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How To Avoid Breaking The Law
Jul
While it is great news that the Hobby Distillers Association won the lawsuit, it is not just as simple as dusting off your still just yet. The injunction, although by far the furthest the hobby distilling legalization effort has ever gotten, it is still not afforded the same rights as hobby brewing or winemaking. There are a number of things that you need to keep in mind in order to remain within the lines of the law going forward. However, it does open up the opportunity for many of us to distill legally now, providing you follow some rules, and do things in the right order.
- The first thing to consider is if your state allows hobby distilling. There are several states with laws specifically allowing home hobby distilling, some that are a bit ambiguous, and other that simply do not allow home hobby distilling at this time. Know what your state has to say about it. The HDA is working to put together an updated list of the laws for each state, but it is always a good idea to reach out to your state’s alcohol commission. Remember, asking those questions shows that you are trying to avoid breaking the law, not get away with something, so they are generally quite happy to help.
- You still need a permit from the TTB! The ruling was not just opening up distilling without permits. While that is our end goal- to gain the same legal ground as hobby brewing and winemaking, we are not there yet. That does not mean that this ruling meant nothing, or that it will be difficult to start distilling at home as a hobby. The first step will be to complete your Distilled Spirits Plant (DSP) permit application. More information on that is below.
- You must be a member of the Hobby Distillers Association! This is extremely important. Although it was not our goal, the injunction applies only to the plaintiffs in the lawsuit, which include on individual and the HDA. As an association member you will be allowed to obtain the permit to distill even in your home (providing you meet the other criteria). This does not apply to Supporters, only full HDA members.
- WAIT! You cannot connect a boiler or condenser until you have your TTB permit! Doing so is against the law. We have come so far, and it has taken so long, be patient while the TTB processes your application, and abide by the rules. We know that you are excited, but you waited so that you could do this legally, don’t change that now.
- Once you have received your permit you will need to fulfill any requirements of your state, if there are any.
- Once you have met all of the requirements, you can move forward with distilling within the law.
As you will actually be a DSP there will also be paperwork that you will be required to fill out and records that you will need to keep. You will also need to pay tax on the spirits you produce, although it is a minimal cost (currently about $14 per gallon at 100 proof, or $2.80 per bottle). Again, remember that this is a stepping stone. We hope (and expect) that once the commercial distillers and the TTB see that this is not going to result in issues, they will be accepting of laws being amended to allow hobby distilling alongside home brewing and winemaking.
The stay may have ended but the government still has time to appeal!
The actual time for the government to appeal runs until September 9, 2024. The 14 day stay was just a period before the injunction went into affect, allowing the government the time to file an emergency appeal and keep the stay in place. There is no way to know yet if they will appeal, and if they do, whether the injunction will be allowed to stand during the appeal process or if it will be stayed while the appellate court makes their decision and rules on the lawsuit.
Do not let that stop you from applying for a permit, though. The injunction may stand, both during an appeal process and as a result of the appellate court ruling.
Important information on how to complete some fields on the DSP application.
While the DSP application is mostly self-explanatory, there are a couple of fields that have caused questions. According to the TTB, you should complete them as follows:
- Company Name- enter your legal name
- Company Structure- enter Sole Proprietorship
- State of incorporation/organization- not required (leave blank)
- EIN (Employer Identification Number)- use your social security number
Complete all other required fields and be sure to include on the application that you are an HDA member (if you are not, you will need to become a member before completing your application).
Additional information on completing your application is below.
Requirements for submitting a registration to the TTB: Click Here
Bond Requirements: Click Here
Lock Requirements for a DSP: Click Here
TTB Portal for submitting permit applications: Click Here
Can you help explain the bonds required in laymen’s term for Hobby Distillers, and are we still required to send in monthly reports like we were with distilled spirits for fuel? Thank you!
My understanding, and also how it was explained to me, is if you reasonably expect to accrue no more than $1000 in excise tax on the distilled spirits you produce (at $14 per proof gallon that is 71.4 gallons, or approx. 357 x 750ml bottles, at 100 proof), then you can select an annual return period, so you will only be required to submit payment at the end of the year. Under this rule you also would not be required to have a bond. I believe that you still must submit your monthly paperwork, but I am not certain on that. Even if that is required it is a minimal undertaking.
Great news! Thank you. After paying the initial tax on the product, I assume we need to report on the subsequent sales. I wonder what happens if you give it away. Will the TTB assess an income based on the excise? (I think they dropped the substantial permit fees based on the filings of your original suit. This is definitely a step in the right direction.)
We do not get into the sales side and what is involved, as we are an association for hobbyists (non-commercial), but the current injunction does allow you to basically put a distilled spirits plant in a home. The TTB does not have anything to do with your profit, only permitting and collection of the excise tax on the spirits.
Are there any samples of completed DSP applications that have or could be shared – after any personal contact information has been removed/obscured?
I am sorry, but I just saw this. We will be putting in our own application, but if memory serves (based on when we had a DSP permit during Covid), everything is electronic. When I complete our application I will see if I can pull a copy to upload here.
Greatly appreciated.
I ma so very sorry, is this only for TX or Can I obtain my license in TN as well?
You can get your federal permit regardless of the state that you are in. Each state has their own rules regarding if a permit is required for the state.
Since I am in Texas, having the federal permit would still not allow me to distill here because of state law? Is that correct?
You could obtain a distilling permit for Texas, but the cost is prohibitive. We are pushing for legalization at the hobby level, though, so if you are willing to reach out to your representative (at the state level) please let me know directly and I will get you some information when you set up a meeting with them.
So to clarify, even with a Federal permit, Texas distilling would still not be allowed?
In Texas, at the moment, you would still need to get a distilling permit, which is not feasible for the hobbyist (around $3000 for two years). It is intended for commercial distilleries. Please reach out to your representative and tell them you want them to support the bill that is currently in the house, and to help push to get it passed.
Done already, and specifically referenced HB 2278!
Thank you for helping out! We need to get as many people as possible, with as many different representatives as possible, to do the same.