Source Article: http://www.entrepreneur.com/article/246099 (By: Corie Brown)
In Start Your Own Microbrewery, Distillery, or Cidery, the staff of Entrepreneur Media Inc. and writer Corie Brown with Zester Daily Contributors explain how you can get started in the craft alcoholic beverage industry, whether you want to start your own microbrewery, distillery or cidery. In this edited excerpt, the authors provide a general overview of the federal regulations you must comply with as a craft brewer.
Extraordinary federal controls on alcoholic beverages are as American as Kentucky bourbon. Fortunately for craft brewers, today’s regulatory battles are leveling a playing field tilted in favor of large multinational producers and distribution companies with outsized control of national markets. The real financial significance of progress on taxation and regulation reform makes membership in the Brewers Association (BA), American Craft Spirits Association, or the U.S. Association of Cider Makers one of the best business investments an independent producer can make.
The craft beer pioneers and the various groups that have lobbied Congress on their behalf over the past four decades—most notably the Brewers Association—have been remarkably effective in overhauling beer regulations. Without the early and significant federal tax breaks for craft breweries, there might not have been a craft beer revolution. Associations representing craft distillers and cider makers are gearing up for similar congressional battles; tax relief for small spirits and hard cider producers is just as critical to the development of these sectors.
Federal alcoholic beverage lawsThe U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) sets the rules for the production, distribution, labeling, advertising, trade and pricing practices, credit, container characteristics, and alcoholic content of each alcoholic beverage. But, in the main, you need to focus on:
Permits and approvalsBreweries and distilleries report wait-times of six to eight months for operating permits, even though ttb.gov suggests things move along at a faster clip. These permits involve not just a completed application. There are background checks of you and your key employees, field investigations, equipment and premises examinations, and other paperwork requirements. Label and formula approvals are separate and seem to move along a bit faster. And make sure you meet all requirements for bond coverage by covering all aspects of your plans with your insurance agent.
DistributionTo sell products, the federally mandated three-tier distribution system requires licensed alcoholic beverage producers be separate from licensed alcoholic beverage distributors, which are separate from retailers. This was intended to end the practice of producer-owned retailers, which were considered anti-competitive.
Today, it seems an archaic and inefficient system that imposes undue burdens on small producers while giving excessive power to distributors. These state-based businesses have merged into national distribution giants with enormous power. Southern Wine & Spirits, the largest of these distribution giants, dominates alcoholic beverage distribution throughout much of the country. While producers set their own prices, distributors are the gatekeepers to the market and have enormous influence on how various products are sold and at what price.
TaxesThere are separate federal tax rates for each of the three craft alcoholic beverage categories. Whatever happens, do not fail to pay your federal taxes on time and in full. The “revenue man” DNA is still in the federal alcoholic beverage bureaucracy. They pay careful attention to tax receipts. Pay the Taxman, or he will surely shut you down.
Craft brewers making less than two million barrels of beer a year pay federal excise taxes of $7 per barrel (31 gallons) on the first 60,000 barrels they brew. They pay $18 per barrel on every barrel thereafter, which is the tax rate for larger breweries. So far the only craft brewer to outgrow this federal tax break is Boston Beer. The BA is lobbying for an even deeper tax break for very small breweries, and a slightly lower rate for midsize craft breweries.
Craft distillers receive no federal tax break and pay the same $13.50 per proof gallon (100 proof or 50 percent alcohol), or $4 per each 750 ml bottle paid by Diageo and Pernod-Ricard. New York Senator Charles Schumer and others in Congress are pushing legislation to lower the tax rate for craft distillers in a scheme similar to what craft brewers enjoy. Their argument casts craft distillers as job creators, bringing tourism to underpopulated areas, the same argument that worked so well for craft breweries.
By federal law, hard cider must be made primarily of apple juice and, in most instances, is treated like wine, taxed at a rate of $0.21 per 750 ml bottle or $1.07/gallon if less than 14 percent alcohol. But hard cider is naturally fizzy, which moves many artisan ciders into the “naturally sparkling” category, which is taxed at a rate three-times higher: $0.67 per 750 ml bottle or $3.40/gal. In some cases, depending on a technical analysis of the hard cider, a lower rate may be available for small cider houses. Confusion over which tax rate applies can be costly.
Source Article: http://www.entrepreneur.com/article/246099 (By: Corie Brown)
A display permit, issued by Texas State Fire Marshal's Office, would be required if a fireworks show contains 1.3G fireworks. 1.3G fireworks are professional grade fireworks and are not available to the general public (can’t buy at a fireworks stand). The display must have a licensed pyrotechnic operator on site at all times. The pyrotechnic operator’s license is also issued by the TSFMO.
Any show, before an audience of 50 or more people, that contains 1.4G fireworks (consumer fireworks), must have a licensed special effects operator on site. The special effects operator’s license is also issued by the TSFMO. Below you will find a notice that the Texas State Fire Marshal's Office posted last year in regards to these type of shows.
Additionally, VFIS provides a Fireworks Risk Communique, which you can download for free by CLICKING HERE.
State Fire Marshal’s Notice
State Fire Marshal Reminder Related to Pyrotechnic Displays with Consumer 1.4G Fireworks
It has come to the attention of the State Fire Marshal's Office that the general public may be engaging in acts that place them in violation of the Fireworks Statute and Rules. This includes businesses, organizations, neighborhood associations, and individual citizens who hold fireworks displays before an assembly of 50 or more people using consumer fireworks, also called 1.4G fireworks. The following is offered as clarification and as a reminder of the importance to remain in complete compliance with all provisions, rules, regulations and/or statutes enacted to govern fireworks in Texas.
This notice applies to pyrotechnic displays for entertainment, exhibition, demonstration, or simulation before an assembly of 50 people or more and using consumer fireworks (fireworks 1.4G).
§ 2154.253.(b) (Texas Occupations Code, Regulation of Fireworks)
At least one Texas licensed special effects pyrotechnic operator must be present on-site at all times where pyrotechnics are used, discharged, or ignited. The on-site licensee is responsible for complying with this section.
§ 2154.253(b)(4) & (6) (Texas Occupations Code, Regulation of Fireworks)
The licensee or the licensee’s employer must obtain a permit from the local authority having jurisdiction before the use, discharge, or ignition of pyrotechnics.
§ 2154.253.(b)(7) (Texas Occupations Code, Regulation of Fireworks)
The applicant for the permit must provide evidence of insurance in the form of a general liability insurance policy in an amount of not less than $1 million, conditioned to pay for damages caused by an occurrence involving a display of pyrotechnics.
§ 2154.253.(b)(8) & 2154.207 (Texas Occupations Code, Regulation of Fireworks)
Violation of this section constitutes a Class A misdemeanor offense. Each day a violation occurs or continues constitutes a separate offense. Venue under this section is in the county in which the offense is committed or in Travis County.
§ 2154.253.(e) (Texas Occupations Code, Regulation of Fireworks