by Marshall Kizner, Esq.

Nearly a year has passed since the law allowing for a Craft Distillery License in the State of New Jersey went into effect. Since then, several distilleries throughout the state have opened and more prospective distillers are seeking approval to gain access to the world of distilling. The law is ground breaking because it allows small business entrepreneurs an opportunity to open and operate their own distillery for a relatively inexpensive annual license fee of $938. A license holder is allowed to manufacture up to 20,000 gallons of distilled alcoholic beverages annually, as well as rectify, blend, treat and mix distilled alcohol beverages. The law also allows distilleries to conduct onsite tours, tastings, provide samples, and sell their product at retail onsite.

The New Jersey law allows local residents to take part in the craft distilling boom that is unfolding throughout the rest of the county. To highlight the expansive growth of craft distilleries, it is estimated that there will be 750 throughout the United States by the end of the year. That is a large increase from the 623 craft distilleries already in operation through the beginning of the year. Additionally, the estimated number of distilleries operating nationwide has greatly increased from just 70 distilleries in existence 10 years ago, according to Thomson Reuters’ data.

The exciting opportunity to open your own distillery comes with many legal issues that must be considered in this highly regulated industry. First and foremost, there are real estate considerations. The site selected to operate a distillery must comport with local land use law. If the zoning for the selected location does not allow for a distillery, a use variance will need to be obtained. Additionally, the site must comply with federal rules and regulations. For example, a distillery cannot operate out of a home, shed, or place where another business is conducted. Apart from these considerations, an applicant must apply for a permit with the Federal Alcohol and Tobacco Tax and Trade Bureau (“TTB”) prior to manufacturing. To receive a permit from the TTB, among other things, a bond must be filed. These are just some of the many legal issues and considerations that arise when selecting a location.

After a site is vetted for compliance with local law and a TTB permit is applied for, an application for a Craft Distillery License can be submitted with the New Jersey Division of Alcoholic Beverage Control (“ABC”). It takes several months for the ABC to process and issue the license.

In the end, while the new Craft Distillery License provides exciting opportunities, the complexity of the legal issues surrounding the distilling business should not be dealt with without counsel.

Stark & Stark is a full service law firm with 115 attorneys throughout New Jersey, Pennsylvania and New York which counsels both new and established brewers and distillers on issues including business formation, licensing, governance and dispute resolution. Marshall Kizner, Esq. can be reached at 609-219-7449 or mkizner@stark-stark.com.

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