In an earlier entry, the new Craft Distillery License was reviewed, which became effective for issuance December 1, 2013. Generally, this license presents a cost-effective option for artisan distillers to establish operations within the State. It also provides distillers the opportunity to generate revenues at their licensed premises by permitting them to offer their products for retail sale direct to consumers for on or off premises consumption. However, in making the determination to apply for this license, there are important considerations that the prospective licensee should take into account before establishing operations.
At the outset, a distiller looking to apply for this license needs to have a good sense of the regulatory environment at the municipal level where the licensed premises is planned to be located. Ultimately, the distillery will be subject to local ordinances, laws and zoning restrictions separate and apart from state regulation. Depending on how the planned location is zoned, a use variance may need to be applied for and a site plan would need to be approved by the local zoning board.
Once the prospective licensee has approval for the planned distillery at the local level, attention can then turn to the application to apply for a Craft Distillery License with the Division of Alcoholic Beverage Control. The application process can be complex and requires the submission of supporting documentation and follow-up with other governmental agencies. First and foremost, the applicant is required to submit the organizational and formation documents of its operating entity for review, as well as financial records, the past two years’ business and personal tax returns and any acquisition or financing documents pertaining to the proposed licensed premises. It is therefore essential to have the business entity organized and in place prior to the application being made.
Beyond the documents that are required to be submitted along with the application, the State Police and FBI require a fingerprint submission, a Beverage Tax Bond must be posted with the State Division of Taxation, and insurance documents must be submitted to the State Division of Revenue. All of these submissions and funds must be provided according to governmental requirements. In addition, each individual on the license must submit a notarized Affidavit of Qualification and the applicant must submit a notarized Statement of Business Intention. Also, public notice of the application must be posted. With regard to the planned licensed premises, a basic site plan must be submitted along with the application (which presumably would have been prepared during the zoning process). The site plan will form the basis of a site visit by the ABC, at which time the prospective licensed premises should be outfitted with equipment and fixtures.
At the Federal level, the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau requires application to be made for issuance of a Federal Basic Permit prior to operation. This would also need to be submitted to the ABC during the application process. All holders of this Permit are required to file a Special Tax Registration and Return prior to commencing business and on or before July 1 each year thereafter.
At the State level, the Craft Distillery licensing process can take upwards of 6 months. Therefore, it is important to have all required preliminary work completed and documentation in place before lodging the application with the ABC, as organized applications will typically be processed more expeditiously then incomplete ones.
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