Selling Homegrown Hops

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Retrofit

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I've never had dreams/ambitions of going pro. My goal as a home hop grower was to produce more hops than I can use, therefore my hops are essentially free and bountiful.

I was chatting with the owner of the local homebrew store and he asked me what my plans are for my extra hops. I said, "I'll store what I can, eventually I'll probably start not harvesting, or maybe just give them away."

Then he asked me if I know what the laws are concerning selling hops to him for his store. I said, "I have no idea!"

I personally think as a 1st year/2nd year grower that my yield isn't going to be so large that I'll have the luxury to even consider this, but I could see my 3rd year and forward a senario where I'll have hops to spare.

Any comments, thoughts, advice, whatever.

Again, this isn't something I planned or even plan on doing. I was approached, but having been asked the question now I'm curious what the logistics might be.

All comments are appreciated.
 
This would fall under the 'comments, thoughts' but, I can't imagine where there would be any problem with it. You are growing a product that he wants to buy. That's it! You set a price and it's a done deal.. :)
 
I thought the hop growers would more likely be here and would be the ones that knew an answer, so I asked here. If it's an issue the moderators can move/delete the topic. Not trying to sound snotty, just explaining myself.

I didn't know if there was issues of I dunno, selling a consumeable product or something. Obviously selling to one store is a nano-ecomony issue, but maybe there is some agency that says, "you need this to be that or you can't do it". I dunno. Just curious.

Appreciate any comment.
 
They are just ingredients. There is nothing that a brew shop sell as ingredients that are controlled. You could just as easily sell your hops at the farmers market if there was a "market" for them there. There might be local regulations that say you need a business license, or a resale license. If you kept it small, who would know?
 
Good to know, since this offer was proposed to me, I have "big dreams" of growing enough hops to cover the cost of my grain. That would let me brew for practically free. Thanks for the comments!
 
I think if you were to sell them for retail sale, you'd want to get a chemical analysis done on that crop to determine the AA% and whatnot. Dunno what that would cost, but I wouldn't just buy "hops from this guy's yard" at a store without knowing that kind of information.
 
I think if you were to sell them for retail sale, you'd want to get a chemical analysis done on that crop to determine the AA% and whatnot. Dunno what that would cost, but I wouldn't just buy "hops from this guy's yard" at a store without knowing that kind of information.

If the price was right, I'd probably do it.

How much extra are you talking about? A couple of pounds may not be worth the work it takes to package them up. In that case you might be best off placing an ad for people who are interested in fresh hops locally grown. By the time you factor in the time to harvest, dry and package, and then add the retailer's cut, you might not be that competitive.
 
Everything is technically under IRS as far as I know. I've heard they've busted little girls selling lemonade!

I suppose if you were able to vacuum pack them they would be worth more. I also like the barter idea. Hops for barley?
 
The thing about the IRS is that they require some paper trail to find people selling stuff. If the LHBS is going to sell your hops then they will need to match their purchases with their sales receipts. If they purchase from you, and put it on the books, then legally you have to claim this as income under tax law.

Personally, I'd just sell to people who brew beer locally, and avoid the paperwork. If it was a significant amount, then claim it.

Or you might be able to somehow convince the lHBS to break the law and sell your hops under the table. Sometimes we have hops swaps here. You may have some extra that someone else is willing to trade you for. It's up to you to determine the relative value of the hops.
 
here's a radical idea...don't break the law!

You have to report the income...all/any income you make ...always.

You can report your expenses against income as well. But cheating on taxes is no different than stealing from a store. If you report your income you can deduct fertilizers, utilties, portion of property taxes ...etc. If its worth doing its worth doing right...
 
I saw a cool homemade oast somewhere. It was just an old dresser with the bottoms removed from the drawers and replaced with screens, for drying the hops. That would hold a ton of hops for drying, and you could label each variety easily, without much in the way of cost. I'll try to remember where I saw it, and post the link.
 
here's a radical idea...don't break the law!

You have to report the income...all/any income you make ...always.

You can report your expenses against income as well. But cheating on taxes is no different than stealing from a store. If you report your income you can deduct fertilizers, utilties, portion of property taxes ...etc. If its worth doing its worth doing right...

I think most folks would be losing money hand over fist if they did the balance sheet. Selling excess inventory is more in a way of recovering some of the losses/expenses of producing some ops for yourself. Land, water, ferts, twine, posts, anchors, vacuum bags, and that is all before you even factor in labor costs.

Given the hoops you will have to jump through to claim agricultural income and losses, God help you if you want to do the paperwork for a few bucks worth of profit/loss to sell a few hops to local brewers or buddies. Quite the Draconian view, IMHO.
 
I saw a cool homemade oast somewhere. It was just an old dresser with the bottoms removed from the drawers and replaced with screens, for drying the hops. That would hold a ton of hops for drying, and you could label each variety easily, without much in the way of cost. I'll try to remember where I saw it, and post the link.

Something very similar can be made with excess plywood you might have laying around. Luckily I have quite a lot of half or 3/4 sheets and the like.

I will be throwing something together this fall that will be pretty low-tech (does it get more low-tech than a box fan and maybe a space heater?)
 
I think most folks would be losing money hand over fist if they did the balance sheet. Selling excess inventory is more in a way of recovering some of the losses/expenses of producing some ops for yourself. Land, water, ferts, twine, posts, anchors, vacuum bags, and that is all before you even factor in labor costs.

Anything he makes is gravy. He was already planning to give away the excess hops instead of selling them, so I don't even see the point of this debate. He is still recovering part of the expenses even if he pays taxes.

I don't see where the hours of paperwork comes from. It takes like 10 minutes that he might even already do. Set aside receipts for fertilizer, etc. in a separate envelope. At the end of the year, add up the additional revenue from sales, and add up the expense receipts. Subtract expenses from revenue. If he made extra income, then add it on the appropriate line. If not then it's a moot point.
 
Anything he makes is gravy. He was already planning to give away the excess hops instead of selling them, so I don't even see the point of this debate. He is still recovering part of the expenses even if he pays taxes.

I don't see where the hours of paperwork comes from. It takes like 10 minutes that he might even already do. Set aside receipts for fertilizer, etc. in a separate envelope. At the end of the year, add up the additional revenue from sales, and add up the expense receipts. Subtract expenses from revenue. If he made extra income, then add it on the appropriate line. If not then it's a moot point.

It's probably like a farm, you have to be able to show you are trying to make a profit (If you aren't making a profit after 5 years and they audit you?), so you have to keep track of miles driven, gas, vehicle expenses, hours worked, any other expenses, i.e. fertilizer, new hoe, oast materials, electricity used to dry hops, phone calls made for sales, advertising expenses, Land and equipment depreciation, etc, etc, . . . . . . . . not sure though.:mug:
 
It's probably like a farm, you have to be able to show you are trying to make a profit (If you aren't making a profit after 5 years and they audit you?), so you have to keep track of miles driven, gas, vehicle expenses, hours worked, any other expenses, i.e. fertilizer, new hoe, oast materials, electricity used to dry hops, phone calls made for sales, advertising expenses, Land and equipment depreciation, etc, etc, . . . . . . . . not sure though.:mug:

There is a caveat in the code for "hobby" vs "business", but I am not a tax professionaly and I am guessing most others aren't either. Making this distinction and itemizing and recording properly is not trivial when you second guess everything you are doing due to lack of experience or knowledge. And this is why it adds time and cost to the average taxpayer that knows how to file their personal taxes and outside of that... good luck.

Hell, you should try having to file taxes with a spouse on federal research grants. I swear to God they change the rules for reporting this income EVERY damn year.
 
It's probably like a farm, you have to be able to show you are trying to make a profit

Only if you are trying to make it into a business and file as a business.


There is a caveat in the code for "hobby" vs "business", but I am not a tax professionaly and I am guessing most others aren't either. Making this distinction and itemizing and recording properly is not trivial when you second guess everything you are doing due to lack of experience or knowledge.

How about if you sell your used brewing equipment on craigslist? You should be filing that on your taxes, too. Is that as complicated as you are trying to make it? It's ONE LINE.
 
Wow.

I had no idea what sort of discussion would occur while I went to work.

I know I've planted more than I can use and my goal has always been "More hops than I can use."

When the Local Store pitched the idea I got to thinking, "I'd love a 'free' bag of grain".

Again I'm shooting for a 55lbs bag of grain. The local store asked me what I know about 'the law" and I said, "I dunno."

I'm not sure what the whole sale price on leaf hop is, but if he wants to say whole hop leaf is worth X and X is maybe half the retail price of a bag of grain. That's still fine by me.

I guess I wanted to go back to the local store and say "There are the rules we are suppose to follow so you don't get in trouble.", but it sounds like there are no rules we obligated to besides tax law. I owned a business once, I get tax law.

So it doesn't appear there are a series of I dunno, "edible saftey laws" that hops fall under, that my local store needs to worry about. Beyond that, he needs to document the purchase and I need to document the sale to be 'legit'.

And if we happen to barter grain for hops, thats his problem, and mine if he's caught.
 
I didnt think you needed to file taxes unless your income was more than $400 or something like that...
 
I didnt think you needed to file taxes unless your income was more than $400 or something like that...

Total income. The sale of hops would need to be added to his regular income tax as additional income.

I'd be more worried about the LHBS than someone's personal income tax. They tend to look at receipts for a business a lot closer than the odd sale from a private citizen. But if the business adds the sale into their books, then the IRS can track the sale back to the grower and wonder why it didn't show up on their return.

I think the easiest thing it so simply claim it as additional income. We're probably not talking about too much money here.
 
... If they purchase from you, and put it on the books, then legally you have to claim this as income under tax law.
...

here's a radical idea...don't break the law!

You have to report the income...all/any income you make ...always.

You can report your expenses against income as well. But cheating on taxes is no different than stealing from a store. If you report your income you can deduct fertilizers, utilties, portion of property taxes ...etc. If its worth doing its worth doing right...

Ding! Sell your hops. Deduct your purchases for hops-growing -- all of them. Did you buy a shovel? Deduction! Wood and twine? Deduction! Build a drying frame? Deduction! Fertilizer? Deduction! Portion of the water bill that goes to hops? Deduction!

The best part is, it's entirely above-board, legal, and can even end up LOWERING your tax bill, if your hobby business shows a loss. Just keep good records, and plan on taxes being more complicated. The top-end version of Turbotax has worked fine for us with a rental property and a hobby business.
 
I think if you were to sell them for retail sale, you'd want to get a chemical analysis done on that crop to determine the AA% and whatnot. Dunno what that would cost, but I wouldn't just buy "hops from this guy's yard" at a store without knowing that kind of information.

I was just thinking the exact same thing
 
. . . . . . if your hobby business shows a loss. Just keep good records, and plan on taxes being more complicated. The top-end version of Turbotax has worked fine for us with a rental property and a hobby business.

Hobby business? . . . . What's a hobby business, never heard or seen that?
 
WOW... I never expected that so many posters on this forum were so perfect when it comes to reporting every dollar that passes from hand to fist to wallet every year!

My friend traded a bag of rhizomes to our LHBS this year and they sold them all. I don't think anyone went to jail for it or will in the future, but after reading this forum, I might just call him up and warn him that the gestapo might be banging on his door any day now.
 
WOW... I never expected that so many posters on this forum were so perfect when it comes to reporting every dollar that passes from hand to fist to wallet every year!

My friend traded a bag of rhizomes to our LHBS this year and they sold them all. I don't think anyone went to jail for it or will in the future, but after reading this forum, I might just call him up and warn him that the gestapo might be banging on his door any day now.

Not sure if this has been brought up on this thread yet. (Seems everything else has:p) But I think the main problem would be any liablity issues that could get back to the LHBS from customers claiming they got sick or ? from something that was purchased from him. Wrong/illegal chemicals applied, claiming they are Organic without being certified, making sure they are true to the variety claimed, ect. It would be a risk that I wouldn't want to take if I were the LHBS.
 
Not sure if this has been brought up on this thread yet. (Seems everything else has:p) But I think the main problem would be any liablity issues that could get back to the LHBS from customers claiming they got sick or ? from something that was purchased from him. Wrong/illegal chemicals applied, claiming they are Organic without being certified, making sure they are true to the variety claimed, ect. It would be a risk that I wouldn't want to take if I were the LHBS.

Taxes aside, this is actually what the Local Homebrew Store was asking me about. He owns a business, I've owned a business in a past. We both know how to buy and sell stuff and record it for tax purposes.

He was wondering if there is some 'governing power' that prevented him from selling "Locally Grown Hops" in the store. So far the forum suggests that there isn't.

If I grow them, dry them, bag them, vacuum seal them, and label them. It sounds like he can try to sell them as "Locally grown hops".

I'm not putting up the product or the money to test them. I don't care what the alpha is. The store owner can if he wants to. The best I'll do is tell them what each hop is, what the average alpha MIGHT be, and then they are his to do with what he wants. Again, he's the one thats interested. I became interested when it occured to me my hops could pay for my grain, making my beer essentially free.

I appreciate all the comments. Had no idea this thread would see this sort of activity. I'm going to talk more with the LHBS and get back to you all with what we discuss.
 
Hi Retrofit,

If my LHBS had offered to buy some of my hops I would be pleased. I think that is the response you might have expected here but didn't get so much.

I don't know if this analogy holds, but my favorite restaurant is in a seaside town in Massachusetts where I live. The restaurant claims they know the fishermen that they get their fish from. For me, that is a good thing. I think that people are trying to help you by seeing possible obstacles, but they are losing sight of the advantages of buying locally.

As far as people getting sick from hops, I've never heard of that. I suppose if I served someone some of my homebrew and they got sick they could sue me?

As long as you didn't pick your hops way too early or late, they will be within the range that they are supposed to be for the particular hop.

As far as the governing power, I don't know. You may want to check if you have a local farmer's market and see how that works. That would be local growers selling things. I would think that this type of activity would be encouraged.

I say you have a balanced view on this issue.
 
Hi Retrofit,

If my LHBS had offered to buy some of my hops I would be pleased. I think that is the response you might have expected here but didn't get so much.

I don't know if this analogy holds, but my favorite restaurant is in a seaside town in Massachusetts where I live. The restaurant claims they know the fishermen that they get their fish from. For me, that is a good thing. I think that people are trying to help you by seeing possible obstacles, but they are losing sight of the advantages of buying locally.

As far as people getting sick from hops, I've never heard of that. I suppose if I served someone some of my homebrew and they got sick they could sue me?

As long as you didn't pick your hops way too early or late, they will be within the range that they are supposed to be for the particular hop.

As far as the governing power, I don't know. You may want to check if you have a local farmer's market and see how that works. That would be local growers selling things. I would think that this type of activity would be encouraged.

I say you have a balanced view on this issue.

I'm sure they know the people they buy thier fish from(So does every large brewer that buys Hops)...but they are still "commercial" fishermen.
As to the Farmers Market aspect. That's fine. Grower to user. After that, We are talking a third party transaction. You need to CYA.(Cover your ass!)
 
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