How to open a winery: federal permits, labels and excise tax

How to open a winery: the federal steps in order

Opening a winery is a regulated business at two levels. The federal level is the Alcohol and Tobacco Tax and Trade Bureau (TTB), part of the US Treasury. TTB says every company must apply and receive permission before producing wine for commercial purposes (not for personal or family use). Your state alcohol agency licenses you separately, and it can add rules of its own on top of the federal ones.

This page covers the federal steps only, in the order most new wineries meet them. Rules vary by state and city, and this is general information, not legal or tax advice. Check each rule on the linked TTB and eCFR pages before you act on it.

1. Decide how you will make the wine: your own bonded winery, a shared winery as an alternating proprietor, or a custom crush arrangement where another winery makes it for you.
2. Apply to TTB through Permits Online: the wine premises application, the basic permit and, unless you are exempt, the wine bond.
3. Wait for approval. Wine for sale cannot be produced until TTB approves you.
4. Get your state licence from your state alcohol agency, and any local permits.
5. Apply for label approval (a COLA) for each wine before you bottle it for sale.
6. Keep records, file operations reports and pay federal excise tax when wine leaves the bonded premises.

Can you sell homemade wine?

No. Federal rules allow home winemaking, but only for personal or family use and not for sale. Under 27 CFR 24.75, wine made at home may not under any circumstances be sold or offered for sale. That applies to selling it from home, at a market, online or to a friend.

The home limit is 200 gallons per calendar year for a household with two or more adults, and 100 gallons per calendar year if one adult lives there. An adult here means someone 18 years of age or older, or older if local law sets a higher drinking age. The same section says the exemption does not override state or local law, so some places restrict home winemaking further.

If you want to sell wine you made, you have to make it on bonded wine premises approved by TTB, with the licence your state requires. Selling wine from home is therefore not an option for homemade wine made under the household exemption.

How to start a wine business without building a winery

TTB describes three main ways to enter the wine business. Which one you choose decides which forms you file and who is responsible for labels and tax.

If you want to start your own wine brand without making wine yourself, the custom crush route is the federal starting point. Selling the wine also needs state permission, and your state alcohol agency decides which licence covers it.

The TTB bonded winery application

Applications go through TTB's Permits Online system, or by mail to the National Revenue Center. TTB says there is no fee at the federal level to apply for or keep this approval.

1. Wine premises application

   File TTB F 5120.25, Application to Establish and Operate Wine Premises. It describes your premises and operations. Approval of this form is what authorizes you to operate the winery.

2. Basic permit

   Anyone producing or blending wine for sale needs a basic permit under the Federal Alcohol Administration Act, filed on Form 5100.24. Operations that need it may not be conducted until the basic permit application is approved.

3. Wine bond

   The bond covers the excise tax on wine in your bonded premises, filed on Form 5120.36. A small winery that pays tax on a deferred basis and qualifies for annual or quarterly returns is not required to provide a bond or bonds covering wine for nonindustrial use.

4. Supporting documents

   TTB also lists signing authority forms, organizational documents, any lease, trade name registrations and the Form 5630.5 (Registration only – No Tax Due). A diagram of the premises is optional for a stand-alone winery but required from alternating proprietors.

5. Review and inspection

   A TTB specialist reviews the application and may call you for more information. TTB can also send an investigator to inspect the premises before approval.

Label approval (COLA) before you bottle

Federal rules in 27 CFR 4.50 say no one may bottle wine, or remove it from the bottling plant, without an approved certificate of label approval, TTB Form 5100.31. This is the certificate of label approval, or COLA. You apply in COLAs Online, and TTB says there is no fee to apply.

TTB's wine labeling guidance lists the statements most labels must carry, including the brand name, class or type, alcohol content, and the Health Warning Statement, Name and Address, Net Contents, Sulfite Declaration.

A COLA covers federal requirements only. Ask the alcohol agency in each state where you plan to sell whether it has label or registration rules of its own.

Federal excise tax and the small producer credit

Federal excise tax on wine is owed at the time of removal from a bonded wine premises for consumption or sale. The rate depends on the tax class of the wine, under 26 U.S.C. 5041 as set out in 27 CFR 24.270.

Domestic wine producers get a tax credit per wine gallon each calendar year. TTB's rate table sets the bands as First 30,000 Wine Gallons; Over 30,000 up to 130,000; Over 130,000 up to 750,000. The credit is $1 credit per wine gallon in the first band, 90¢ credit in the second and 53.5¢ credit in the third. On still wine up to 16% alcohol, the first band leaves an effective rate of $0.07 per wine gallon.

Producers may transfer their tax credits to other wineries or to bonded wine cellars. Credits can be limited for controlled groups and single taxpayer arrangements, so read TTB's CBMA guidance if you share ownership with another alcohol business.

Excise tax returns and operations reports

Wine tax is paid on the Excise Tax Return, TTB F 5000.24. By default, taxpayers who defer payment use semimonthly return periods. If no tax is due for a period, the filing of a return is not required.

Small wineries can file less often. You can file annually if you were not liable for more than $1,000 in wine taxes in the previous calendar year and expect the same this year; the annual return and payment are due January 14th of the following year. You can file quarterly if you were not liable for more than $50,000 in wine taxes the year before and expect the same this year.

Separately, every bonded winery files the Report of Wine Premises Operations on TTB Form 5120.17, monthly, quarterly, or annually. Annual filing is open only to wineries that file annual tax returns and do not expect more than 20,000 gallons of wine on the premises in any month.

How to sell wine: where state rules take over

Federal approval lets you produce, bottle and pay tax on wine. Where to sell wine, and how, is mostly decided by states. A tasting room, a farmers market stall, sales to shops and restaurants, and shipping wine to customers in other states each need state permission, and the rules differ from state to state.

If you want to sell wine online and ship it to customers, each state you ship into decides whether it allows direct-to-consumer shipping and which permit it needs. Contact your own state's alcohol beverage control agency first, then the agency in each state you plan to ship to. This page does not list state rules because they change often and differ in detail.

Where Nation fits

Questions about opening a winery