Legalities of selling homebrewed beer?

RhinoRhino Registered User regular
edited July 2011 in Help / Advice Forum

I homebrew for a hobby. The ingredients and equipment are getting quite expensive though. I know I can't legally sell it. My friend though, says it's perfectly acceptable and legal for him to buy the ingredients, I would make it and we would split the output. Between friends, it's probably alright if he has a hand in making it and gives me the ingredients directly?

It's like baking a cake, he brings the supplies, I have the oven, we make it together and we split the cake afterwards.

But what if his friends and friends of his friends are asking me, but instead of giving me the supplies directly they want to just pay cash. And only for the "share" of the ingredients that are in the output they want.. I told them no, but just curious on the legality here.

Also, for sake of argument. How much trouble could I get into for selling directly? I would never do that. But my friend is saying it's not a big deal. I want to prove him wrong and give him some idea of how much of a big deal it really is.

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  • ceresceres When the last moon is cast over the last star of morning And the future has past without even a last desperate warningRegistered User, Moderator mod
    Where do you live?

    And it seems like all is dying, and would leave the world to mourn
  • JebusUDJebusUD Adventure! Candy IslandRegistered User regular
    Big trouble. You want the ATF knocking down your door?

    However, if you wanted to have some friends share in the ingredients that is fine. Friends of friends is a bit iffy though. If it is that delicious, maybe you should look into a microbrewery.

    And I won, so you lose,
    Guess it always comes down to.
  • CryogenCryogen Registered User regular
    While I don't know for sure (IANAL), I would think it would depend on the liquor licensing laws in your area. I would guess that selling your homebrew to a licensed establishment might be ok (subject to the usual laws for running a business eg paying relevent taxes etc) while selling to regular customers (including friends) would require you to have a liquor licence. It is possible there is some kind of threshold though, which would allow you to sell a certain quantity without a licence, so research that angle.

    I'd expect the trouble you could get in would be restricted to selling without a licence, though it is possible you may also open yourself up to liability if your customer say, gets into a car accident following the purchase/consumption of your alcohol. Obviously you'd be careful not to sell to anyone who is a minor/not legally allowed to consume alcohol, that would be another potential hazard. Oh and perhaps income tax related charges if you aren't declaring the income.

    Overall, I think between friends the risks are extremely minimal as long as you keep it amongst yourselves. I'm sure this kind of thing happens all the time. It's when friends of friends start getting involved, people you don't really know, then all it takes is one person to report you for some reason and you're being investigated. For what you are planning though, it should be fine. *not legal advice lol*

  • MushroomStickMushroomStick Registered User regular
    Is what the OP is asking really that much different from everyone throwing in their $5 towards a case of beer?

  • joshofalltradesjoshofalltrades Class Traitor Smoke-filled roomRegistered User regular
    My pastor sells his homebrewed beer and also some wines every year for our church silent auction. We have cops attending our church, so I'm sure if there was a problem he'd get shut down. Then again, we are Lutheran, which means we say "hey" when we pass each other in the liquor store.

    You should really check the laws in your area; if they're vague, call the cops and ask them yourself.

  • DeadfallDeadfall Registered User regular
    Selling unlicensed homebrew is usually a pretty serious deal. I homebrew too, so I know the costs (just built a several hundred dollar ten gallon set up in my garage myself).

    Why even bother risking it selling it? It's not that expensive. I give away a good 30% or more of my batches because I like sharing what I've done creatively. If you kept it pretty quiet, I doubt you'd get caught, but man, I'm proud of what I make. I like giving mine away to anybody who wants some.

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  • RhinoRhino Registered User regular
    edited August 2011
    Deadfall wrote:
    Selling unlicensed homebrew is usually a pretty serious deal. I homebrew too, so I know the costs (just built a several hundred dollar ten gallon set up in my garage myself).

    Why even bother risking it selling it? It's not that expensive. I give away a good 30% or more of my batches because I like sharing what I've done creatively. If you kept it pretty quiet, I doubt you'd get caught, but man, I'm proud of what I make. I like giving mine away to anybody who wants some.

    I love giving mine away too. But "expensive" is a relative term. I like to try new beers and I only have so much "hobby money" I can use for supplies/equipment. Some guys are ok with dropping $400 a month on this; but I'm not one of those guys. I guess I was hoping for a way to offset some or all my costs.

    I guess I should look at reducing my supply costs. It runs me about $20-40 per 5 gallon batch. I'll research it more. Maybe I can buy in bulk for some things.

    Do you do grain or extract? How much are your supply costs? You said you had a 10 gallon setup, is that cheaper or more expensive to run a batch (per oz, not total)?



    Rhino on
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  • DeadfallDeadfall Registered User regular
    edited August 2011
    Some guys are ok with dropping $400 a month on this; but I'm not one of those guys. I guess I was hoping for a way to offset some or all my costs.

    Jesus 400 a month? Who the hell is dropping 400 a month on brewing? That's...that's way more than I've ever spent on making a batch. That's probably more than my club has spent on multiple batches.

    I did 5 gallon extract/grain for two years. Cost roughly 30 bucks for a batch for anywhere between 40 to 50 bottles. The 10 gallon all-grain batch I have planned coming up will cost about 70 bucks (it's a complex batch) and should yield over 100 bottles, or two corny kegs if I get those in time.

    The way I see it, if you have a materials-intensive hobby like this, you shouldn't really be terribly concerned with offsetting your costs. That's why it's a hobby.

    I am in talks with a gal who owns a small organic farm who is hosting some kind of event in a few months and who wants to serve my beer. She offered to buy it off me, which I refused (for a few reasons), but she insisted so I gave her the option of purchasing some co2 equipment for me. Maybe something like that would work for you, having your friends buy you bottles or something.

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  • RhinoRhino Registered User regular
    edited August 2011
    Deadfall wrote:
    Some guys are ok with dropping $400 a month on this; but I'm not one of those guys. I guess I was hoping for a way to offset some or all my costs.

    Jesus 400 a month? Who the hell is dropping 400 a month on brewing? That's...that's way more than I've ever spent on making a batch. That's probably more than my club has spent on multiple batches.

    Crazy guys. There are big spenders with any hobbys. Again, expensive is relative. $40-80 a month (or 2 or 3 batches plus some small equipment) is costly for me.
    I am in talks with a gal who owns a small organic farm who is hosting some kind of event in a few months and who wants to serve my beer. She offered to buy it off me, which I refused (for a few reasons), but she insisted so I gave her the option of purchasing some co2 equipment for me. Maybe something like that would work for you, having your friends buy you bottles or something.

    How legal is that? Could the feds bust you for that? The spirit of the law, some would say, is being violated there. I know she isn't paying directly, but will that hold of in court if the ATF raids her little event?

    Rhino on
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  • IrukaIruka Registered User, Moderator mod
    Personally, I would keep this pretty contained. I mean, all it takes is one of those beers getting passed along to some person you don't know and have that person blame a random illness on your brew. If the general expenses of your hobby are high enough for you, why also assume the risk of later legal ramifications? Generally, those aren't cheap problems. Its not just about sanitation, either, liquor licences and violations of such things can be a huge fucking pain in the ass.

    My experience is from college parties being busted for having people pay for alcohol. Of course, generally that crack down was a veiled way to shut down big parties in otherwise quiet neighborhoods, but it can happen. If you aren't prepared for it, I'm no lawyer but I would avoid it.

    Also, this shit varies highly state by state.

  • ASimPersonASimPerson Cold... ... and hard.Registered User regular
    ceres wrote:
    Where do you live?

    This still hasn't been answered.

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  • khainkhain Registered User regular
    Wikipedia indicates that it's illegal in any state since you'd be avoiding the excise taxes on alcohol though they don't have a cite for it. Googling brings up a bunch of homebrew forums which say basically the same thing along with that your state may also have a law against it. Also just as a note in the couple of state laws I saw quoted take bartering is taken into account since it's consideration and I'd be very surprised if it wasn't in the federal law as well.

  • amateurhouramateurhour One day I'll be professionalhour The woods somewhere in TennesseeRegistered User regular
    I used to work for an Alcohol Beverage Control (ABC) Board in one of the few states that still has state run liquor stores. In general (IANAL, and every state differs) most states have regulations so that you can brew a specific amount, usually 100-200 gallons a year for personal consumption and no one really cares what you do with it as long as you're not selling it to stores or bars or in bulk or anything. It is illegal to sell it to your friends though and bartering does count. The real question is whether or not the ATF or an ABC board (depending on where you live) would ever know what you're doing, and that depends on how nosy your neighbors are...

    The only real loophole I could see is if MAYBE they bought all of the materials to make a batch, in which case they'd just be using your equipment, but you'd still possibly be responsible for whatever they did with it, or if they got caught driving back from your place with a few gallon jugs of beer, which may or may not be classified as an open container. Honestly it's just a bad idea. If you're not cool losing money giving it away then you need to just make less of it and let them deal or buy their own setup.

    Now if you're looking to make more than 100-200 gallons a year or actually sell it you need to get a license. If you're even close to that amount then you need to get a license, because again, a nosy neighbor can make serious trouble for homebrewers. My weeks working for ABC were filled with looking at evidence photos of stills and homebrew setups because someone called in a complaint and ABC isn't like the local police, who might just show up and tell you to knock it off. They're gonna take your shit and put you in cuffs and let the attorneys sort it out later.

    Look, the realistic nature of this is that the ATF or ABC board has no fucking clue what you're doing in your home. You can make this delicious beer every day and be fine, let your friends come over and drink some, and generally be a cool dude. When you start letting them take it off your property though or do things that will technically reimburse you for the costs you're entering an entirely new area. It could be anything from them getting busted and saying they bought it off of you to some friend of a friend of a friend getting sick off your beer, like another poster said.

    It's a hobby, so just keep it that way.


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  • SatanIsMyMotorSatanIsMyMotor Registered User regular
    So how does one actually become a profitable craft brewer? I'm genuinely curious as this is something I'm interested in doing.
    Do you have to actually open a brewery so that you're paying taxes and undergoing health inspections? Is it simply a matter of getting listed as a business?

  • RhinoRhino Registered User regular
    ASimPerson wrote:
    ceres wrote:
    Where do you live?

    This still hasn't been answered.

    MN, USA.

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  • RhinoRhino Registered User regular
    edited August 2011
    So how does one actually become a profitable craft brewer? I'm genuinely curious as this is something I'm interested in doing.
    Do you have to actually open a brewery so that you're paying taxes and undergoing health inspections? Is it simply a matter of getting listed as a business?

    Yea, that's a different topic - but equally messy and confusing in terms of legality.

    You need to setup a normal business that can report taxes, etc. That part isn't hard, same as any other small business.

    Then you need local and state liquor permits. I'm not sure what is involved here. But it's complicated unless you have a lawyer?
    The permits are different depending on if you are just brewing, have a brew pub (tasting on site), or sell it on site, etc, etc.

    Your product also needs testing and certification IIRC. Also you can't do it from your home in most states. It has to be an industrial area, whatever that is.

    You also need things like branding permits and special type of insurance I think.
    I was told between $10K-$500K depending on the state and what you actually want to do. That is per-year.


    Rhino on
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  • RhinoRhino Registered User regular
    I used to work for an Alcohol Beverage Control (ABC) Board in one of the few states that still has state run liquor stores. In general (IANAL, and every state differs) most states have regulations so that you can brew a specific amount, usually 100-200 gallons a year for personal consumption and no one really cares what you do with it as long as you're not selling it to stores or bars or in bulk or anything. It is illegal to sell it to your friends though and bartering does count. The real question is whether or not the ATF or an ABC board (depending on where you live) would ever know what you're doing, and that depends on how nosy your neighbors are...

    The only real loophole I could see is if MAYBE they bought all of the materials to make a batch, in which case they'd just be using your equipment, but you'd still possibly be responsible for whatever they did with it, or if they got caught driving back from your place with a few gallon jugs of beer, which may or may not be classified as an open container. Honestly it's just a bad idea. If you're not cool losing money giving it away then you need to just make less of it and let them deal or buy their own setup.

    Now if you're looking to make more than 100-200 gallons a year or actually sell it you need to get a license. If you're even close to that amount then you need to get a license, because again, a nosy neighbor can make serious trouble for homebrewers. My weeks working for ABC were filled with looking at evidence photos of stills and homebrew setups because someone called in a complaint and ABC isn't like the local police, who might just show up and tell you to knock it off. They're gonna take your shit and put you in cuffs and let the attorneys sort it out later.

    Look, the realistic nature of this is that the ATF or ABC board has no fucking clue what you're doing in your home. You can make this delicious beer every day and be fine, let your friends come over and drink some, and generally be a cool dude. When you start letting them take it off your property though or do things that will technically reimburse you for the costs you're entering an entirely new area. It could be anything from them getting busted and saying they bought it off of you to some friend of a friend of a friend getting sick off your beer, like another poster said.

    It's a hobby, so just keep it that way.

    Fair enough. Thanks for the post.

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  • DarkewolfeDarkewolfe Registered User regular
    Rhino wrote:
    So how does one actually become a profitable craft brewer? I'm genuinely curious as this is something I'm interested in doing.
    Do you have to actually open a brewery so that you're paying taxes and undergoing health inspections? Is it simply a matter of getting listed as a business?

    Yea, that's a different topic - but equally messy and confusing in terms of legality.

    You need to setup a normal business that can report taxes, etc. That part isn't hard, same as any other small business.

    Then you need local and state liquor permits. I'm not sure what is involved here. But it's complicated unless you have a lawyer?
    The permits are different depending on if you are just brewing, have a brew pub (tasting on site), or sell it on site, etc, etc.

    Your product also needs testing and certification IIRC. Also you can't do it from your home in most states. It has to be an industrial area, whatever that is.

    You also need things like branding permits and special type of insurance I think.
    I was told between $10K-$500K depending on the state and what you actually want to do. That is per-year.


    You would also be subject to health regulations and stuff.

    What is this I don't even.
  • Dr. FrenchensteinDr. Frenchenstein Registered User regular
    So how does one actually become a profitable craft brewer? I'm genuinely curious as this is something I'm interested in doing.
    Do you have to actually open a brewery so that you're paying taxes and undergoing health inspections? Is it simply a matter of getting listed as a business?

    You should watch Beer Wars, it's REALLY hard to become a successful microbrewery.

  • SatanIsMyMotorSatanIsMyMotor Registered User regular
    So how does one actually become a profitable craft brewer? I'm genuinely curious as this is something I'm interested in doing.
    Do you have to actually open a brewery so that you're paying taxes and undergoing health inspections? Is it simply a matter of getting listed as a business?

    You should watch Beer Wars, it's REALLY hard to become a successful microbrewery.

    Yeah I've seen it. I'm more concerned about the process - not how one becomes successful.

  • a5ehrena5ehren AtlantaRegistered User regular
    So how does one actually become a profitable craft brewer? I'm genuinely curious as this is something I'm interested in doing.
    Do you have to actually open a brewery so that you're paying taxes and undergoing health inspections? Is it simply a matter of getting listed as a business?

    You should watch Beer Wars, it's REALLY hard to become a successful microbrewery.

    Yeah I've seen it. I'm more concerned about the process - not how one becomes successful.

    You have to get a bunch of licenses and stuff. How hard it is to get the licenses varies wildly from state to state, however. You also need some serious capital to get real equipment.

  • mehmehmehmehmehmeh Registered User regular
    edited August 2011
    I'm from mn as well, I think they were a couple of articles in city pages or the star trib about people transitioning from hobby to small business 612brew was a new one that was featured in the articles but i'm having trouble pulling it up.


    http://612brew.com/beer/?page_id=3
    https://sites.google.com/site/minnesotabeeractivists/about-us


    I think they also talked about renting brewery space/time so you didn't have to deal with a large investment in equipment until you are more sure of you sales.

    edit:
    http://www.citypages.com/2010-09-15/news/612-brew-fulton-beer-surly-and-the-craft-beer-renaissance/
    I remember this article being more informative but i guess that's it.

    mehmehmeh on
  • JebusUDJebusUD Adventure! Candy IslandRegistered User regular
    Rhino wrote:
    ASimPerson wrote:
    ceres wrote:
    Where do you live?

    This still hasn't been answered.

    MN, USA.

    Hey, me too. I know some friends that are big into this so I will ask what they know and pass on the info. Some have already looked into it.

    And I won, so you lose,
    Guess it always comes down to.
  • DeathPrawnDeathPrawn Registered User
    edited August 2011
    As others have said, going pro is very expensive and very time-consuming.

    I'd be hard-pressed to find anyone, legal authorities included, who would take issue with an argument of "my buddy and I are big into homebrew. We go halfsies on all the ingredients, but I'm the one who does the actual brewing".

    You would get in *big* trouble for actually selling, as in "here is some money, and in exchange here is some homebrew". There are plenty of ways to sidestep the law, and most of the time the authorities have much better things to do with their time than go after you, but if you are caught in a direct monetary transaction involving homebrew you're pretty fucked (you're both selling alcohol without a liquor license AND selling food that wasn't prepared in a commercial kitchen, among other things). If you were selling a six-pack here or there to close friends I can't imagine you'd ever get caught, but your friend is wrong.

    DeathPrawn on
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