Federal Government’s Restrictions on Production, Location, and Use of Plants for the Production of Distilled Spirits

If you are considering venturing into the distillery business, in New Jersey, Pennsylvania, or any other state, it is important to know what the Federal Government’s rules, regulated through the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), provide for the location, use of plants and production of distilled spirits. The following article highlight’s the TTB’s rules and regulations:

1. Home Production Barred. To start, producing distilled spirits is not something that can take place in someone’s basement. A person may not produce distilled spirits at home for personal use. Distilled spirits must be produced by a business registered with the TTB and a plant approved by the TTB.
2. Location of Plant. The following locations are expressly prohibited:
   • Any residence, shed, yard, or enclosure connected to a residence;
   • A vessel or boat;
   • A place where beer or wine is produced;
   • A location where liquors are sold at retail; or
   • A place where any other business is conducted, subject to certain exceptions.
3. Premises Should be Adjoined. Generally, the premises of a plan must be continuous, i.e., located in the same vicinity. However, the TTB may approve the registration of the plant where there are separations of the premises if there is no jeopardy to revenue caused by the separation of premises and separation does not create administrative problems for the TTB.
4. Use of Plant Premises. The plant must be authorized through the filing of a notice of registration or as otherwise approved by the TTB. The premises must also be used for storage of the distilled spirits, unless the TTB approves another method of storage.
5. Other Business Use on Premises. The premises may only be used to conduct another business operation if the TTB authorizes the conduct. The person seeking permission to use the premises for something other than distilling spirits must apply pursuant to TTB regulations and receive approval.
6. Alternative Storage. The TTB requires the filing of an application for registration if a distillery needs to utilize a warehouse for storage. After submitting the appropriate application, the TTD may approve registration if the proposed location will not jeopardize revenue and there is evidence sufficient to establish the need for the warehouse. The TTB may impose special use restrictions on the warehouse as a precondition to storing distilled spirits.

These restrictions only include the Federal Government’s limitations on the production, location and use of plants for the production of distilled spirits. Significantly, there are various state law, local law and practical considerations that also impact the potential locations. Due to the complexity of these issues, counsel should be consulted before finalizing a location for the production of distilled spirits.

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