Tuesday, July 16, 2013

A Distillery's Licensing Process

The process of starting a distillery is rightfully intense – the average start-up craft distillery takes 1½ to 2 years of business planning followed by 12 to 18 months of licensing.  Beware - the process is painstaking and detail oriented. 

After a year or two of developing a business plan to outline production, products, marketing plans, financial projections, capital, location and equipment, you can then start the organizational and permitting process.  Make note that when selecting a location, zoning is critical – thankfully our municipal leaders have been excellent to work with! 

The first step in the permitting process is obtaining a Federal TTB Permit.  All distilleries, breweries and wineries must be federally approved to exist.  The TTB is part of the Department of Treasury, and their formal name is the Alcohol and Tobacco Tax and Trade Bureau.  After a detailed inspection of your organizational documents, background checks on shareholders, an understanding of your equipment, security, insurance/bonding, etc., etc., the TTB will issue a Distilled Spirits Plant number, or DSP.  Once a DSP number is issued, you legally (under Federal law) can produce spirits; although you cannot yet sell them.  The process of obtaining a DSP can take 6 to 8 months.

 With a DSP number in hand, you can submit a formula to the TTB’s Advertising, Labeling & Formulation Division.  In this process you must outline your formula, in detail, with all ingredients and any additives used in the process as well as specific production and aging methods.  This process typically takes 3 months to receive approval, and it must be completed for each and every product.

Once a formula is approved, you must submit your label to the TTB’s COLA Division (Certificate of Label Approval) for approval as well.  In this process the TTB verifies that the product being produced matches the label being used and that the correct disclaimers are used.  The process of label approval usually takes 3 months, and it also must be completed for each and every product.

Now that all 3 federal approvals are secured, you must obtain a municipal liquor license.  This license will authorize you to sell spirits, provide tasting and operate within your facility (depending on municipal laws).  While accomplishing this task, you must also obtain approval from the Environmental Protection Agency for the disposal method of spent mash.  From our experience, the EPA approval was the most complicated.

In the last licensing step, you must submit all of your previous approval documents to the State of Illinois - Liquor Control Commission.  The Commission grants the final approval for all DSP’s in the State of Illinois.  This final step (while a marathon to get to) can take 1 to 2 months to receive approval.  Once this approval is granted you have been authorized by all authorities to produce and sell spirits!

Please note - this is purely an overview of the licensing process, not all steps have been included.

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