Alcohol & Tobacco Tax and Trade Bureau

With articles about the “magic” of turning employees into company owners popping up in the New York Times and The Atlantic last fall, Employee Stock Ownership Plans are becoming part of the mainstream vernacular. Referred to by those in the know as “ESOPs” (pronounced “ee-SAHP”), these specialty retirement plans are a popular—and tax effective—way for companies to manage succession planning. When structured properly, and ESOP can provide huge financial benefits to companies and their employees alike. According to the National Center for Employee Ownership, there are almost 7,000 ESOPs currently in place. About 10 million people—more people than currently love in the state of Washington—actively participate in an ESOP today.

There have been several craft brewers who have taken advantage of the ESOP structure in the past year and we expect this trend to pique the interest of craft distilleries. This article explores at a very high level some of the issues involved with starting and maintaining a craft distillery ESOP.

Read the full article.

Originally published in Artisan Spirit, Spring 2017.

One of the last things anyone thinks about when embarking on a new, exciting venture (like opening their own distillery), is how things will come to an end. The fun is in the journey, in the craft – and those are rightfully the focal points for entrepreneurs running their own craft distilleries. But, inevitably, the time comes for the next adventure, the next enterprise, the next journey. An entrepreneur may have to recoup the investments they have made in their business or transfer that business to the next generation to carry it forward. No matter the driving force, there comes a time in the life cycle of every business that requires an entrepreneur to consider a sale or some other form of transaction.

This article, originally published in the Winter 2016 issue of Artisan Spirit, addresses several issues that can arise when buying or selling a craft distillery.

On May 28, 2013, the Alcohol and Tobacco Tax and Trade Bureau (TTB) published a new Industry Circular, Number 2013-2, that authorizes voluntary “serving facts” labeling on alcohol beverages regulated by TTB under the Federal Alcohol Administration Act (i.e., it does not apply to wine below 7 percent alcohol by volume (ABV) or beers made without malted barley or hops).

The most relevant points:

  1. Everything discussed in Industry Circular 2013-2 concerns voluntary labeling statements.  It mandates no new labeling disclosures.
  2. The serving facts statement mostly contains the same information contained in the “statement of average analysis” required for “light” and similar products.
  3. TTB gives producers and importers the option of adding a statement showing the amount of pure alcohol per serving or per container of a product (e.g., 0.6 fl. oz. of alcohol per serving), accompanied by alcohol content (ABV) information.
  4. The serving facts can be displayed in a panel (FDA style) or “linear” fashion.
  5. Producers and importers have the option of showing serving facts as a substitute for the statement of average analysis required on “light” and similar products.
  6. TTB recognizes a wider range of serving sizes for wine, malt beverages and distilled spirits, depending on the strength of the product.  For example, instead of a 12 oz. serving size for all malt beverages, serving facts statements for higher-strength beers should use smaller serving sizes for progressively higher-alcohol products.
  7. If a producer or importer follows the format authorized by TTB, it can add serving facts to existing labels without the need for a new COLA.