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Our first time pouring beer at GABF – Grand Rounds Brewing Company

By Steve Finnie & Grand Rounds Brewing Company

The anticipation of getting on a plane to Denver, Colorado, to pour four beers we brewed in Rochester, Minnesota, was substantial. Three GRBC staff members and two volunteers left the day before the festival began. We hit the ground running in Denver. First order of business – picking up festival badges for the team. The GABF volunteers emphasized again that the badges are not replaceable (at all – lose them and you don’t get back in). That’s a lot of pressure for an event with 3 days of unlimited samples of some of the best beer in the country. But we did it!

The Great American Beer Festival hosted the brewer’s gathering the night before the event begins at Hard Rock Café – a blocked-off VIP area with nibbles and beer flowing and rock stars of the beer world in all their hoodies and bearded glory.

image1-5
Photo courtesy of Grand Rounds Brewing Co

Thursday morning, our crew headed to Snooze in the Union Station for breakfast, but so did everyone else, and a 1.5 wait time led us to Mercantile – no wait, coffee, bloody marys, bahn mi sandwiches. Great way to start the day. We headed to the convention center to get our bearings and check out our booth in the Brewpub Pavilion. Impressive to see the number of volunteers and organizers – 3600 in all.Have to say, it does feel very rock-staresque walking past the queue with your brewer’s pass.

The Brewpub Pavilion was made up of 24 brewpubs from across the country, including our friends from Town Hall Brewery in Minneapolis. You find out you’ve won the lottery to pour at the fest in the summer, and in early September, they ship you empty kegs from Microstar. You fill the kegs, and the Minnesota Brewer’s Guild coordinates a cold storage truck to drive all the Minnesota beer to Colorado. Surly Brewing was nice enough to coordinate pickup and storage – cheers! Each keg is carefully labeled, and you find out later how this helps keep things running smoothly. The Brewpub Pavilion is smack dab in the center of the action – great location with high visibility and plenty of traffic. Behind the scenes, there are multiple five-gallon buckets and a series of PVC pipes supporting taps and gas lines (with quick disconnects that are linked in series to the “mothership” CO2 tank for the Brewpub pavilion).Everyone has the exact same set up. It’s an intricate, finely tuned system of buckets, PVC and hoses. By the time we return at 4:30, the kegs were in the buckets full of ice. It’s almost too good to be true – no jockey boxes, no kegs to lug around, no lines to clean. Slick.

GABF - Grand Round Brewing Co
Photo courtesy of Grand Rounds Brewing Co

All five of us were milling around behind the counter prior to the flood gates opening. Sam Calagione, founder of Dogfish Head, casually walks by. Legend. It’s too exciting to stand around, so a couple stay behind to take the first shift at the booth and everyone else tries to get the lay of the land and see where our favorites are. The taps absolutely do not get turned on until 5:30, but there were a couple of shops that were pouring from bottles that had lines forming and no one slapping their wrists. (Rare Barrel, Lost Abbey, and a few other top notch samples were had pre-game). There were already lines forming made up of industry people and volunteers, and it’s not difficult to see why breweries like Funky Buddha had poured their limit by 7:30 (event ended at 10:30).

GABF - Grand Round Brewing Co
Photo courtesy of Grand Rounds Brewing Co

The next two days were more of the same. We did get to visit a few Denver breweries – Hogshead Brewery which specializes in cask-conditioned beer, with t-shirts that read F@#K CO2. The beer was not only great but for us brewing folks it was free! – thanks to our friends at Five Star that were sponsoring this “work “event. At Hogshead we bumped into our friends at Fair State Brewing Coop also busy “working”. We also visited Call to Arms Brewing – fantastic beer, great beer names, and taproom. But alas we felt the calling from the convention center and had to head back to downtown Denver to do what we came to do: pour beer (and drink a little!).

GABF - Grand Round Brewing Co
Photo courtesy of Grand Rounds Brewing Co

The final day of the Great American beer Fest culminates in the amazing three-hour ceremony and presentation of medals for the ultimate beer competition in the United States. This is the Oscars of the beer world, where the Brewers and brewing staff are recognized for their efforts and get to jump up on stage and celebrate with not only a medal around their necks but a fist pump from the beer god and originator of the Great American beer Fest – Charlie Papazian. It’s an amazing spectacle.

It’s not quite as straightforward as you would think. Entering beers in this particular competition, with almost 100 categories of beer, you better make sure you know where your beer belongs and is it true to the style guidelines. We submitted four of our own beers, and although we didn’t win a medal we are looking forward to getting some constructive feedback and we’re very excited for our fellow Minnesota breweries who did win medals and made our state proud.

Standing ovation for the man who started it all, Charlie Papazian. Thank you for 35 years of #GABF!

A video posted by Minnesota Beer Activists (@mnbeeractivists) on

I love brewing beer . Brewing beer is hard work. Three days at GABF makes it all worth it. Brewing is not a glamorous job. Manual labor and long hours, a lot of time spent cleaning in a hot brew house and cold room. You’re sweaty, you’re dirty, you’re tired. Having people taste the beer you make and smile makes you keep going. The three days at GABF are about as glamorous as the beer world gets. You can take all your beer books and have them signed by the authors who penned their expertise on brewing, yeast, hops, water etc ! You can chat with and get your picture taken with the rock stars of the beer world! You get a backstage pass to an event that 60,000 people rush online to get tickets for, travel from all over the country for, and stand in queues for lengths of time to get in for. Having a line in front of our booth and actually running out of 2 of our beers at all sessions was a pretty amazing feeling.

Another consistent feeling throughout all of the festival is one of amazing camaraderie amongst brewers and brewery staff. There is an intense love for this craft, which is making beer. Everyone is willing to share information and help each other out. It’s an amazing feeling and it truly is an amazing beer festival. I hope to make it back next year, and the year after, and the year after….

GABF - Grand Round Brewing Co
Photo courtesy of Grand Rounds Brewing Co

 

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So You Want to Start Your Own Distillery? Ten Key Legal Steps You Need to Take

By: Jeff O’Brien

Introduction

Recent law changes in Minnesota have paved the way for a microdistillery boom. Starting a distillery, however, can be a daunting task. Besides purchasing equipment and supplies, owners also have to navigate the myriad of legal issues in this heavily regulated industry. Without proper planning and advice, you may end up back at square one (or worse).
Here are ten key steps to start your own distillery business on a sound legal foundation:

Step #1: Choose a Name

Before any document is filed with a government office, you must determine if the desired name of your distillery is available. Nothing could be worse than paying additional fees to change a name that conflicts with an existing distillery, reprint letterhead and business cards, or dealing with a cease and desist demand from another distillery’s lawyer.

The easiest and cheapest way to clear your proposed name is to Google the proposed name. Also check your state Secretary of State’s website for similarly named business entities or assumed names, and the United States Patent and Trademark Office’s trademark database for similar trademarks. These databases are limited in scope and for additional expense you can perform a comprehensive search that will more conclusively show whether you can proceed with your selected distillery name (and brands of spirits).

Step #2: Form an Entity

Use of a business entity serves two primary purposes: (1) your personal assets are shielded from the liabilities of your new venture; and (2) where you have multiple owners, clear and unambiguous agreements amongst the owners as to who owns what, what rights each of the owners have, and what happens if an owner wishes to leave, help minimize later disputes.

Most business owners choose either the limited liability company and the Subchapter S corporation for their entity form. Use of LLCs or corporations can be a valuable planning and asset protection tool for business owners, and most attorneys can form these entities at reasonable fees in a short period of time.

Step #3: File a Trademark for Your Distillery Name

Distillery Equipment GraphicA trademark is any individual or combination of words, phrases, symbols or designs that identifies or distinguishes the source of goods of one party from those of another. A service mark does for services what a trademark does for goods. Trademarks protect the goodwill that owners create to identify goods and services, not the goods and services themselves. Trademarks can also exist indefinitely (subject to ongoing use and renewal requirements).

The process of registering a trademark or service mark begins by filing an application with the U.S. Patent and Trademark Office (USPTO). The USPTO employs attorneys who will review the application for proper legal and procedural grounds. In many cases, the examining attorney responds to the application with an “office action.” The attorney highlights any conflicts with the proposed mark, or any other objections to granting registration in the office action. The applicant has the opportunity to respond to any conflicts or problems noted in the office action within six months. After six months, if the applicant does not respond, the application is deemed “dead.” If the application either receives no objections for registration, or if the applicant overcomes any objections within the six month period, the USPTO publishes the mark for opposition. Any party, who may contest the registration of the mark, must do so within 30 days of the publication date. If no one contests the mark, then the USPTO will register the mark, typically 12 weeks following the publication date. Once you select a mark, the overall USPTO process from start to finish averages between 12 and 18 months.

Careful trademark and service mark management can lead to a successful brand development and greatly increase the value of a company or product. However, use and registration of trademarks and service marks can be a complicated and treacherous landscape. The knowledge of an experienced attorney can help navigate the terrain of trademark law, and lead to an outcome of branding success.

Step #4: File Trademarks for Your Product Names

With new distilleries, wineries and breweries launching every day, the competition for product names is fierce. The Trademark Office treats all liquor names the same; i.e., if the proposed name of your gin is already registered for a wine, you should choose a different name and avoid the fight with the Trademark Office. Once you select the names and design logos, you need to file trademark for these as well (NOTE: if you have your product names selected at the time you apply for a Federal trademark for the distillery name, you can submit the applications for the product names at the same time – up to 36 months before the launch of the product itself).

Step #5: Lease a Space for Your Distillery

As the old cliché goes, in real estate it’s all about “location, location, location,” and this is especially true for a distillery business. If you’re looking to be the neighborhood hangout complete with a cocktail room, you’ll need to find a suitable space close to home. Should you have larger ambitions, you may seek a more strategic location amenable to later expansion. Whatever the case may be, you’ll need to have a space secured in order to complete the licensing process.

A new distillery owner will most likely lease a building at the start, and negotiating a suitable lease is a crucial step in the process.
Commercial lease agreements typically come in one of two varieties: “triple net” and “gross.”

In a triple net, the tenant pays rent to the landlord, as well as a pro rated share of taxes, insurance and maintenance expenses. In the typical triple net lease, the tenant pays a fixed amount of base rent each month as well as an “additional rent” payment which constitutes 1/12 of an estimated amount for taxes, insurance and maintenance expenses (also called CAM or common area maintenance expenses). At the end of the lease year, the estimated amounts are compared to actual expenses incurred and adjusted depending upon whether the tenant paid too much or too little through its monthly payments.

In a “gross” lease, the landlord agrees to pay all expenses which are normally associated with ownership. The tenant pays a fixed amount each month, and nothing more.

Step #6: Have Your Key Employees Sign Employment Agreements

Most employees in Minnesota and other states are “at will” employees; that is, they can leave their employment whenever they wish, for any reason or no reason. If a business owner has a key employee that is integral to its success, that employee should have a written employment agreement that provides for a fixed term of employment. A covenant not to compete can be included to deter a key employee from leaving to work for a competitor. Absent this type of agreement, the key employee can leave at any time.

A written employment agreement is imperative for those employees who know a distillery’s product formulas could do the most damage to the business working for the competition. Hence, an employment agreement for these key employees should include a covenant not to compete and provisions that clearly state that the product formulas are “trade secrets” and thus the property of the distillery.

Covenants not to compete must be narrowly tailored to balance the interests of employer and employee. The employer must show (i) the covenant not to compete was supported by consideration when it was signed (if the consideration for the covenant is the continued employment of the employee, then the covenant must be signed prior to the start of employment to be valid); (ii) the covenant protects a legitimate business interest of the employer; and (iii) the covenant is reasonable in duration and geographic scope to protect the employer without being unduly burdensome on the former employee’s right to earn a living.

Step #7: If You’re Raising Money, Comply with Federal and State Securities Laws

Dollar sign graphicFinding suitable financing for a startup venture such as a new distillery can be difficult. Perhaps that’s why many startup distillery operators are turning to private funding sources for their new venture.

When private funds are sought, federal and state securities laws must be complied with. The definition of a “security” is very broad and not limited to shares of stock. It includes partnership and LLC interests, promissory notes and many other financing instruments. Securities must either be registered or exempt from the registration requirements of state and federal laws. Certain written disclosures and information must be made or made available to investors so they can have the appropriate information to make an investment decisions. Whenever possible, focus on “accredited investors,” which are essentially those persons who have a million dollar net worth excluding their house or persons with annual gross income of $200,000 if an individual, or $300,000 for a married couple, with an expectation that it will continue. The disclosure requirements are the least for these sophisticated investors. However, even if you have an exemption from registration, liability for any fraud by the issuer still remains.

The consequences for not complying with federal and state securities laws are severe and can include administrative, civil and criminal penalties. Thus, before seeking private financing for your new distillery, be sure to consult with an attorney knowledgeable and qualified to handle securities matters.

Step #8: Apply for Your Distiller’s License with the TTB

Perhaps the most important – and most time consuming – step along the path to owning and operating your own distillery is the process by which you obtain a license for the distillery from the Alcohol and Tobacco Trade and Tax Bureau (“TTB”). TTB collects Federal excise taxes on alcohol, tobacco, firearms, and ammunition and assures compliance with Federal tobacco permitting and alcohol permitting, labeling, and marketing requirements to protect consumers.

If you intend to make distilled spirits for other than family or personal use, TTB must approve your operations, recipes, labels and the like. You have to apply for a distilled spirits manufacturer’s license and TTB must approve your operations before you begin to make products. TTB may initiate an on-site inspection of the proposed premises and operations prior to the issuance of your license. Background checks on directors, officers and significant owners are also required. This process typically takes three to four months to complete.

Step #9: Apply for Applicable State and Local Licenses

Besides TTB approval, a new distillery will need to apply for a state wholesaler’s license as well as any licenses required by the municipality in which the distillery will operate. An example of the latter is a taproom license. In Minnesota, if the distillery intends to construct and operate a cocktail room where patrons can purchase cocktails at the distillery, the cocktail room license must be issued through the municipality, not the State of Minnesota.

Step #10: Choose Distributors Carefully

Distribution is one of the most important, yet commonly overlooked components in the operation and success of a distillery. Unlike brewers, distillers do not have the option to self-distribute.

Rocks glass with iceNormally, each market will contain two to three major distributors, who do business with virtually all restaurants, bars and liquor stores. They have excellent contacts within the retail trade, including important chain store buyers. The disadvantage for the distiller is that most distributors manage huge portfolios of products, and your products may be just a blip on the radar. Of particular note, due to laws imposed in most states, it is often very difficult to terminate a distributor agreement. Once you enter an agreement with a distributor (whether or not written), these laws protect the distributor from suppliers terminating at will.

When selecting a distributor, choose one that not only suits your needs now, but that will also be appropriate down the road. Before letting a distributor promote your spirits, obtain price sheets from each wholesaler so you know which distributors carry the various brands in the market. Talk to retailers to gain insight into which distributor they prefer dealing with. Ask questions about service, product knowledge, enthusiasm, etc., of the salespeople and which distributor understands and sells microdistilled spirits the best. Look around the retail accounts and festivals to find out which distributor seems have the more meaningful presence, and best shelf positioning for craft spirits. Talk with other distillers in that market to get their opinion from the supplier side. Once you have chosen a distributor willing to carry your products, be sure to have your attorney draft a written distribution agreement.

Conclusion

The ever-changing legal requirements for properly establishing a new distillery are numerous and complex and they can become a distraction from routine business operations if not handled properly. That’s why working with an attorney knowledgeable in these issues is essential as you can focus on developing delicious spirits and catering to customers, versus dealing with what seem to be a never-ending array of legal issues. Based on experience, if you integrate your lawyers into your distillery team early, you will hopefully avoid monster issues down the road.

Jeffrey C. O’Brien is an attorney and shareholder with the Minneapolis-based law firm Lommen Abdo, P.A., and Chair of the firm’s Food, Beverage and Leisure Activities Practice Group. He handles a wide variety of legal issues for several local microdistilleries. He can be reached at 612-336-9317 or via email at jobrien@lommen.com.

 

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The Rise of Craft Breweries [Infographic]

by 

At SuretyBonds.com, we’re proud to have served countless professionals in a wide variety of industries. Sometimes, it really seems like there’s a surety bond for everything! The brewing industry is no exception, and — in honor of the Great American Beer Festival — SuretyBonds.com has decided to take an inside look at the rise of craft breweries.

Despite the tough economy, the beer industry is ever-increasing. In fact, the total number of craft breweries in the U.S. has increased by 5 percent in only 6 months (BrewersAssociation.org). California has the most craft breweries, while Vermont has the most capita per craft brewery.

The Great American Beer Festival, which took place this past weekend (October 10-12, 2013) brought together the top craft brewers from across the country. Over the course of three days, five different three-hour judging sessions took place to name the top three beers in 75 different categories. The Pro-Am competition is separate from the GABF Brewery and Brewer of the Year awards. Pro-Am beers are brewed by professional brewers in collaboration with the American Homebrewers Association.

Check out SuretyBonds.com’s latest infographic in conjunction with the Great American Beer Festival. If you need an alcohol bond or a bond for any other industry, contact SuretyBonds.com online or by phone at 1 (800) 308-4358Monday through Friday between 8 a.m. and 7 p.m. CST.

Republished with permission from SuretyBonds.com

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The SEC’s New General Solicitation Rule: Will it Really Help Breweries Raise Funds Faster?

Infographic-New-SEC-Rules-on-General-Solicitation
Infographic via Angel Investment Network

By Jeffrey C. O’Brien

Of all the legal issues involved with starting a brewery, none is more complicated, cumbersome, time consuming and costly than obtaining equity capital.  That’s due to the requirements – or should I say, restrictions – imposed by federal and state securities laws.

On September 23, 2013, the new Securities and Exchange Commission (“SEC”) rule which lifts its long-standing prohibition on general solicitation and general advertising for certain private securities offerings under Rule 506 of Regulation D goes into effect.  Some have written that finding investors will get easier and pre-launch breweries are looking at updates to their websites to include a pitch for funds. Is the new rule that much of a benefit to issuers, or is the devil in the details? 

Background on Securities Laws

In the aftermath of the 1929 stock market crash and in the midst of the Great Depression, Congress enacted the Securities Act of 1933.  This Act created the SEC as the federal regulatory agency having jurisdiction and oversight over the raising of investment capital.  Under the Act, an issuer must either register its offering with the SEC (this is said to be a “public offering”) or make the offering under one of several exemptions set forth in the Act.  Most small private company offerings are made under exemptions set forth in Regulation D.  Rule 506 is one of the Regulation D offerings and allows an unlimited amount of funds to be raised, provided that the issuer does not engage in general solicitation or general advertising of investors. 

The importance of the prohibition on general solicitation is this:  unless the issuing company or someone with close ties to it knows of any “accredited investors” interested in investing, the issuing company faces a steep uphill climb to realizing its fundraising goal(s).  In the brewery context, experience shows that those most interested in owning part of a brewery are typically “non-accredited”, meaning that they lack the net worth and/or annual income sufficient to qualify as “accredited.”  The process for soliciting these “non-accredited” investors – who the law deems to be unsophisticated and entitled to greater disclosures and protection – is complicated and expensive…unless the SEC ever creates regulations giving effect to the crowdfunding provisions of last year’s JOBS Act.

The New Rule 506(c)

The new rule creates another means of raising funds from accredited investors under Rule 506.  The “old” rule – whereby no general solicitation is made – is now found as Rule 506(b).  New Rule 506(c) allows issuers to engage in general solicitation and general advertising to market their offerings, so long as: (1) all purchasers of the securities are accredited investors; (2) the issuer takes “reasonable steps to verify” that the purchasers of the securities are accredited investors; and (3) all terms and conditions of Rules 501, 502(a) and 502(d) are satisfied.

“Reasonable steps to verify” is the key verbiage of this new so-called “easier” way to raise funds.   Under current Rule 506 offerings, typically the issuer verifies accredited investor status via a check-off box in its subscription agreement.  That, however, is not enough under Rule 506(c).  An issuer looking to engage in general solicitation to find investors under Rule 506(c) is going to have to review tax returns, bank statements, personal financial statements, or receive a written opinion from an attorney, CPA or financial advisor.  This is a cumbersome task that goes well beyond finding the right location, determining what to name your brewery and beers and where to source your raw materials from.

In short, the wisest course of action, in my opinion, when it comes to the new Rule 506(c) is to proceed as if it does not exist.  The 506(b) offering, while restricting an issuing brewery’s ability to cast a wide net for equity investors, remains far simpler to comply with and less fraught with potential liability for the brewery and its professional advisors.

Reprinted with Permission

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Our Tweets Have Been Heard – #EnjoyBy 05.17.13 hits #MN

By Tucker Pearce

EnjoyByDatesThose of us in Minnesota love our IPA’s, there’s no doubt about it. It’s also true that some amazing IPA’s and IIPA’s are brewed right here in the state. With so many great IPA’s produced here in Minnesota why is there such a buzz behind Stone Brewing Co’s Enjoy By? First of all it’s FRESH. Many of us beer lovers like cellaring Stouts and other high alcohol beers, it’s cold a vast majority of the year so it makes sense. However when it comes to an IPA we realize that the fresher the beer is the better it is.
 
Freshness
With Stone EnjoyBy IPA they take the freshness very seriously in fact it is printed right on the front of the bottle. In this case it’s 05.17.13 and the idea is that it must be consumed or at least sold by that date. I don’t see this being an issue in fact I worry it will fly off of shelves before myself and others have a chance to buy any due to the “daytime beer hunters”.EnjoyBy3
 
Going back to the freshness; this beer was bottled and kegged at Stone in California on Friday 04.12.13. Unlike some beers that may sit in a warehouse for days Enjoy By was loaded onto pallets and shipped out that very same day. Per a conversation with Hans Lofgren of Original Gravity the beer arrived in Minnesota at their distribution facility on Tuesday 04.16.13 and will make it to stores beginning Wednesday 04.17.13. I’m not sure about the rest of you but I’ll take an IPA brewed six days ago in California.
 
Quantity
In regards to quantity, according to Nate Sellergren (Upper-Midwest Brewery Representative @StoneBrewNate), we will be receiving a good amount of Enjoy By here in Minnesota. There will also be a number of tapings including the kickoff at Republic 7 Corners in Minneapolis on Wednesday 04.17.13. I hope to see many of you there at 5:00pm.
 
Finding Enjoy By
Nate also mentioned that you can go to www.stonebrewing.com/enjoyby for a list of stores and bars receiving Enjoy By and I’m guessing other events will also be posted by Original Gravity on their Facebook page and Twitter account.

Keep up the Social Campaign
Last but not least make sure to add your photos of Enjoy By to Twitter, Facebook and Instagram and include the hashtags #EnjoyBy #MN. The more we talk about this beer the more likely we are to get it back again.
Tucker Pearce writes for TwinCitiesCraftBeer.com, a site devoted to beer sold or produced in and around the Twin Cities. Tucker can be found on twitter at @Pearceweb
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No More Minnesota Nice – Give us our #EnjoyBy #MN

By Tucker Pearce

Stone - Enjoy By
Stone Brewing Co Enjoy By 12.21.12 by @JasonBGP

In Minnesota we have waited patiently, as most Midwesterners do, for Enjoy By IPA from Stone Brewing Co. We don’t want to complain or cause too much of a ruckus here in the Midwest but that might be part of the problem.

See the whole point of the #EnjoyBy campaign is to vote for the beer in your City or State. Stone wants to know who really wants this beer because they need to be certain that we can consume it by the date printed on the bottle. Yes, I know this is Minnesota and we love our IPA’s and for those of us living here we all realize there won’t be a bottle left on the shelves but we still have to convince Stone. So, to get Stone’s attention you simply need to put down your beer and start Tweeting. Be sure that your tweet includes the following two hashtags: #EnjoyBy #MN

I’d also suggest including @StoneBrewingCo at the end of your tweet. Make sure the tweet doesn’t start with @StoneBrewingCo as we want to ensure all of your followers see the tweet even if they are foolish enough not to follow Stone.

Next, go to http://www.stonebrewing.com/enjoyby/ and click on Vote at the top of the page which will take you to the Vote Now button. Click on the Vote Now Button and the vote with your E-mail address and go ahead and enter your Gmail address along with a MN Zip Code. Then vote again with that Hotmail account you haven’t used since college.

Go ahead and get vocal Minnesota! Tweet a few times a day, vote once with every e-mail address you have (yes we know you have a few) and reach out to the following guys on Twitter and let them know you want #EnjoyBy #MN

Stop reading this and get out and Tweet that is unless you really want to drive to Iowa to get your fair share of EnjoyBy!

Please feel free to leave any comments below, I’d love to hear your take on #EnjoyBy and other beers you want to see from Stone. Oh, and a special thanks to @JasonBGP from beergeno.me for the #EnjoyBy photo above. Yes, he’s lucky enough to live in Iowa…

Tucker Pearce writes for TwinCitiesCraftBeer.com, a site devoted to beer sold or produced in and around the Twin Cities. Tucker can be found on twitter at @Pearceweb

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Five Steps to Starting a Brewery in Minnesota — Legally

By Danielle Rodabaugh
If you’re looking to start a brewery in Minnesota, you need more than a passion for beer and a thorough understanding of the science that goes into brewing. You must also understand the legal aspects that will affect your ability to manage a brewery. Preparing to open and operate a successful brewery in Minnesota might seem overwhelming now, but this guide will help you get started.

Step 1: Make sure you understand every law and industry regulation that will affect your enterprise.

Starting a brewery in Minnesota is a huge undertaking, and you need to understand the full legal implications of what you’re getting yourself into. You don’t want to be in the middle of starting a brewery only to encounter a legal issue that could hinder your progress. Or, even worse, you don’t want to find out you’ve accidentally violated a code. Regardless of whether you mean to or not, breaking the law means you can face penalties such as fines, license revocation, legal action and even jail time. You can save yourself a lot of hassle later on by fully researching the legal nuances of the industry now.

Step 2: Draft a legal team to advise you.

There are a number of legal concerns to consider when establishing a brewery, and you probably don’t have the experience necessary to make all of the decisions on your own. At the bare minimum, you’ll want a lawyer and an accountant on your side to give you expert advice. With all the various aspects of starting a business competing for your constant attention, managing your finances and making detailed legal decisions can become stressful. And you definitely don’t want to make mistakes when it comes to managing finances and making legal decisions.

Step 3: Form a legitimate legal business.

When establishing your brewery as a business in Minnesota, there are many legal formations you have to choose from. Some common business structures you might want to consider are sole proprietorship, general partnership, limited partnership or limited liability company. You should base your decision on two key factors:

  • how many owners you plan to involve in your business
  • the type of brewery you want to operate

Each legal formation has its advantages and disadvantages. If you need help deciding what type of structure would be best for your brewery, discuss the options with your legal counsel.

Step 4: Get federal approval for your operations.

Assuming you intend to brew beer for reasons other than family or personal use, the federal Alcohol and Tobacco Trade Bureau (TTB) will have to approve your operations. Applicants don’t have to pay a fee to get their operations approved by the TTB, but the agency does require brewery owners to
file liquor license surety bonds, which require a premium payment be made to an insurance underwriter. The bond guarantees compliance with regulatory laws, especially those that require taxes be paid in full and on time. For more information on getting your brewery operations approved by the TTB, you can reach the Brewery Applications Section by phone at 1 (877) 882-3277 or by email at TTBInternetQuestions@ttb.gov.

Step 5: License and register your brewery according to state law.

To qualify for a brewer’s license in Minnesota, applicants must:

  • be 21 years old
  • be of good moral character and reputation
  • file a $1,000 surety bond with the state
  • not have had a license issued under Minnesota Statute § 340A revoked within the preceding 5 years
  • not have been convicted of a felony within the preceding 5 years, or a willful violation of a federal, state, or local ordinance governing the manufacture, sale, distribution or possession for sale of distribution of alcoholic beverages

The Minnesota Department of Public Safety regulates the brewery licensing process and can be reached at 1 (651) 201-7000. Individuals interested in applying for a brewer’s license can access the application forms on the department website.

Now that you know the basic legal aspects that go into establishing a brewery in Minnesota, you can determine whether opening a brewery is the right decision for you. If you decide to go forward with the process, be sure to check back soon for our second installment about budgeting and funding your brewery.

Danielle Rodabaugh is the director of educational outreach at SuretyBonds.com, a surety provider based out of Columbia, Missouri. SuretyBonds.com issues bonds to working professionals across the nation. Danielle writes articles that help new business owners better understand how surety bonds affect the business licensing process. You can keep up with Danielle on Google+.