If you are interested in making moonshine for personal or commercial use, you are likely wondering if this prospective hobby is legal or not. Learning the laws related to moonshine and home distilleries is a wise move that can keep you out of potential trouble when you’re making your own moonshine.
Federal Distilled Spirits Permit
If you’re planning starting a distillery or setting up a large scale home distillery, you will need to get a permit if you would like to distill without violating state or federal laws.
If you would like to make moonshine without any legal risk, getting a federal distilled spirits permit is your first option. Depending on your state, you will need to pay a fee to get started as well as list your equipment and ingredients on your application.
If you’re properly permitted, inspectors from the Bureau of Alcohol, Tobacco, Firearms and Explosives will conduct regular inspections of your distillery to check for compliance. Any issues can result in fines or even the shut down of your distillery.
These permits are much easier to get, and you won’t need to worry about regular visits from government officials. The catch with this path is that you are not legally allowed to consume the alcohol you produce. Many people, however, opt for this permit and still consume what they make.
Are There Penalties for Making Moonshine Without a Permit?
Like it or not, there are potential penalties for making moonshine without the proper permit.
You might be considering making moonshine without a permit so that you can skip the fee and red tape, but if you’re in violation of state and/or federal laws you’ll be facing fines and potential prison time.
Depending on your setup there’s really a wide scale for the legal repercussions of a non-permitted distillery. Likely for the small home distillery, you’ll get a warning or a small citation.
Worst case scenario, illegal distilleries could face up to five years in prison and a fine of up to $10,000. Most people shy away from making moonshine when they hear about the potential fallout, but some people refuse to let legal technicalities get in the way.
Check Your Local Laws
The regulations listed in this guide only relate to federal laws, and it’s important you remember that your local and state laws might be different.
You could feel tempted to overlook some steps so that you can get started with your distillery, but you need to educate yourself on the process and each law that could affect your freedom and financial stability.
When my dad and I took the leap and started Hillbilly Stills in 2011 and then HBS Copper in 2014, we had no idea just how many different types of challenges and rewards we would find in owning our own business. Certainly one of the most surprising challenges we discovered was when we were named in a patent infringement lawsuit last year. After years of developing friendly relationships on both the hobby and craft sides of the industry, we were suddenly faced with the daunting challenge of navigating a legal process and court system regarding a patent we’d never even seen.
As the ordeal wrapped up at the end of the year, I decided that some of our experiences might help others understand the complex litigation and patent process, and I’ve distilled those ideas into this article.
1. Understand the nature of the beast
Many craft distillers are hobbyists turned small business owners, and among the myriad issues new distillers face is establishing their product lines and brands. Early on, we understood that Hillbilly Stills needed to stand apart from its competitors, but other than making top quality distilling products and marketing to our potential clients, we weren’t sure what other tools could help us accomplish that goal. While we weren’t against using lawyers, we did not know what attorneys could help us do. So my dad reached out to one of our customers, Ben Lieb, an intellectual property attorney with a law firm in Denver, to learn more about how the law might help us protect and grow our business.
Up to this point, we hadn’t investigated patents or trademarks other than securing our name, Hillbilly Stills. Ben helped us map out a protection strategy that aligned with our business goals. From the outset, a patent didn’t make sense for us, just as they haven’t made sense for most distilling equipment companies. Patents protect inventions that are new and non-obvious, and our equipment is based on technology that has existed as long as distilling. Trademarks, however, made good business sense for us because they offered us ways to enhance our brand and protect our products over the long haul.
Knowing more about intellectual property has certainly helped us grow our business. But whether you’re proactive with your intellectual property strategy or not, expect the unexpected when it comes to litigation.
2. Face reality: the lawsuit will get heard
One of the biggest wake up calls that Hillbilly Stills has had in its four years of business is that you need to be ready to face the judicial process whether you believe you should be there or not. The system is set up to hear all claims that it receives, and the judge cannot decide the case is baseless until a significant number of steps have been taken. Small businesses and entrepreneurs have no protection from the potential fallout that a pending lawsuit may impose, so ensuring you have good counsel at the ready is an essential part of staying ahead. When we first received news that we were facing a design patent infringement lawsuit from a former business partner, we weren’t sure how we could have infringed on the patent, yet the courts would not listen to our story until we reached the right point in the process.
When we first received news that we were facing a design patent infringement lawsuit from a former business partner, we weren’t sure how we could have infringed on the patent, yet the courts would not listen to our story until we reached the right point in the process.
Luckily, we were able to take advantage of our relationship with Ben, who is an experienced patent infringement litigator. Ben and his team explained the process, gave us a slew of options on how we could respond (along with their corresponding outcomes and costs) and let us decide on how we wanted to pursue the situation. Having trusted counsel was essential. While we understood the potential implications of losing a lawsuit, Ben was able to articulate a number of different ways we could address the suit and what implications each of those might have. As a still relatively young business, we appreciated seeing a scale of costs and consequences that allowed
As a still relatively young business, we appreciated seeing a scale of costs and consequences that allowed us to choose an approach that we felt was best given our financial position and appetite for risk. It was also helpful to have an attorney who showed us what makes a truly valuable patent. He illustrated the difference between run-of-the-mill patents that can be obtained through a website and customized patents that licensed patent attorneys create for their inventor clients after spending time understanding the technology at hand. Given the information he gave us, we felt comfortable choosing our approach and ultimately our destiny.
Our next step was to let the other side know we meant business. We were prepared for the fight as well as a slow process to get to a resolution.
3. Stick to your guns & wait it out.
While no one could have prepared us for the waiting — the litigation process is s-l-o-w — I am certain that it felt much less stressful because we had made key decisions about our approach, and we stuck to our guns throughout the process. Even though the lawsuit could have dragged on for years, we were able alert us if additional decisions needed to be made. We could have worried about our fate every minute of every day, but instead we used that energy to keep driving the growth of our business.
4. Be ready for anything when you start partnering with others.
While I don’t think we would wish litigation on anyone, I am confident that we learned valuable lessons throughout the process. In addition to those I have already mentioned, we certainly learned the importance of doing our research when it comes to working closely with others.
It has always impressed me how friendly everyone in the craft distilling industry is — between still builders, we have an open line of communication. We all bounce ideas off of each other, and while everyone has their trade secrets, we all do right by each other. I’ve enjoyed developing so many relationships over the years. However, we learned that it’s necessary to make sure we protect ourselves before we go into or choose to do business together with a comprehensive written agreement. Make sure you know and have addressed all the foreseeable risks involved before you step into any transaction or deal. Be prepared and understand the costs associated with proactive protection of your products and a legal battle to protect your business.
About the Author
Matt Haney founded Hillbilly Stills and HBS Copper with his father, Mike Haney, in 2011 and 2014 respectively. The company faced a patent infringement lawsuit in 2015. The case, Paul E. Caldwell v. Haney Enterprises, LLC, was dismissed in favor of Haney Enterprises by the Oregon District Court in October of 2015. Haney Enterprises was represented in the case by Ben Lieb of Sheridan Ross P.C. in Denver, Colorado.
It looks like things are brightening up for the hobby distiller!
Law Change in the Personal Distilling Industry
We look at our Facebook all the time and read all of the comments. We’ve noticed one comment popping up a lot and wanted to update you on some exciting news!
The frequent comment is that we have to report all of our sales to the feds. Obviously, many hobby distillers aren’t too keen on that. In the past, this was true. However, it no longer is!
In February we got a really exciting letter in the mail that is sure to put a smile on the face of the hobby distiller. We have had a huge advancement in our relationship with the TTB. This letter (attached below) states that we no longer have to report the stills that we ship and sell to the federal government.
This is a huge step in the right direction for the hobby distiller! We still have a ways to go to be where we would like, but at right now we are on the right path and moving forward.
We have never had to report things like yeast, measurement equipment and kettles. We are so thankful for each and every one of you. We don’t want you to have to worry about any of this any more!
You can always check out your state’s laws if you have doubts and feel free to leave us comments and questions in the comment area below! If you want to talk with other hobby distillers or distilling enthusiasts you should check out stilltalk.com – our online forum.
There is still movement in the Legalizing of Home Distillation. My son Matt is in contact weekly with senators and Representatives on this topic. He has Been to DC recently and met with some of our Senators. National Geographic is about to produce a documentary on home distilling. Hopefully this will shed some light on our hobby distilling and help to get legalization moving forward. We don’t know the date on the airing of this documentary. We will post this when we find out.
Distilling Laws The distillation of spirits is governed federally by the Alcohol and Tobacco Tax and Trade Bureau (TTB) www.ttb.gov – a sub department of the U.S. Treasury. All of the information a distiller needs to get started can be found on their website. The him page for distilled spirits is located at http://www.ttb.gov/spirits/index.shtml
There’s a microdistillery boom going on, with more and more homemade booze being produced across the United States. But these specialty liquor makers don’t have to run from revenooers a la Snuffy Smith. In fact these still owners are thriving with the tax collector’s blessing. According to a story in today’s New York Times, “some of the latest and quirkiest entrants to the industry are in places like Iowa, Indiana, Illinois, Michigan and Mr. Fox’s barn.”
Since Prohibition ended, states have regulated sale and distribution of alcohol, in conjunction with some federal requirements. A lot of places took stances that were barely looser than the bootleg era laws. Now, reports the Times, “small steps have been taken toward loosening state regulation — moves that probably have as much to do with bringing in revenue as anything going on with consumer tastes.”
“Distilled spirits are a bonanza from a tax standpoint,” Michigan State professor and microdistilling expert Kris A. Berglund told the paper. “I guess somebody sat down and looked at the math and said, Holy cow! We’re cutting ourselves out of the action, not to mention tourism dollars.” The Tax Foundation keeps track of key state taxes, including alcohol.