Dealing with Federal Agencies a Hurdle for Opening Breweries

For opening breweries, the Alcohol and Tobacco Tax and Trade Bureau (aka TTB) is a tangled web that can frustrate the goal of opening.

So what did some breweries that opened in 2016 say about how they coped with dealing with the TTB?

“The permitting and licensing portion of getting open is hands down the one thing I wouldn’t want to endure again,” said Round Town co-founder Max Schenk. “The state and local side of things was certainly tedious but fairly painless overall. The TTB permitting, on the other hand, I wouldn’t wish on my worst enemy.”

It took the Indianapolis brewery ten months from the time Schenk said she figured out how to navigate the lengthy online portal to the approval e-mail hitting her inbox.

“Those ten months were riddled with conflicting instructions from the site itself to what would later be requested by our TTB representative, and to be perfectly honest it still doesn’t make much sense,” she said. “The site would tell you one thing, such as ‘complete this section for owners over x percent,’ so I would, and then weeks later I would receive an email request for that information and more for owners under that x percent.”

The information requested was also extremely lengthy and a bit invasive, to the point where Schenk said she would have to convince investors with minimal ownership percentages to provide everything from social security numbers and bank information to height, weight, and eye color and mothers’ maiden names.

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For Eric Paredes, the chief manager for Modist Brewing in Minneapolis echoed Schenk in that the biggest challenges were finding a clear roadmap among not just the TTB but also with state and local agencies.

“There are a million steps — it seems — needed to get the necessary permits and approvals, but it is up to you to decipher when things are needed, in what order, and which agency to contact to accomplish those things,” Paredes said. “Everyone was nice and helpful, but their jurisdiction only extended so far. We spent hours on the phone and days filling out — and sometimes re-filling — forms. The process is complicated and muddled.”

Ownership structure was just a small fragment of the major headache for Schenk, as she was asked to upload 46 different attachments, from leases to floorplans to bank statements, in addition to the multiple page application itself.

Many of these attachments were also subject to further scrutiny.

“We were able to work on some other aspects of the business during this time, particularly the building out of our space, but there were multiple chicken and egg situations involved,” Schenk explained. “The TTB requires you to have a signed lease and a purchase order for equipment before the process can even begin, which is a lot like asking someone to buy a car before allowing them to begin the process of obtaining a driver’s license.”

Patience was absolutely necessary, she noted. Getting help from a lawyer friend who had overseen a couple of these processes was also essential.

“The one thing I told myself over and over throughout the process was ‘all you can do is all you can do,’ ” she said. “As in, I couldn’t control what the story of the day would be with what they were asking, but I could just bare down and do it until the next unexpected request hit my inbox. And that is what I continued to do, no matter how frustrating at times.”

Chris Smith, a co-founder and managing member for The Virginia Beer Company, said that his group spent the money to hire a consultant to work through the TTB nightmares.

“Totally worth the money given their knowledge of the process and the time we saved,” he said.

Added Paredes: “As you start accomplishing things, you can start to see the light at the end of the tunnel… and that keeps you going.”

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