Cheers? Not So Fast When It Comes To Opening A Brewery

By Christopher Matteodo | It seems like craft beer is everywhere. The number of operating breweries in the US in 2013 totaled 2,822, with 2,768 considered craft breweries. This represents an 18% increase from 2011 and the highest total in the United States since the 1880s. The total retail value of the US beer market in 2013 was $100 billion dollars, with craft beer comprising $14.3 billion dollars.

Rhode Island itself is no exception to the brewing trend. Foolproof Brewing Company, The Bucket Brewery, Coastal Extreme Brewing Company, Revival Brewing Co., Grey Sail Brewing and Ravenous Brewing Company are all locally brewed. With such a robust and expansive market, many young entrepreneurs are turning their love of beer into a business. But before you decide to start your own brewery, there are a myriad of legal factors to consider.

The legal actions critical to many new breweries include: forming the proper type of entity, obtaining a trademark, negotiating a lease, purchasing assets and raising capital. Key employees may need to sign employment agreements. Would-be brewers will also need to create relationships and negotiate with distributors.

Regulatory approval from the appropriate federal and state authorities can be particularly onerous. Alcohol beverage labels must receive a Certificate of Label Approval from the Alcohol and Tax and Trade Bureau (TTB) before the label can be used. Logos and labels used by a brewery that are protectable as trademarks should be registered with the United States Patent and Trademark Office as well.

A special brewer’s permit must be granted by the TTB before beginning operations. Obtaining the necessary licenses from the TTB can take anywhere from six to twelve months, while the overall process for obtaining a trademark can take a year to 18 months. In Rhode Island, a manufacturer’s license is required for the establishment and operation of a brewery.  Failure to correctly — and completely–  fill out all forms before submitting them to the Rhode Island Department of Business Regulation can result in a delay in processing an application and may result in a rejection.

With so many complex requirements, these issues can overwhelm and consume many would-be start-up brewers. As with most new business ventures — especially a brewery — a sound legal approach can help prevent a potential business hangover later on. For more information, contact Joshua Celeste.