Monthly Archives: December 2015
A few weeks ago, I attended the soft opening of the newest addition to the Corsair Artisan arsenal of distilleries. A short drive from downtown Nashville and nestled in one of Nashville’s hottest neighborhoods, Wedgewood-Houston (or WeHo as it is known by the locals), this gem houses several new stills (the biggest pictured below) and incredible amounts of room for storage, processing, etc.
The new distillery (also known as Merritt Place for the road on which it sits) also houses two tasting bars and several outdoor decks and patios for entertainment once the weather improves.
I have suggested they add a fire pit so the joys of this Winter season can be cherished by those of us who enjoy some whiskey in the cold by a fire. I encourage everyone near and far to go check out this new Nashville distillery. Take a tour and enjoy some of their wonderfully sophisticated flavors.
Some of my Tennessee clients have asked if they can donate product directly to charities. The issue is not so much with the federal regulations. There is a line item on the reports to list charitable donations. The issue is with Tennessee regulations. Tenn. R. & R. 0100-06.03(15) says:
“An industry member may deplete inventories for purposes of contributing to any entity that has obtained a special occasion permit issued by the Commission. If the industry member is a manufacturer, then such contribution shall be distributed through a licensed wholesaler. The licensed wholesaler shall retain records of all such withdrawals showing the amount of inventory withdrawn, the purposed of withdrawal and the employee responsible for such withdrawal in accordance with 0100-03- .14(2).”
This is the only language in Tennessee laws or regulations that addresses donations to charities. I know several Tennessee distilleries have donated in other situations and I personally do not see the harm. Note that this regulation only authorizes donations to special occasion permit holders, not all charities, non-profits or catered events. This language is more restrictive than what a lot of distilleries understand to be the rule. I am not saying they are wrong, just pointing out that this is the only written authority available. There has been some misinformation out there, both by members of the industry and enforcement authorities. With regard to state gallonage taxes, I see no exemption for donations to charities. If the product goes through a wholesaler, the wholesaler would be required to report and pay the tax (and likely charge the distillery for that tax). If distilleries are allowed to donate it directly, they would have to report it on their manufacturer’s gallonage tax return as a “use” of that product.
I suggest industry members be cautious when donating product other than through a wholesaler.
I am always being asked about what can be done on the bonded premises and general premises of a distillery. Below are the key TTB regulations concerning this. Read together, you can only have distilling, processing, bottling and storing operations on the bonded premises and you can only have offices, restrooms (not open to the public), or other administrative operations on the general premises. You are not required to have any general premises if you do not want it. If you want to do anything else on the bonded premises or general premises, you need to get prior approval from the TTB. To me, this means you cannot have events (especially were alcohol is served) on the bonded premises or general premises. You can, however, do whatever you want on what should be designated on your TTB application as “adjacent retail space” or “adjacent event space”. I do not think there is a lot of strict enforcement in this area except with regard to bonded premises. The concern is that someone might try to abscond with a large amount of non-taxpaid spirits. The only problem is practicality. Have you tried to lift a 55-gallon barrel? Those things are not light.
As used in this part, the following terms shall have the meanings indicated unless either the context in which they are used requires a different meaning, or a different definition is prescribed for a particular subpart, section, or portion of this part:
Bonded premises. The premises of a distilled spirits plant, or part thereof, as described in the application for registration, on which the conduct of distilled spirits operations defined in 26 U.S.C. 5002 is authorized.
General premises. Any business office, service facility, or other part of the premises described in the notice of registration other than bonded premises.
§19.54 Use of distilled spirits plant premises.
(a) General. A person may not conduct any business or operation on the premises of a distilled spirits plant unless the business or operation is authorized by the notice of registration on file with TTB or authorized under §19.55.
(b) Bonded premises. The proprietor must use the bonded premises of a distilled spirits plant exclusively for distilled spirits operations. The proprietor must store packaged spirits, cases of spirits, or portable containers of spirits in a room or building on bonded premises. TTB may approve another method of storage as an alternate method or procedure. However, the proprietor must apply for, and receive approval for another method of storage from the appropriate TTB officer in accordance with §19.27 before using that method.
(c) General premises. General premises are any portion of the distilled spirits plant described in the notice of registration other than bonded premises. A person may not use the general premises of a distilled spirits plant for any operation required under the provisions of this part to be conducted on bonded premises.
§19.55 Other businesses.
(a) The appropriate TTB officer may authorize the conduct of a business other than that of a distiller, warehouseman, or processor on the premises of a distilled spirits plant if:
(1) The business is not prohibited by 26 U.S.C. 5601(a)(6);
(2) The business will not jeopardize the revenue;
(3) The business will not hinder TTB’s effective administration of this part; and
(4) The business will not be contrary to law.
(b) A person who wishes to conduct another business at a distilled spirits plant must apply for such authorization in accordance with §19.73(b) or §19.120(b) and receive approval from the appropriate TTB officer before operating the other business. The approval will specify whether the other business may be conducted on the bonded premises or on the general premises.