Distilling is different from other industries in some ways, especially when it comes to regulation. But distilleries are just like most other businesses in that their owners almost always should set up business entities to protect themselves from potential legal liability. A “business entity” for our purposes is a company with its own independent legal identity, such as a corporation or limited liability company (LLC).
You need a distilled spirits plant permit (DSP) to start a new distillery. DSP permits are issued and regulated by the Alcohol and Tobacco Tax and Trade Bureau (TTB), which is a branch of the Treasury Department. The TTB has tried to create a straightforward online DSP permit application. However, complex federal rules that apply to this process can make applying for a DSP permit much more difficult than it may appear at first glance, even through the online system.
Each distilled-spirits container must be labeled with a government-approved label before it can be sold. The TTB is the government agency responsible for reviewing and approving alcohol beverage labels. In most cases, you must obtain a Certificate of Label Approval (“COLA”) from the TTB before putting the product on the market. You can usually file a COLA application as soon as you receive a DSP operating permit. You must submit a sample label with that application. In some cases, you must submit your product formula for TTB evaluation before filing a COLA application.
The name of every alcoholic-beverage manufacturer, every product line, and every drink, is a potential trademark. The logos, slogans, and graphics on your labels or packaging are potential trademarks too. If your chosen trademarks don’t comply with the law, or they are too similar to someone else’s, you might not be able to use them. It’s best to find out whether you can use and protect your trademarks as early as possible so that you can make changes before you have accumulated customer goodwill and marketing costs. This is especially true in an increasingly crowded alcoholic-beverage industry, where trademark disputes are very difficult to avoid without careful planning.
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