There is an art to creating the perfect wine, sculpting a sumptuous flavor and aroma until it’s just right. And when you hit that mark, your wines are perfected and ready to sell, do you know where to start in opening your own winery in Michigan?
There are numerous legal, tax, organizational and Federal and State regulatory requirements that must be complied with to establish a winery. This article will summarize some of the important requirements for establishing a winery as well as proper winery operations.
Part 1 – Winery Establishment
- LOCAL ZONING APPROVAL. Each Township or City has unique zoning and other rules that a winery must comply with. The winery organizers must review and comply with the local zoning and other rules before they can open a winery 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 winery must comply with. The winery organizers must review and comply with the Township, City, State or County rules and regulations before they can open a winery 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 wine 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 State Patent and Trade Mark Office to verify that the name is available and will not infringe on another users 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 wine 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
- STATE WINE LICENSE. The business must obtain a State of Michigan license for the winery. The winery can be licensed as a Wine Maker or as a Small Wine Maker. Either license allows the winery to sell wine at the winery directly to a consumer for takeout and allows it to offer free samples to consumers. A Tasting Room License is a license issued by the State of Michigan to a Wine Make or Small Wine Maker to operate an off-site winery tasting room located away from the winery premises.
- MICHIGAN DIRECT SHIPPER LICENSE. A Michigan direct shipper license is required from the State of Michigan for in-state and out-of-state wineries to ship domestic wine directly to Michigan consumers. This License does not allow direct shipment of imported wines. For shipments to out-of-state customers, verification of the other state’s shipment laws is required.
- FOOD ESTABLISHMENT LICENSE. A winery 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 WINE LABEL APPROVAL. Every wine 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 – Wine Taxes
- PAYMENT OF MICHIGAN EXCISE TAX ON WINE. Explanation: Michigan wineries must pay a State excise tax on wine sold.
- PAYMENT OF FEDERAL EXCISE TAX ON WINE. 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 wine 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.