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Security Issues for Distilled Spirits Plant (DSP) Applicants

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The Fall 2013 issue of Whisky Advocate contains a great article about the story behind the start up of High West Distillery in Park City, Utah.  The objective of the article is to provide insight into the process from conception to production of a craft distiller.  Written by the founder, David Perkins, this article touches on some of the regulatory hurdles that a potential distiller would have to deal with starting up.  Mr. Perkins explains the federal permitting application as “onerous, thick, and at times puzzling.”

In particular Mr. Perkins references his favorite provision relating to security issues for storage of distilled spirits and their lengthy regulatory guidelines on this topic.  This blog will touch on some of those requirements, in particular what Mr. Perkins refers to as the “special lock.”

Treasury Regulations lay out exactly what will qualify as an “approved lock.”  Approved locks, absent exception described below, must be used to secure everything from outdoor tanks used for spirit storage or an enclosure around an outdoor tank.  These requirements are necessary for indoor tanks that store spirits, or the door in which a person can gain outside access to the indoor storage tanks.  Finally, these apply to any door to the distillery from which access may be gained from the outside to rooms or buildings containing spirits stored in portable bulk containers.

Basically, a safe harbor is created in this Treasury Regulation so that if these requirements are met, the proprietor has met the regulatory requirements for an approved lock.  The lock must have all of the following:
(1) A corresponding serial number on the lock and on the key, except for master key locking systems;
(2) A case hardened shackle at least one-fourth inch in diameter, with heel and toe locking;
(3) A body width of at least 2 inches;
(4) A captured key feature (the key may not be removed while the shackle is unlocked);
(5) A tumbler with at least 5 pins; and
(6) A lock and key containing no bitting data.

You are not out of luck if your proposed lock doesn’t match up with the above.  However, you have to take additional steps to get your DSP.  The regulations require the applicant to submit an example or prototype of the lock to the appropriate TTB officer, with a request that the lock be approved for use. The appropriate TTB officer will evaluate the lock and determine whether the lock should be approved for use. All applicants should make note of as many special requirements of this type as possible as they apply for their DSP so that they either plan to meet the safe harbor requirements of the regulations, or allow for additional time for special approval.

If you find any part of the application process for your DSP to be “onerous, thick, and at times puzzling,” give us a call, we’d be happy to help you get through the regulatory issues surrounding your application.

We're Here to Help

Dear friends in the alcoholic beverage industry,

As we as an industry, nation and planet collectively try to navigate this unprecedented period the coronavirus has brought us, We’d like you to know that we at Craft Beverage Consultants (the other CBC!) are here to answer any question you may have (or not know you have) about not just surviving this time but positioning yourself to thrive as soon as social distancing measures allow your business to function at full capacity again.

If you schedule a free 60-minute phone or video conferencing consultation with me or any of my 11 highly specialized colleagues, we’ll help you figure out any of your immediate and/or longterm business needs, or “everything but the staffing,” as we like to say. We’re not high-pressure sales kind of people, especially these days, so you don’t have to worry about fending off annoying pitches. Make an appointment on our website or Facebook page, or just call us the old-fashioned way at 314-768-0220.

Our experts have a combined 150 years in the alcoholic beverage industry, with deep knowledge in everything from sales and distribution, production, and regulatory compliance to marketing, package design, event planning, IT, (social) media, hospitality, and even values-based executive coaching. 

For example, we can coach you through this season when chain accounts have canceled their spring, in some cases, fall resets and distributors have drastically cut orders. Our director of business strategy and compliance can save you money – now – on excise taxes, caution you to avoid naming your beers in ways that risk alienating your buyers (Wuhan Wheat? Coronavirus Cream Ale? Groan. No.), and secure TTB approval for the tastefully named beers you do make. Our creative director and web team can get your e-commerce site up and running and launch a social media campaign that keeps you top of mind for current and future customers. Our director of storytelling can put you in front of the press so you can tell your story to your community. 

Once you’re ready, we can look forward together. Now is the time to talk about post-virus. We all suspect the legal landscape to look different. But how? And how do you prepare yourself in a way that positions you to charge out of the gate ready to maximize the potential and profit of whatever the “new normal” turns out to be? Please get in touch so we can talk about it. 

CBC’s roster includes local and regional clients like Epic Brewing, Logboat Brewing, Piney River Brewing, SudWerk Brewing, Waves Cider and Common Cider Company, just to name a few.  The agency was founded in 2004 by Jacob and Beth Halls, formerly known as Convergence Consulting; Rick Laxague, joined as a partner in charge of sales, marketing and distribution consulting in 2019. 

Rick hase close to 20 years of experience, a bulk of which was with Crescent Crown Distributing in Arizona. His last role there was Area Sales Manager for the dedicated craft beer division, coaching and leading a sales team to be nationally recognized. In early 2014 Rick helped take a regional brewery national as their Director of National Accounts and increase that segment of their business from 30,000 cases to almost 300,000 cases in two years, an increase that equates to $4.8 million in IRI dollar sales. 

Co-founder Jacob Halls brings 17 years of experience in regulatory compliance, business strategy, marketing and craft brand management to the company. In his former position as craft brand manager for the N.H. Scheppers Distributing Company in Columbia, Missouri, Jacob helped lead his team to winning the 2016 Distributor of the Year award from New Belgium and to a nomination for the Brewers Association’s Distributor of the Year award. Jacob is also the founder and director of the South East Craft Beer Fest and several other industry specific charitable event marketing festivities. Beth Halls is Director of Business Operations and Coordinator of Charity Operations for the festivals and events run by CBC, such as the South East Craft Beer Fest, MO Bacon & Bourbon, and many more. 

Again, please reach out to us for anything.  CBC can be reached at (314) 768-0220 or at craftbeverageconsultants.com.

We look forward to meeting/talking soon.

Sincerely,

Rick Laxague, Jacob Halls, and Beth Halls