Is it legal? Does it make sense?

[cjmcfoot]

I have been brewing beer for years, winning awards and also judging BJCP sanctioned competitions.
I have learned alot and have come to really respect the answers given by the members of HBT. I could not think of a better venue to get some advice so here it goes..... (Long read, sorry, have a homebrew in hand for this one)
It has been a long time coming but I have finally decided to take the plunge and license my brews. I have ordered the 1bbl system from Stout Tanks and Kettles in Portland. My research on probrewer and talking with my BJCP pals has led me to the conclusion that I probably need to take about six months to a year brewing on the 1bbl system just to nail down a good recipe that I can feel comfortable about marketing.
So that yields a whole bunch of beer that I can't really do anything with. Well I suddenly had this premonition that came to me over the past week or so.

How about being a "Learn to Brew" facility. This seems to make sense to me with the current state of the economy. People are taking cooking classes and eating more at home. Home brewing is at an all time high, and people are just plain old buckling down with finances. So it seems I can brew beer for about 2 cents a beer on the 1bbl set up. Buying grain in bulk from morebeer, and buying my hops direct from freshops or hopunion.
I could essentially offer my services as a brewery set up and a learning situation for new brewers or even seasoned brewers that want to take a shot at all grain batch brewing with a recirculating mash. I looked into some legal terms of "beer or alcohol" and it seems as long as I don't mix the yeast with the wort it is just sweet cereal beverage.
So I was thinking I could offer five gallon fermentation bottling buckets of the sweet wort with a packet of nottinghams taped to the top with a complete instructional booklet on how to pitch the yeast and how to bottle the beer after fermentation is completed.
I am not too sure what to charge for five gallons of wort, and how to handle the ferm buckets. I am kind of leaning towards just buying some buckets, putting in some bottling spickets, including a lid and an airlock, and offering that as an additional cost. Some folks may already have a fermentation preference and will bring their own.
I am kicking around the thought of 30 dollars for five gallons, that comes to about 56 cents a beer. That's a better deal than any craft beer you can buy at the store.

Well go ahead fire away, I will take absolutely any advice or any questions you guys and gals might have.


Sincerely,
Craig J McPheeters
Bricktowne Brewing Company
Medford, Oregon
www.bricktownebeer.com

 

[Edcculus]

Hmm, There are a lot of Brew on Premises that do something similar, but you ferment and bottle it at their facility. I guess this could work the same, although 1bbl is a little big for a BOP type deal...

 

[Merl]

I would be very careful about that idea. You would be under the ATF and they have nailed (at least one) shop for doing much the same thing on the firearms side. Shop provided materials and machines to make a firearm, no longer in business.

That said, doesn't sound like a bad idea. deposit on buckets, returned clean & unscratched. outright sell the rest (including other supplies like sanitizers). rent cappers.

how much learning will you get making wort as opposed to making beer? Or is this just for expenses as you get the recipes down?

 

[avidhomebrewer]

First off, good luck with your idea. Sounds like you are giving it some serious thought and thinking of all the details.

As for the sale of wort, I don't know the legal ramifications of that (not a lawyer, but I bet there is one out there in HBT land), but, I would think it would depend upon the strength of the wort that would determine what you charge. I doubt you are going to make a big beer time and again to nail the system down, so $30 sounds reasonable to me for an average strength brew, seeing as I can get an extract kit from my lhbs for about that same price, for a 5 gallon batch.

 

[Veinman]

First of all congrats on taking the plunge to go all-grain. There was a similar debate about the legality of selling wort a little while ago.

First Off standard answer is get yourself a lawyer who can check it out this forum is full of smart brewer's not lawyers.

That being said I think everything you have said is true, you are selling wort which is not alcohol and yeast which may turn it into alcohol. Up here in Canada there are 2 different products called "brewhouse" kits and "fiesta" brew kits. They are completely finished wort which comes in a bag you pour into a fermenter and add the yeast. The only hurdle I can see you running into is health/sanitation as you're probably now selling food/drink, and of course likely need a business license.

Pricing would be tricky, I can tell you the brewhouse kits run for about $40CAD and they make 5 gallons. I would think $30 for 5 gallons of wort would be totally reasonable. Good luck and let us know how the process goes.

 

[roadymi]

I'm sure each state will have different laws. We have a local winery operating much as you describe. The customers come in and get their wine going in a primary. They come back several weeks later, bottle and take their product home. I have no idea how pricing works. I assume there must be something about who does the work that makes this legal?

 

[sportscrazed2]

why not just ferment it and sell the finished product?

 

[remilard]

If you are serious about opening a brewery, you do not want any alcohol related crimes on your record so get a good lawyer.

I do know that there is a brew on premise in Portland (or was, Let's Brew) and that Bader in Vancouver, WA does something similar with wine. You might run some questions by those guys before you give four figures to a lawyer, but do hire the lawyer before you go ahead.

 

[mattd2]

So it seems I can brew beer for about 2 cents a beer on the 1bbl set up. Buying grain in bulk from morebeer, and buying my hops direct from freshops or hopunion.

Really 2 cents per beer (guessing 12 oz?), would that equal a cost of $6.60 for a 1 barrel batch?

 

[cjmcfoot]

I would offer the classes for 1 to 6 people at any given brew day, so basically I would at a minimum do 10 gallon batches when it is only one person. As they would get five gallons and I would get five gallons. Basically it would be five gallons per person. If I had six people for a brew session then I would give out all 30 gallons to the students.

 

[cjmcfoot]

Really 2 cents per beer (guessing 12 oz?), would that equal a cost of $6.60 for a 1 barrel batch?

Yeah you're right I stand corrected its about 13.6 cents per beer.

 

[Dynachrome]

Check out "Vine Park Brewery" in St. Paul.

 

[cjmcfoot]

why not just ferment it and sell the finished product?

That's my eventual final goal, but I want to be real careful on the quality of what I release. We have a local brewery here, not going to name it, but they released some just mediocre beers, and they are selling but they are not as popular as they could be. I will give them credit though, they are improving.

My goal is to deliver small handcrafted batches that are unique and hold true to the demographics of our unique area.

For instance, our wine industry is really growing and booming in Southern Oregon, it has kind of become "pop culture" so to speak, and I have brewed up a five gallon batch on my home brew set up of "Valley Wine Barrel Vanilla Porter", and with some aging it is getting really good. My future intent is to use a local area wine barrel for aging, and I am using organic vanilla beans to get the vanilla flavor.

 

[jfr1111]

The only good advice in this thread is to contact a lawyer and the companies who already market such items. Brewhouse sells their wort in some states on the West Coast.

You don't just have to look at what you can and cannot do, but the legal ramificatiosn as far as health code and packaging for example.

 

[rico567]

I cannot see where selling ingredients (which is all wort & yeast are) can fall under the ATF or any state alcohol control.....because no alcohol is involved. During Prohibition, when all this was completely illegal, the grocery stores sold cans of Blue Ribbon Malt Syrup with the legend on the lid that went something like "It is illegal to combine the contents of this can with X amount of water and yeast to make the illegal beverage known as beer."
Homebrewing is legal, and all the OP would be doing is selling ingredients a step closer to the actual production of alcohol. As long as no alcohol is fermented, I can't see where there would be any offense involved.

OTOH:

1, I think it very likely you would come under some state or local food / beverage / health regulations.

2. Having said all of the above, no way in the world would I proceed with this plan without competent legal opinion, as suggested in many previous posts in this thread. You're skating closer and closer to the edge of a very big and mean federal agency, and the rule that applies here is "Don't poke the bear."

 

[SPLASTiK]

There's two Brew On Premises in Oregon according to Beer Advocate: http://beeradvocate.com/beerfly/list?c_id=US&s_id=OR&bop=Y
Well the first doesn't really look like one from the website but the second appears to be.

I'd give them a call.

 

[Veinman]

I think this product with the right marketing could be very succesful. I got thinking more about it after reading the thread about how Belles Brewery was giving away 5 gallon batches of wort to homebrewers and having a competition to see who could produce the best beer with it.
I would personally focus the marketing on the extract (capitalize on the freshness who else offers "fresh extract made daily"?) and only offer lessons to newbies to explain the brewing process the first time. I think ultimately you want repeat buyers of who take the extract home to brew with. Also I'd encourage experimentation with the wort include a phamplet of recipe modifications and show how changing the hops, yeast, adding steeping grains or DME can turn this wort into a Pale Ale, IPA, Brown, Porter, BarleyWine etc. etc. etc. and then encourage your customers to let you know about experiments they tried and add those to the phamplet crediting the creator. If you can stock those modifying ingredients that would help as well although maybe I've taken you too far from the brewery you're trying to become now...

 

[Sigafoos]

This is a Brew on Premisis. Get a lawyer.

The above's been stated a bunch, but it's true. Don't let any of us say 'well it's not technically beer!' -- you're going to be making a name doing this for yourself and it's hard enough to get TTB licensing without them thinking you've been trying to pull one over on them for the past year.

 

[Revvy]

Gang, the ATF doesn't give a rat's ass about Booze since 9-11, they sent all the alcohol (and I thought the Tobacco) part of their division to the Alcohol and Tobacco Tax and Trade Bureau and only kept the guns part. (Chicks dig cops who bust gun runners, but hate "revenuers." )



This sounds like it would still fit under the purview of a Brew on Premise, so if you've got the money and the patience to wade through this mess (I got a headache once just looking at the requirements for a beer's label getting approved.

But here's the website....there is a section where you can just download all the stuff you need for the first round of approvals.

Alcohol and Tobacco Tax and Trade Bureau (TTB)

You don't need armchair lawyers telling you what or what is not legal, or how to get around the laws...you need facts, so go there, and also probrewer.com there is where you will get the REAL info you need.

Good luck!

 

[ReverseApacheMaster]

To expand on a couple of things discussed beforehand, there's a couple obvious issues:

1. That may classify you as a BOP. Depending on the state laws, that may interfere with your license to sell as a brewery. They may be mutually exclusive licenses (and I bet they are). You'll also need to see how far into the brewing process you could go before you are engaging in BOP activities or going beyond what either breweries or BOPs are allowed to do. Definitely an area for a lawyer...

2. Wort may be separately regulated as a food product and subject to state/federal food regulations. You likely will not be able to let wort go out the door without appropriate packaging, which means it will have to have the brewery's logo at a minimum. A plastic bucket may or may not be an adequate package for retail beverage sales. There may be separate FDA requirements for wort. Again, all things for a lawyer to help with.

As a result of the separate legal issues of making and selling wort to the public it may be prohibitive in terms of time and/or money...

 

[Old_E]

I am a lawyer, but not in Oregon, so this is just plain old advice.... not legal advice.

What you would be selling is not beer. It will have 0% alcohol. I doubt it could/would be classified as beer. It is more like a soft drink or soup. Are you really brewing before you pitch yeast? Even after, you probably have to hit a certain alcohol percentage before it becomes an "alcoholic beverage." What people do with it once they leave your facility is out of your control.

You will probabaly need to look into local and state regulations as to the handling and sale of food products. It will probably require occupational licences and inspections by the appropriate regulatory agency.

Good luck!

 

[cjmcfoot]

Gang, the ATF doesn't give a rat's ass about Booze since 9-11, they sent all the alcohol (and I thought the Tobacco) part of their division to the Alcohol and Tobacco Tax and Trade Bureau and only kept the guns part. (Chicks dig cops who bust gun runners, but hate "revenuers." )



This sounds like it would still fit under the purview of a Brew on Premise, so if you've got the money and the patience to wade through this mess (I got a headache once just looking at the requirements for a beer's label getting approved.

But here's the website....there is a section where you can just download all the stuff you need for the first round of approvals.

Alcohol and Tobacco Tax and Trade Bureau (TTB)

You don't need armchair lawyers telling you what or what is not legal, or how to get around the laws...you need facts, so go there, and also probrewer.com there is where you will get the REAL info you need.

Good luck!

Thanks for the links Revvy,

While I was poking around on the TTB website I came across this which I thought is quite interesting, since technically you could consider wort to be "cereal beverage" I suppose. Since it is less than 0.5% ABV.

ATF Ruling 76-13

The Bureau has been asked whether a person engaged in the business of either importing or purchasing for resale at wholesale a malt beverage containing less than one-half of one percent alcohol by volume would be exempt from the permit requirements of section 3 of the Federal Alcohol Administration Act (27 U.S.C. 203). In addition, the Bureau has been asked whether such a beverage would also be exempt from the labeling and advertising requirements of section 5 of the Act (27 U.S.C. 205(e) and (f)).

Section 203 specifically makes it unlawful, except pursuant to a basic permit, for any person to engage in the business of importing into the United States, or purchasing for resale at wholesale, malt beverages.

Section 205(e) and (f) makes it unlawful to sell, etc., "malt beverages in bottles unless such products are bottled, packaged and labeled in conformity with ... regulations...," and to publish, etc., "... any advertisement of malt beverages...unless such advertisement is in conformity with...regulations..." However, the penultimate paragraph of section 205 provides, in effect, that with respect to malt beverages, the labeling and advertising provisions shall apply only to the extent that the State law imposes similar requirements.

Section 211(7) and 27 CFR 7.10(d) define the term malt beverage to mean a beverage made by the alcoholic fermentation of an infusion or decoction, or combination of both, in potable brewing water, of malted barley with hops, or their parts, or their products, and with or without other malted cereals, and with or without the addition of unmalted or prepared cereals, other carbohydrates or products prepared therefrom, and with or without the addition of carbon dioxide, and with or without other wholesome products suitable for human food consumption.

Section 211(7) contains no reference to a minimum level of alcoholic content before a product is considered a malt beverage. The legislative history of the Act clearly shows that Congress intentionally omitted any minimum alcoholic content from the definition in order to bring all malt beverages within the coverage of the statute, regardless of alcoholic content. The report of the Committee on Ways and Means on the Federal Alcohol Control Bill stated: "The definition of malt beverages...is a technical one designed to cover the beverage products of the brewing industry and includes such products regardless of their alcoholic content." H.R. Rep. No. 1542, on H.R. 8870, 74th Cong., 1st Sess. 16(1935).

Accordingly, the Bureau has taken the position that the term malt beverage as used in the FAA Act is a beverage made by alcoholic fermentation from specific materials and includes cereal beverages or "Near Beer" regardless of alcoholic content. Rev. Rul. 57-322, 1957-2 C.B. 930 (Internal Revenue), held that the term "Near Beer" may be used in the labeling and advertising of malt beverages containing less than one-half of one percent of alcohol by volume. However, both words must be printed to conform to the labeling provisions of the regulations relating to the labeling and advertising of malt beverages.

Held, a person who engages in the business of either importing or purchasing for resale at wholesale a malt beverage containing less than one-half of one percent of alcohol by volume is subject to the permit requirements of the Federal Alcohol Administration Act. Accordingly, importers and wholesalers of malt beverages and "Near Beer" produced by a process involving alcoholic fermentation, containing less than one-half of one percent of alcohol by volume must obtain appropriate permits under the Act. Furthermore, to the extent that the State law imposes similar requirements, the labeling and advertising of such products must also conform to the requirements of sections 205(e) and (f) and the regulations thereunder.

27 CFR 7.10.

 

[cjmcfoot]

To expand on a couple of things discussed beforehand, there's a couple obvious issues:

1. That may classify you as a BOP. Depending on the state laws, that may interfere with your license to sell as a brewery. They may be mutually exclusive licenses (and I bet they are). You'll also need to see how far into the brewing process you could go before you are engaging in BOP activities or going beyond what either breweries or BOPs are allowed to do. Definitely an area for a lawyer...

2. Wort may be separately regulated as a food product and subject to state/federal food regulations. You likely will not be able to let wort go out the door without appropriate packaging, which means it will have to have the brewery's logo at a minimum. A plastic bucket may or may not be an adequate package for retail beverage sales. There may be separate FDA requirements for wort. Again, all things for a lawyer to help with.

As a result of the separate legal issues of making and selling wort to the public it may be prohibitive in terms of time and/or money...

You are absolutely right, it could potentially be time and money prohibitive. However in my case I own the building and the equipment without a monthly payment, so it becomes more cost effective for sure. Furthermore that's why I love this forum, I have already learned so much by reading all of these replies.

 

[Rhoobarb]

We used to have several "Brew-on-Premise" places in the Chicago area. The problem is that they were pricey (>$100 for 12 gallons of beer, IIRC). I know a guy who got started in homebrewing at one. It was all-extract and had 6 kettles all set up. There were literally 100 recipes to pick from. You did all of the brewing with the help of instructions and a few helpers. The staff did all the sanitation. You would brew and then come back a couple of weeks later. They would filter the beer and get it very cold and then you would wash & sanitize your bottles and tap the cold beer into the bottles and cap them. He said their recipes made very nice beer. The problem is that it was so expensive and people eventually realized they could do it cheaper at home. Some of the recipes were close to $200 for 12 gallons. The place is closed, as are all of the others, I believe. And the one he was familiar with probably lost money. He said they must have had over $200,000 in kettles, plumbing and walk-in cooler equipment alone.

 

[cjmcfoot]

So did you guys notice Section 211(7) from the ATF, it is considered a malt beverage regardless of alcohol content.

Which means it must be licensed and permitted.

Thats alright I might still do it, after I get licensed, just for the love of homebrewing, and the fact that I can teach others to brew, and I can also learn alot in the process of teaching.

Thanks everyone for your advice and help.
Craig

 

[cjmcfoot]

***UPDATE***

Just got off the phone with a TTB representative. I spent quite some time on the phone with her, and her final answer is that it is such a gray line, because technically the wort leaving my facility has absolutely no yeast in it, that it can-not be a product with alcohol, so they would never pursue an operation like that. In her opinion it would be a huge waste of their time.

So I guess it is legal afterall from a TTB standpoint, now it is getting the states stance on the deal I guess,

Craig

 

[passedpawn]

Sounds just like FestaBrew.

 

[JeepDiver]

***UPDATE***

Just got off the phone with a TTB representative. I spent quite some time on the phone with her, and her final answer is that it is such a gray line, because technically the wort leaving my facility has absolutely no yeast in it, that it can-not be a product with alcohol, so they would never pursue an operation like that. In her opinion it would be a huge waste of their time.

So I guess it is legal afterall from a TTB standpoint, now it is getting the states stance on the deal I guess,

Craig

While I doubt they would go after you, Technically since you sanitize and not sterlize, the wort does more than likely have yeast, and will ferment on it's own over time.

I would get that in writing from someone at the TTB and have their boss sign it before I would bank my business on it.

Get the wrong agent on the worng day, and Technically what someone told you on the phone won't mean anything

 

[motobrewer]

i just went to a brew on premise in sacramento.

Brew It Up!

it was a brewpub that offered you to brew your own beer, 10 gallons. they'd ferment it, you'd come back later and bottle. people were brewing and bottling when i was there on wednesday at like 7pm.

seemed great till i heard the price - starts at $150 for 10 gallons.

 

[mattd2]

While I doubt they would go after you, Technically since you sanitize and not sterlize, the wort does more than likely have yeast, and will ferment on it's own over time.

I would get that in writing from someone at the TTB and have their boss sign it before I would bank my business on it.

Get the wrong agent on the worng day, and Technically what someone told you on the phone won't mean anything

I am probably wrong on this but don't yeast only produce alcohol during anaerobic conditions? So when the wort leaves the site (assuming it is brewed that day) it would still be packed full of oxygen and therefore in the aerobic stage and thus won't be producing alcohol yet. Again I could be, and most likely am, wrong
I do agree that you should get what was said above clarified and in writing to cover you ass, just in case!
I have looked, very briefly, into my countries regs on this sort of matter and it seemed more of a hassle and bother to produce food products than beer/wine! The food regulations were stringent on how/when/where/what/who/why(?), where as the alcohol regulations were more focus on tax, and as far as I could tell if you had a liquor licence you were exempt from needing a food prep certificate! As always it’s all about the Benjamins (or Rutherfords (that badass split the atom!) over here)

 

[vandeg]

Something similar is the Big and Easy bottle brews, which consist of 2 liter bottles of wort with yeast attached somewhere on them.