business decisions. An experienced attorney can help you follow the path to success.
The Three-Tier Alcohol Regulation
Alcohol follows a three-tier model from production to consumer sale:
Brewer (supplier) -> Distributor (wholesaler) -> Retailer
Ales (top-fermentation beers)
Lagers (bottom-fermentation beers)
Indian pale ales
There are new descriptions for consumer marketing that describe the brewing process or beer feature/quality. These include:
Interesting Beer Facts
A barrel in the UK is 36 gallons. A barrel in the US is 31 gallons.
ABV = alcohol by volue (% vol/vol) ethanol or ethyl alcohol.
In 2004, more than half of the beer brewed globally originated from just ten companies.
Beer has B vitamins, polyphenol antioxidants and has the same cardiovascular benefits as wine. It helps reduce stress and stress-related problems. It also contains niacin, riboflavin, folic acid, magnesium, potassium, selenium, calcium, phosphate and silica. Some argue that reasonable consumption of beer is beneficial for Alzheimer’s, blood pressure, osteoporosis, cholesterol, preventing blood clots, reducing gallstone risk, promoting bowel functions and suppressing the onset of Type 2 diabetes.
Tracy P. Jong, Esq. |
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