There are numerous legal, tax, organizational and federal and state regulatory requirements that you must comply with in order to establish a brewery. Here are some of the important requirements for establishing a brewery, as well as proper brewery operations:
Part 1 – Brewery Establishment.
- LOCAL ZONING APPROVAL. Each township or city has unique zoning and other rules that a brewery must comply with. The brewery organizers must review and comply with the local zoning and other rules before they can open a brewery and should do so before investing in land or a building.
- LOCAL AND COUNTY AGENCIES. Each township, city, state or county has unique rules and regulations that a brewery must comply with. The brewery organizers must review and comply with the township, city, state or county rules and regulations before they can open a brewery and should do so before investing in land or a building.
- ESTABLISH A LEGAL ENTITY. Generally, an LLC or corporation is appropriate depending on your circumstances. To establish a brewery business, the business organizers must follow the ordinary steps required to start a business plus additional steps because of the state and federal regulatory requirements. Some of the more important steps include selecting a name for the business and checking with the State and United States Patent and Trademark Office (USPTO) to verify that the name is available and will not infringe on another user’s name. The business must also file the organizational documents with the State of Michigan, register with the State of Michigan Treasury Department for state taxes, including the beer excise tax, obtain a number from the Internal Revenue Service, complete the formation of the organization and comply with any state and federal securities law that may be applicable. The business should also register the brewery name and the labels with the USPTO and get the label approved by the TTB.
- STATE BREWER LICENSE. The business must obtain a State of Michigan license for the brewery. The brewery can be licensed as a brewer a micro brewer or as a brewpub. Each license allows the brewery to sell beer at the brewery directly to a consumer for take-out and allows it to offer free samples to consumers.
- BEER DISTRIBUTION. A Brewer a Micro Brewer and a Brewpub cannot sell beer directly to retail stores. They must sell their beer to licensed wholesalers unless the brewer qualifies as a qualified micro brewer.
- FOOD ESTABLISHMENT LICENSE. A brewery is considered a wholesale food processor and it requires a food establishment license. To obtain a food establishment license, a business must contact the local Michigan Department of Agriculture (MDA) office to involve a local MDA inspector in the building/remodeling process.
- FEDERAL LICENSING. The business must obtain a federal license from the Alcohol and Tobacco Tax and Trade Bureau (TTB).
- OBTAIN BEER LABEL APPROVAL. Every beer label must be approved at both the federal and the state level. Federal (TTB) approval must be obtained first and then state approval.
Part 2 – Brewery Operations.
- PAYMENT OF MICHIGAN EXCISE TAX ON BEER. Explanation: Michigan breweries must pay a state excise tax on beer sold.
- PAYMENT OF FEDERAL EXCISE TAX ON BEER. Federal excise tax is due semi-monthly, quarterly or annually, depending upon the amount of tax due and the size of the company’s operations. Amount of tax that must be paid is determined when the beer is removed from the premises for consumption or sale.
This summary is for educational purposes only and should not be relied on without the assistance of competent counsel. It is not legal advice or a legal document.
A lawyer and certified public accountant, Edward J. Castellani has practiced alcohol beverage law in Michigan for more than 30 years, assisting clients at all levels of the industry, including retailers, wholesalers, manufacturers, and importers. To learn more, he can be reached at email@example.com or 517.377.0845.