23 Jun Starting A Brewery In Indiana The Right Way
Starting a brewery in Indiana can be a simple or a tedious process, depending on how you approach it. And if your fingers are itching to get that craft beer flowing, getting licensed is imperative. Of course, without having the skills, know-how or the equipment, no beer will flow but without a license it won’t flow either.
To a start a brewery, there are a number of federal and state requirements that you need to follow and fulfill, before you are permitted to operate legally. These include getting licensed, getting a brewers surety bond and a few more.
Read on below about where you need to apply and what you need to do before you can start a brewery in Indiana.
Obtaining a State License and a Federal Permit
Anybody who wants to brew beer for sale must apply for an Indiana beer license with the Indiana Alcohol and Tobacco Commission, but also for a federal permit from the Alcohol & Tobacco Tax and Trade Bureau (TTB).
Applying for a Federal Brewer’s Permit
Those who want to start producing and selling their own brand of Indiana craft beer will have to submit a Brewer’s Notice application with the TTB. There is no application fee.
Step #1: Studying Federal Regulations
Furthermore, the TTB’s online application system allows for easy application and online submission of all relevant documentation. For greater ease, what you should do before applying with the TTB, is to become familiar with the regulations on beer in the Code of Federal Regulations, Title 27, Part 25.
Step #2: Preparing and Submitting Documents
Studying the regulations will give you an idea what the TTB will be assessing when processing your Brewer’s Notice application. For example, the TTB will look at your beer’s labeling, packaging as well as the environmental impact of your brewery. When submitting your application you will be asked to post the relevant documentation concerning the above points.
You will also have to submit a personnel questionnaire from every person with a 10% or higher interest in the brewery. Also keep in mind that before issuing your permit the TTB may want to perform an on-site inspection of your brewery.
While there is no application fee, you will be required to post a brewer’s bond when applying. In this case, the brewer’s bond comes in two variations – a Brewer’s Bond or Brewer’s Collateral Bond, depending on your needs. The minimum penal sum of the bond is $1,000 if your excise tax liability is expected to be less than $50,000 during that year.
If you intend to prepay tax on the beer, the maximum penal sum of the bond can be $150,000 or, if you intend to defer taxes and pay them semimonthly, the maximum penal amount is $500,000.
If you’ve never submitted a surety bond before, you may be wondering why you need to do that. As explained in this surety bonds guide, all surety bonds serve as a form of protection and guarantee for the public, the state or a private person – the obligees.
They guarantee that the principal posting the bond will comply with rules and regulations of a license or the conditions of a contract. If the principal does not comply and defaults on their obligations, the surety bond company is there to compensate for all losses and damages that result from this.
Applying for a Indiana State Alcoholic Beverage Permit
Microbreweries in Indiana also need to apply for a liquor license at the Indiana Alcohol and Tobacco Commission (ATC) before they can begin operations.
Step #1: Finding Out What Type of Permit You Need
The first thing you need to do is to figure out what kind of liquor license you will need. A ‘brewer’ or ‘small brewer’ license is usually chosen by small Indiana breweries but if you have other plans, you may want to get a ‘retailer’ or ‘wholesaler’ one.
Once you know the type of license you want to obtain, you have to consult the ATC permit processor for your county whether there are available licenses. Studying Indiana’s regulations on alcohol and tobacco may also come in handy, so consider reading through the code.
Step #2.1: Applying For a New Permit
If the quota for your type of license has not been filled, you can proceed with submitting your permit application and all additional documentation such as:
- Proof of ownership or lease of your brewery’s location
- Business papers
- Four copies of your brewery’s floor plans
- A brewer’s surety bond
Obtaining a brewery license costs $500.
Step #2.2: Applying For a Transfer Permit
If the quota for your type of license has been filled, you can contact a brewer in your county who is interested in selling their license. The fee for transferring a license is $250.
When doing so, you also have to submit the relevant transfer documents such as the cover letter and the ‘consent to transfer’ form, property tax clearance from the county treasure, alongside the usual application form which applies to new and transfer permits.
Step #3: Submitting a Brewer’s Bond
As part of the licensing process you will also be asked to obtain a $10,000 brewer’s bond.
In this case, the brewer’s bond guarantees that you will pay taxes associated with your Indiana brewery on time. It serves as protection for the state of Indiana and the public.
Don’t be startled by the bond amounts, though. To obtain a brewer’s bond you only pay a premium on the bond, which is a fraction of the total amount. Your rate depends on your credit score and applicants with a high credit score are usually offered a rate between 1%-4% of the total amount. In other words, your premium for a $10,000 brewer’s bond will be between $100-$400.
Do keep in mind that the minimum surety bond premium on all surety bonds is between $100-$250, depending on your credit score. In other words, if you have to post a $1000 surety bond, your premium won’t fall below $100.
Once you’ve submitted your application, along with all documents and your brewer’s bond, you will need to appear before the local Alcoholic Beverage Board during its meeting. The board will review your application and take a decision whether to allow the issuance of your permit or not.
After that, there are a number of further stages that your application goes through. Be prepared that the entire application process may end up taking between 10-12 weeks.
Brewing Your Own Indiana Craft Beer
If all goes well, you should soon be ready to pour out the first pints. Starting a brewery in Indiana is not too complicated if you’re well familiar with the requirements and all the steps you need to take.
If you have previous experience with opening a brewery and there’s more you can add to this, please leave us a comment, we’d be happy to hear from you!
Vic Lance is the founder and president of Lance Surety Bond Associates. He is a surety bond expert who helps small businesses get licensed and bonded. Vic graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan’s Ross School of Business.
Ben
Posted at 06:55h, 06 AugustOn the licensing front, I read the IC to only impose quotas on large brewers (more than 90K barrels), then on beer/wine retailers. There do not appear to be any quota limitations on small brewers (under 90K barrels) — and the IC seems to give the small brewer permission to sell beer by the glass (or growler) without the need for a separate beer retailers permit (IC 7.1-3-2-7(5)(G)). Or, am I crazy?
Brian
Posted at 20:07h, 05 JuneKinda funny, I recognized the exterior photo right off — that’s the Iron Hill brewpub in West Chester PA.