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What’s On Tap: How to Start a Brewery in Michigan

You’ve Crafted the Brews, Now Follow These Steps to Start Your Small Business Brewery in Michigan Before you can serve up that first cold brew to a customer, there are several key regulations you need to know about in order […]


You’ve Crafted the Brews, Now Follow These Steps to Start Your Small Business Brewery in Michigan

Bartender serving beer: how to start a brewery in Michigan.Before you can serve up that first cold brew to a customer, there are several key regulations you need to know about in order to build a successful brewing company. Some of these local, state, and federal regulations are specific to breweries – so simply following the normal procedures of opening a business may not be enough.

Here is a step-by-step guide to help get you started selling your own craft beer:

Establishing a Brewery

LOCAL ZONING APPROVAL. Before you invest in land or a building, review your township or city’s zoning ordinances to make sure you comply with all regulations. Each township or city has unique rules with which a brewery must comply.

COMPLY WITH LOCAL AND COUNTY RULES. After reviewing local zoning rules, consider the unique rules and regulations that your  township, city, county, or state may have in place for breweries.. Again, you must review and comply with these regulations before opening a brewery, so it is best to do so before investing in land or a building.

ESTABLISH A LEGAL ENTITY. Decide what kind of business entity you want to form. Generally, an LLC or corporation is appropriate (your choice will depend on your circumstances). To establish a brewery business, you must follow the ordinary steps required to start a business plus additional steps because of the state and federal regulatory requirements.

When selecting a name for your business, be sure to check 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. You 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. You should also register the brewery name and the labels with the USPTO and get the label approved by the TTB (Alcohol and Tobacco Tax and Trade Bureau).

OBTAIN A STATE BREWER LICENSE. Before opening, you 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, which requires a food establishment license. To obtain a food establishment license, you must contact the local Michigan Department of Agriculture (MDA) office to involve a local MDA inspector in the building or remodeling process.

FEDERAL LICENSING. The business must obtain a federal license from the 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.

Operating a Brewery

PAYMENT OF MICHIGAN EXCISE TAX ON BEER. Michigan breweries must pay a state excise tax on all beer that is 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. The amount of tax that must be paid is determined when the beer is removed from the premises for consumption or sale.

See related blog: What You Need to Know About Opening a Winery in Michigan

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.

Fraser Trebilcock Business Tax Attorney Edward J. Castellani

 

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. Ed can be reached at ecastellani@fraserlawfirm.com or 517.377.0845.