WHAT THE GOVERNMENT SHUTDOWN MEANS FOR DISTILLERIES Congress’ failure to pass an appropriations bill has triggered a government shutdown effective October 1, 2025, halting operations across several federal agencies, including the Alcohol and Tobacco Tax and Trade Bureau (TTB). So what does this government shut down mean for distilleries? For distilleries, this pause has direct…
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If you’ve ever had a Certificate of Label Approval (COLA) rejected by the Alcohol and Tobacco Tax and Trade Bureau (TTB), you know how frustrating it can be. From seemingly minor formatting errors to incomplete statements of composition, label approvals can turn into bottlenecks that delay production and derail launches. With TTB staffing still stretched…
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While consulting for FIVE x 5, I’ve been lucky enough to meet distillers from all walks of life, and at all stages of the learning process. One of the appealing things about this industry is that you can always learn more – I’ve been doing it since 2018 and I still learn something new most…
According to an article at Wine-Searcher.com, TTB’s Industry Outreach office indicates that TTB had about 520 employees last year, and has about 450 today, due to two rounds of “voluntary resignations”. This reduction in staffing levels has already led to extended permit approval times – average DSP permit approvals are running at 81 days (April…
Sometimes, the world of regulatory compliance gets a little too dry, and I find myself reflecting on the past. It’s helpful to understand the background and chain of events that led us to the present. After the fall of Prohibition in 1933, the US Treasury was the regulator/enforcer for distilleries. Their successors in distillery regulation,…
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TTB has made a significant change to fill height regulations – one that most distilleries will find positive. They eliminated the distinction between bottles and cans, and added thirteen new authorized fill sizes! Allowable Fill Heights, Prior to January 10th, 2025: 1.8 Liters Bottles Only 1.75 Liters Bottles Only 1 Liter Bottles Only 900 mL…
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This is an advanced-level article that presumes working knowledge of gauging and proofing terms and methodologies. It includes excerpts from an article entitled Proofing and Gauging that I wrote for Craft Spirits Magazine, as well as presentations I’ve given over the years. If you have product on hand that has 6g/Liter or more of dissolved…
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As we wrap up a dynamic 2024, it’s wise to take a moment to reflect on some common TTB audit findings. Avoiding these pitfalls can save you significant time and expense – and you’re required to follow all the regulations, anyway! 1. Incomplete Gauge Records TTB regulations require you to gauge your spirit at various…
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Are you considering starting up a distillery? One of the most daunting tasks is figuring out the equipment that you need. It’s especially challenging if you’re not yet sure what you’re going to produce and how you’re going to produce it. This guide breaks down the different types of equipment according to production operations, so…
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Recordkeeping As a consultant for distilled spirits, I like to use an Iceberg metaphor to describe your compliance requirements. The tip of the iceberg represents monthly Reports of Operations – these require you to transmit a summary of your operations each month. The bulk of the iceberg lies below the surface, less visible: it represents…
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This post is intended to be a quick Public Service Announcement since we’ve observed an increase in this type of transaction. Both copackers and distillers are routinely running afoul of regulations surrounding Transfer in Bond of bottled/canned product, by sending and receiving canned product via Transfer in Bond. Unless the copacker and their distillery client…
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As a Consultant, I’m often asked what exactly I have to offer. My gut feeling is to say: “everything!”, but my therapist would probably push back on that. Joking aside, I love this question because it has many different answers – I’m fortunate enough to work with nano-distilleries that produce 10 proof gallons per year…
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The bottling department of your distillery is a paradox: your biggest value-add is putting corks in glass, but bottling carries a lot of technical and regulatory challenges. Let’s go through these challenges and examine some solutions. When I refer to a bottle, I’m speaking of a standard 750mL filled with 80 proof spirit. Technical Bottling…
Distilleries in the US are often approached by businesses and individuals who are interested in having the distillery produce and/or bottle product on their behalf. These arrangements are simple to describe in plain English, but they are deceptively complicated “under the hood”. In addition to Federal Trade Practice regulations, these arrangements are typically governed by…
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TTB regulations are stiff for the most part, but if you are a careful student, you can find some regulatory “freebies” that can save you significant amounts of time and money. Here, we’ll cover three of the most important ones. 1) You Don’t Have to Take Physical Inventory of Barrels This one’s a bit tricky because…
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At first glance, you might wonder why regulations distinguish between Voluntary Destruction and Losses. The key differences: In either case, you’re typically not taxed on the quantity lost/destroyed – but let’s dive in deeper. Voluntary Destruction Voluntary Destruction is covered in 27 CFR 19.459, which states: A proprietor may voluntarily destroy spirits […] or wines…
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Regulations require you to track and report your bulk Imported Spirit separately from your domestic spirit. This applies to spirit held in the Storage liquid account as well as the Processing account. We’ll cover the scenarios and ‘gotchas’ so that you can stay on TTB’s good side. And, be aware that we’re not going to…
Flow meters are used to measure the amount of liquid flowing through a pipe. It’s not hard to see why this is an appealing proposition for a distillery, which is full of moving liquid that must be tracked and measured constantly. Unfortunately, most flow meters are unsuitable for spirits. Typical magnetic flow meters will not…
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Since the US Census Bureau publishes population data, and the TTB publishes DSP permit data, I thought it would be instructive to join the two datasets and examine “Distillery Permits per Capita by State” in the US. For this exercise, I took Census Population data from the 2020 Census (last available) and mashed it up…
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A long-time client and friend called me one day and said: “Listen, our production guys messed up a batch of Rye and the mash bill is all wrong. We know exactly what went into the mash/ferment, and we’ve calculated how to adjust our Bourbon mashbill so that we can blend-in this mistaken Rye distillate in…
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Both DISTILL x 5 and Whiskey Systems offer you the ability to generate Case Labels for your bottled, finished goods, which helps you to meet your CFR requirements for case marking: But this is just the beginning of regulations around cased goods. You are also required to fill cases with properly filled & closed bottles….
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It is common for distilleries to make products like mixers, soda, syrups, shrubs and more. Folks that are in Maple Syrup country naturally want to use an empty bourbon barrel to finish some maple syrup; same goes for distillers in bee country with honey. All of these ideas are wonderful, but come with a giant…
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“From Bond”, “In Bond”, “Bonded” … it can seem like the regulations are fixated on the concept. But what does it all mean? First off, some background. In the US, the Federal Government’s Excise Tax attaches to spirits the instant they come into existence (when vapor condenses to liquid). However, to allow proprietors flexibility in…
What is AlcoDens LQ? AlcoDens LQ is a blending & gauging calculator made by Katmar Software. It has all the functionality of the calculators built into DISTILL x 5 and Whiskey Systems, plus additional functionality and support for spirits blends containing sugar. There is no business relationship between FIVE x 5 and Katmar Software; we just think…
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A bond is a special kind of insurance policy which has three parties, instead of two. If you think about home or car insurance, you (the policyholder) pay the insurance company a premium, and in the event of a financial loss, the insurance company makes you whole. A bond (or surety bond) is also an…
Many distilleries are involved in sending or receiving Bottled Spirit via Transfer in Bond. What they may not realize is that they’re running afoul of TTB regulations which have changed multiple times in recent years. This post will summarize the past and current regulations. The Past Prior to 2018, bottled spirits could not be transferred…
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Most distillers are aware of the Craft Producer tax break on the first 100,000 PGs/yr of product removed in a calendar year. When the tax break was first announced in 2018, there were some loopholes that allowed producers to sometimes take advantage of multiple 100,000 PGs/yr allotments. Those loopholes have largely been closed through subsequent…
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For some important background, make sure you’ve read the first blog post in this series, COGS – Why You Should Care and How to Track It. This post’s intended audience is distillery management and accountants/CFOs/controllers. First and foremost, we should define the goal of this exercise. What we’re aiming for is GAAP-compliant books that can…
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A frequent question from DSPs is how do I record the production and sale/shipment of ready-to-drink (RTD) cocktails in Keg format (e.g. sixtel, corny keg, beer kegs, etc)? The short answer: in the United States, you cannot. The background is usually the same: a cocktail in the Tasting Room becomes popular and turns into a…
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Congress is not expected to pass appropriations bills this month, and a failure to do this will trigger a government shutdown effective on October 1st. Historically, government shutdowns have resulted in TTB pausing their processing of COLA / Label Approvals/Exemptions, Formulas, and Permit Amendments/Applications. Due to this pause, a backlog of submissions is likely to…
As a rule, the Alcohol & Tobacco Tax & Trade Bureau (TTB) would prefer to work with industry members to guide them into compliance, rather than levying large fines or shutting businesses down. In fact, TTB even has a Voluntary Disclosure program that can help you minimize business disruption and cost, should you find yourself…
Are you working on a new formulation? Here’s a few common ‘gotchas’ to watch out for: Does this seem daunting? If you’d like help with Formula requirements, COLAs/Labels, or any other DSP operations we’re here to help. Reach out here to schedule time on my calendar and take your operations to the next level. Tyler…
All Distilled Spirits proprietors need to know about two substantial changes in in TTB Enforcement standing policy. 1. Change in Ownership Reporting If you have a change in ownership of your business, you must report that change to TTB via a Permit Amendment within 30 days. Reportable changes include: change of controlling interest, change of 10%+…
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Meet Tyler Derheim, Fx5’s in-house consultant, who uses his expertise to help distilleries of all sizes make it easier to make great things. Tyler first entered the regulated beverage industry in 2010, when he started working harvest and crush at a midsize winery in Slovenia. After returning to California in 2017 he joined a startup…
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One of the many advantages of working with FIVE x 5 Solutions is that we’re tapped in to what’s happening in the world of distilling. During our usual monitoring, we’ve noticed an uptick in enforcement actions by the TTB as more distilleries are experiencing a TTB audit. With pandemic restrictions easing, it makes sense that…
Since every Distilled Spirits Plant is unique in some way, the question of when to expand operations ultimately depends on the proprietor and their business model. With that said, there are some clear indicators that you should consider expansion: If you’d like to learn more about how to expand your operations, you can reach out…
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Inventory Management is one of those tasks that isn’t hugely rewarding while you’re doing it, but the benefits from good record-keeping are profound. Managing the cycle of raw materials, dry goods and finished products will allow your business to grow and react to changes. In today’s world of disrupted supply chains, staying on top of…
This article on density meters assumes that you have a good understanding of proofing/gauging and the associated vocabulary. Check out our previous blog post “Proofing & Gauging 101” for that overview if you haven’t already. A density meter is a device that determines the density of a liquid or gas, which you inject or pump…
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The TTB is charged with two primary missions: protect revenue and protect consumer. Because of this focus, they are very concerned with alcohol content measurement in distilled spirits plants – an underproof product shortchanges the consumer, while an overproof product shortchanges the government its excise tax; enter proofing and gauging. Accordingly, 27 CFR has strict…
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Before we dive into the topic of proofing and gauging, it’s useful to establish some background and definitions; while they may be familiar to you as experienced distillers, these will form the vocabulary for this article. These definitions and regulations primarily apply to United States-based producers, though there are comparable terms and guidelines in most…
Selecting the right equipment for your new DSP is a challenge. Even if you have the budget to purchase everything brand new, many of the items you need have long lead-times and require professional installation. Plus, everything you buy must work together. What is a new distillery to do? The best option is to seek…
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If you’ve ever used TTB’s Online Services, like COLAs Online or Formulas Online, you’ve probably found yourself frustrated with the unintuitive interface, unfamiliar (or easily misunderstood) standards, and arcane terminology. But that’s only the beginning of possible frustrations – even after wading through the appropriate service, it can feel like TTB Specialists reject submissions for…
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Does Your Excise Reporting Pass the Quality Test? Excise Tax Returns are deceptively simple if your operations are. While most of a DSP’s reporting requirements are denominated in proof gallons or wine gallons, TTB Form 5000.24sm only asks you for dollars and cents. The form is so simple that other industries such as Tobacco,…
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The FDA has withdrawn all three guidance documents which allowed distilleries to produce and distribute hand sanitizer as an emergency measure during the pandemic. Production should have ceased December 31st, 2021, and distribution by March 31st, 2022*. It is also important to be sure you de-register from the FDA’s OTC monograph system if you registered…
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Looking for some quick and easy ways to improve your DSP operations? Here are some process improvements that you can implement to save time and money, while reducing your risk of noncompliance. If you’d like help with CFR requirements or how to implement improvements for your DSP operations we’re here to help. Reach out to…
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