Do you crave a pint of cold, craft beer on a hot Indiana summer eve? In fact, is your passion for beer so strong, that you want to be the one producing it?
If you’re dreaming of joining the ranks of more than 100 breweries in Indiana, we have a few useful tips on how to get your Indiana brewery license and brewers bond. These are the necessary legal prerequisites that will allow you to open your micro- or nano-brewery in Indiana, and start delighting your state with your special brew.
While the process is not complicated, it’s a good idea to know what’s required of you, so that you operate in full compliance with state and federal law. Then you can start selling in bars, backyards and even food trucks. Sky's the limit
Let’s get started with the licensing overview. We’ll walk you step-by-step through the bonding process.
Your Indiana beer license
The licensing process starts with the Indiana Alcohol and Tobacco Commission, which is the regulating authority for alcohol producers and retailers in the state.
First you have to decide what type of licenses you will need. If you’re just starting your independent brewing business, the best option is the brewer or small brewer license. In case you would like to expand and make direct sales in shops, bars or at your own premises, you’ll also need to get a retailer or wholesale license.
You’ll have to check whether the license you need is currently available in your area, as there are license quotas depending on the population in the area. In case it isn’t, you can always contact other brewers that might be interested in selling their licenses.
Brewery license applications
To submit your permit application, you’ll have to prepare four copies of the floor plans of your brewery, your business papers, a proof of ownership or lease of the brewery’s location, and a brewer’s bond. The permit for beer will cost you $500
If you’re buying a license from a current brewer, you’ll have to fill in a few transfer documents that are also available online. The transfer fee is $250.
After you’ve submitted your application and paid the fees, your proposal will be reviewed by the local alcoholic beverage board. They will judge your suitability, and issue recommendations as to whether you can be given a permit. If you’re approved at this stage, you will get a visit from the State Excise Police for a final check of your brewing location. It usually takes between 10-12 weeks to get through the licensing process.
Besides the state licensing, you will have to pass the scrutiny on the federal level: the Alcohol and Tobacco Tax and Trade Bureau (TTB). This includes filing - and getting approval - on your Brewer’s Notice, submitting environmental impact information, and getting approval on your labels and packaging.
You will also have to get a Brewer’s Bond (TTB F 5130.22) or Brewer’s Collateral Bond (TTB F 5130.25). The bond amount is $1,000 for brewers whose excise tax liability is expected to be less than $50,000 for the year, and has been less than that in the previous year as well.
[And make sure you have the proper zoning in place. Sometimes that’s the hardest part. – ed.]
What’s the brewers bond all about
When you’re applying for a brewer’s permit, you’ll have to obtain a $10,000 alcohol bond to meet the state requirements, and, in most cases, a $1,000 bond to meet the federal ones. But what exactly is the brewer’s bond?
It’s a kind of surety bond, and as such, it guarantees your compliance with all applicable rules and regulations. In the case of the brewer’s bond, it functions as a security that you will pay all taxes you owe.
In practical terms, the bond is a contract between you as the principal, the authority requiring the bond as the obligee, and the surety providing the bond. Because of the financial risk involved in bonding, sureties examine the overall status of businesses before they get them bonded.
Another way to think about it is that a bond is an additional line of credit for your brewery. If you fail to follow the law, a claim can be made on your bond. The surety that underwrote it will cover all costs up to the amount of the bond. Afterwards you’ll have to reimburse the surety in full, so it’s a good idea to avoid such situations.
Getting bonded
As already mentioned, the required brewer’s bond in Indiana is $10,000. The good news is that you need to pay only a percentage of this amount. If you qualify for the standard bonding market, this means a premium of about 1%-4%, or between $100 and $400. The bond required by the federal TTB is $1,000, which can be obtained for premium between $100 and $250 per year.
But even if you have less-than-perfect credit, don’t despair. There are options to get bonded with bad credit, so that you can still pursue your brewery dream. You might end up paying slightly higher bonding premiums, but it’s worth it when it gives you the chance to start producing your own beer.
Vic Lance is the founder and president of Lance Surety Bond Associates. He is a surety bond expert who helps small businesses get licensed and bonded. Vic graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan’s Ross School of Business.
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