As you can imagine, the federal government has an interest in this activity as it wants to make sure that the excise tax revenue generated under your Brewer’s Notice at your brewery is not at risk. Of course, others expand to allow for this type of activity and so can you. All you have to do is open a “tavern.” A “tavern” is described by the federal government as a part of the brewery premises where beer is sold to consumers. In addition, so long as you follow the rules, you may also sell tax paid wine, distilled spirits and food – all on your brewery premises.
The government has created special provisions for the purposes of allowing taverns on the premises of a brewery. Fundamentally, alternate uses of a brewery are generally highly restricted and like the proposal to operate a tavern, require prior permission before the use is allowed.
So what are the rules? A primary interest of the government is to make sure that your new activity does not put the beer at risk (or at least that the activity doesn’t put the excise tax payments from the beer at risk). So, you need to notify the government of your intended new venture by amending your Brewer’s Notice. It will be necessary to “show” the government how your brewery premises will be divided up to allow for the new tavern. You can prepare a diagram or a description of the boundaries of the tavern. You will have to identify the areas of the existing brewery that are accessible to the public and which ones are not. If you submitted a diagram of the brewery when you first acquired your Brewer’s Notice, and likely you did, then this is a great starting point as this is already part of your license application. Your updated diagram can reflect the new tavern area.
Your diagram, or explanation of the tavern area, should be specific enough to describe security measures that will be taken to segregate public areas from non-public areas. Again, think about protecting the “revenue” – aka the brewery and its production of beer for excise tax purposes. An open door policy between the tavern and the brewery is simply not going to be allowed. Given heightened interest in craft brewing, consumers enjoy learning about the brewing process. Therefore, glass partitions at your local brew-pub are all too common. Do note that those areas are not easily penetrated without some access to a key, code or other security device. Be prepared to describe what effort you will make to create this type of environment.
Your amended Brewer’s Notice seeking permission to open a tavern will also have to include a detailed description of the method you will use for measuring beer for tax determination, given the fact that there will now be consumption on premises. If you use one or more tanks for tax determination it will be necessary to identify those tanks as “tax determination tanks.” The taxes for the beer will have to be determined every time you add beer to the tank and you can never simultaneously pump into and out of a tax determination tank. Finally, you will have to identify areas of your brewery where tax determined beer will be stored.
Likely all of the above is very manageable and achievable in your brewery environment as long as it can be made accessible to the general public while securing the product. If you want to open a tavern and need some help with the regulatory approval of your new venture, feel free to give us a call. We would be happy to help.