Before you can begin wine production, you must be licensed at both the federal and state levels. At the federal level, you are licensed by the Alcohol and Tobacco Tax & Trade Bureau (TTB), and at the state level your primary regulator is the VA Department of Alcoholic Beverage Control (ABC). You also have a number of registrations/inspections that must take place, which are discussed below
Both federal and state licenses are attached to a specific premise address, and are not transferrable. If you move locations, you’ll have to go through the licensing process again.
FEDERAL LICENSING
TTB: The processing time at the TTB is generally 6-12 weeks from the time you submit your application, although current license application processing times can be found here. The most efficient way to apply is through the online system, PermitsOnline (PONL). The turnaround time for applications submitted through PONL is shorter than those for paper applications, and if you submit through PONL, all subsequent amendments can also be submitted through PONL, cutting down the turnaround time for amendments going forward as well. There are no fees associated with the federal application
PONL has a self-registration feature which allows users to register online. Just click on the “Register for an Account” link in the top-right corner of the Online Customer Page . Registered users may create new applications and track the progress of submitted applications. Be sure to note your username and password so that you can successfully login to the system. The system has password requirements, and once established, passwords will need to be changed every 90 days. The customer reference manual for PONL can be found here.
Be sure to use a valid email address when completing the contact information. You will receive an email at that address which contains the information necessary to activate your account. If you are unable to access the initial registration email you will not be able to complete your registration. Also, be sure to check your spam filter if you don’t receive your activation email when expected. Emails from PONL are often caught in spam filters.
You’ll submit 3 types of applications through the PONL system: Entity, Personnel Questionnaire (PQ), and Bonded Winery. The PQ application must be completed prior to submitting the winery application. Make sure to note the PQ tracking numbers when you complete those applications, as you’ll have to include them in the winery application. You must complete a PQ application for every person that will be listed as an officer, director, or stockholder of more than 10% of a corporation; a member or manager of an LLC; a limited or general partner in a partnership; or a sole proprietor
The supporting documents that you’ll need to submit will vary depending on how the business is set up, but as a general rule, the following documents will need to be uploaded into the PONL system in order to submit a completed application:
- Organizational documents
- FEIN (can be obtained at www.irs.gov)
- Color copy of driver’s license for primary contact
- Deed or Lease
- If the deed is not in the name of the entity which will be licensed, you’ll need a lease conveying the property from the named owners on the deed to the entity to be licensed.
- The lease must indicate a permitted use to be the “manufacture, storage and sale of alcoholic beverages”
- Diagrams of building
- Make sure to identify the dimensions of not just the exterior of the building, but also the uses and dimensions of each space within (i.e. barrel room, case goods storage)
- Bond (see below)
- Signing Authority/Power of Attorney
- Signing Authority for persons within the company, POAs for attorneys or contractors who are not employees
- Documents showing all sources of funding for monies invested in operations
- Will need to provide evidence of loans, gifts, and 6 months of bank statements showing fund movement
A list of the required documents for each specific business type can be found here and copies of the most common ones are attached in Resources.
Bond: Bonded Winery applicants are required to post a bond to secure tax liability if their federal excise tax liability will exceed $50,000 or more per year. Generally, these bonds are either surety bonds (obtained through insurance companies approved to issue TTB bonds), or cash bonds, which are accomplished by submitting a check to TTB, which will be cashed, and refunded to you upon cancellation of your federal license. The bond amount is calculated based on your expected tax liability, with a minimum bond amount of $1,000. There are two components to your bond amount. The operations portion of your bond secures the wine in process or still in your inventory. The deferral portion of your bond covers any tax liability for wine that is removed from bond between tax payment periods (see Taxation below for more information). There is automatically $500 deferral coverage in a $1,000 bond, and an automatic $1,000 deferral coverage in a $2,000 bond. Deferral coverage beyond that needs to be added by the licensee. A bond calculation worksheet is attached in the Appendix here Bond Worksheet TTB generally expects you to carry approximately 2x what your operations coverage alone would be, to ensure that you have sufficient coverage to include wine still on site from prior vintage years.
Note that the expected tax liability upon which the bond amount is based should take into account the Small Domestic Producer Credit (SDPC). See the Taxation section below for more information on this credit.
NOTE: As of January 1, 2017, licensees who reasonably expect to be liable for less than $50,000 in annual federal excise tax liability and who paid less than $50,000 in annual federal excise tax liability last year are exempted from the requirements of carrying a bond. If you are exempt from the need for a bond based on these criteria, but currently have a TTB Bond in effect, you will need to file an amendment to remove the bond requirement. You’ll need to file an amendment to remove the bond requirement. Once that amendment is approved, you will send a copy of the Notice of Termination to your bond company to cancel the existing bond, so that you can stop paying your bond premium.
FDA REGISTRATION:
Wine is considered food under both federal and state law, so wineries have to register with the FDA as a food facility. This is a bi-annual registration. There is no fee associated with this registration. The registration is online and can be done here. There are companies that will do this registration for you for a fee, but registration can be done directly through this site as well without additional cost. Note that registered companies are responsible for maintaining records on all items touching the wine produced, including, but not limited to bottles, corks, barrels, tanks, and hoses
STATE LICENSING
ABC: There are 2 types of winery licenses available in Virginia.
- Farm Winery Class A: Must have a production facility with some production (upon licensure) as well as a producing vineyard, orchard or similar growing area on site. 51% of the fruit used to make the wine must come from land either owned or leased by the licensee, and no more than 25% of the fruit used in the wine can come from outside the Commonwealth of Virginia. Annual fee of $190; Farm Winery Class B: Must have held a Farm Winery Class A license for 7 years, have some production as well as a producing vineyard, orchard or similar growing area on site, and no more than 25% of the fruit used in the wine can come from outside the Commonwealth of Virginia. Annual fee of $3725.The licensed premises for both classifications of Farm Winery licensees will include the production area, a tasting area (if so designated), and whatever vineyard/orchard area the licensee specifically includes. It MUST include some vineyard/orchard area, and the vineyard/orchard area must be contiguous with the production area. The licensed premise will be the area in which guests to the farm winery can walk around with wine, but also in which the licensee is responsible for ensuring that there are no violations of ABC law. Balancing the goals of including enough space for guests to experience the vineyard while limiting it so that activities in the licensed area can be controlled should be weighed carefully before determining what should be included in the licensed premises. Both categories of farm wineries can contract with a contract winemaking facility to make wine on their behalf, and may produce wines up to 21% ABV, but there still needs to be some production on site to maintain the farm winery license and ensure you’re entitled to the Small Domestic Producer Credit, discussed in the Taxation section, below. Farm wineries are also exempt from building codes, protected from much local regulation, and have the privilege of having 5 additional remote retail locations in Virginia at any given time. Farm wineries can sell their wine in VA ABC stores (at the discretion of the ABC Board), can sell to wholesalers, and can sell for on-premise and off-premise consumption without additional licensure. Farm wineries may also conduct tastings, both complimentary and for a fee, in their designated hospitality area on their farm winery premises. Transitioning from a Class A Farm Winery License to a Class B Farm Winery License: Once a Farm Winery Class A has been licensed for 7 years, it is eligible for a Farm Winery Class B license, which eliminates the need for 51% of fruit to be grown on property either owned or leased by the licensee. Renewal time is the easiest time to make this transition, but it can be done any time during the year. This transition is considered a reclassification of a Farm Winery license rather than a new license. Therefore, a new application, and posting and publishing is not required. Send a letter with the corresponding check to ABC letting them know you’d like to be “reclassified as a Class B Farm Winery licensee” and include a copy of your current Farm Winery license. If you are not making this transition at renewal time, just note that in the letter, and include a check for $3,535, which is the difference in cost between the 2 categories of Farm Winery licenses. ABC will pro-rate the fees, depending on where you are in your license cycle, and refund you accordingly. A template of a letter to request this reclassification is included in the Appendix here: Letter Requesting Reclassification from Farm Winery Class A to Farm Winery Class B(2)Winery: There are not different classifications of winery licenses like there are farm winery licenses, but the fee is dependent upon production amounts. If the winery will produce 5000 gallons or less annually, the annual fee is $189. If the winery will produce more than 5000 gallons, the annual fee is $3725. Wineries can also operate distilling equipment to make spirits from fruit or fruit juices to be used to fortify their wine. Wineries cannot hire a contract winemaking facility to produce finished wine for them but may purchase bulk wine from another producer to finish at the licensed premise for sale. The licensed area for a winery licensee will not include vineyards and will be limited to the building or adjoining outdoor spaces as permitted by ABC. Wineries are also not entitled to remote retail privileges.Wineries can conduct complimentary tastings on-site in their designated hospitality area and sell their wine to wholesalers. But unlike farm wineries, they cannot sell their products in ABC stores, and need additional licenses in order to sell their products to consumers for either on- or off-premise consumption. In order to sell products for off-premise consumption, a winery would also need to obtain a Retail Off-Premises Winery License, at an annual fee of $145. To sell for on-premise consumption, the winery would need to obtain a retail license of some sort. Generally, the restaurant license is most applicable, which carries an annual fee of $300. However, meals must be regularly sold at substantially all hours when wine is offered, and there is also a minimum monthly food sales requirement of $2000.It is permissible to hold both a Farm Winery and a Winery license at the same location if you’ll be making some wine with fruit from outside of VA or which would be outside the parameters of your farm winery license. You need to ensure that you keep wine produced under your farm winery license separate from wine produced under your winery license through all phases of production and storage, and that records are kept ensuring that you can establish which wines were made under which license. If you carry both licenses, you’ll be issued 2 separate license numbers, and will have monthly reports due for each license.
Application Process: Allow a minimum of 6-8 weeks from the time Part 1 is submitted, assuming you have all your required documents and fees submitted. ABC requires the same supporting documentation you will have gathered for your TTB submission, plus:
- Copies of drivers licenses for all principals
- DMV driver’s histories for all principals
- List of all Winery Equipment
- VA Sales and Use Tax Certificate
- FEIN letter from the IRS (or other proof of use of this EIN)
- Diagram showing the production buildings in relation to the vineyard on the licensed premise (for farm winery applicants only)
- TTB permit (when issued)
The ABC currently uses a single application for all licenses other than banquet special event licenses. The application can be found here. There are 2 parts to the application; both parts require to be signed.
Part 1: Includes the bulk of the substantive information, and should be mailed to: Virginia ABC, 2901 Hermitage Road, P.O. Box 27491, Richmond, VA 23261-7491, accompanied by your supporting documents and fees as follows:
- License fees as noted above (may be paid with Part 2 of application – see below)
- License Application Fee: $195 per license (i.e. $585 if a winery, retail off-premise, and restaurant license are all being applied for)
- Criminal Background Check Fees: $15/principal
- You do not need to submit this fee for each application, but these background checks do expire after 2 years, so if you apply for an additional license outside of that time period, you will need to resubmit this fee.
- You will need to submit a personal data sheet (included as page 5 of the application) for
- Sole Proprietor – Owner
- General Partnership – Each Partner
- Limited Partnerships, LLPs, and LLCs – All managers and managing members, as well as any members with 10% or more ownership.
- Corporations – All stockholders with 10% or more of corporate stock, as well as all officers and directors
Once Part 1 is filed, you can begin the publishing and posting portion of the application process. The pages to do this are included in the application package. You will need to have the included notice published in a paper of general distribution in the location of the winery twice, one week apart. It needs to be published once in each of those 2 consecutive weeks, not daily for 2 solid weeks. The paper should send you a publishing affidavit after the notice is published for the second time. Once you know the first date of publication, you can include that on the notice in the application and post it so that it can be seen from the outside of the winery building for 10 days. The first date of publication also triggers the beginning of a statutory 30-day notice period during which citizens may submit comments to the ABC in support of or against your requested license. It is also during this time that ABC will notify the locality where the winery is located that an ABC application is pending for your business.
Part 2: After the posting and publishing requirements are completed, you will submit Part 2 of the application, along with any outstanding fees and documents. Shortly after you submit Part 1, ABC will send an email to the contact email listed in Part 1 of the application, advising you what documents remain outstanding
After Part 2 is submitted and all documents have been turned in to ABC, the local ABC Compliance Agent (contact list attached in the Resources) will contact you to schedule a site visit. By the time the agent comes to visit, your building should be structurally complete and secure, and you MUST have equipment onsite that is sufficient to allow you to crush, ferment, and bottle. You do not need to have all your equipment in place prior to the inspection, but ABC will not issue your license without those threshold items on site.
SALES TAX PERMIT: In order to be issued a winery or farm winery license, you will have to first obtain a VA Sales and Use Tax Certificate which can be obtained online here. This is the same website that you may have already registered with for the payment of employment taxes. If so, your login credentials will be the same and you can just add that additional permit to your existing registration. In order to complete this registration, you’ll need your FEIN, owner information, and business addresses. During the process, you will be asked for the effective date you’d like for the Sales and Use Tax Permit. Once that effective date has passed, you will need to be prepared to file monthly sales tax returns, regardless of whether or not you have made any sales, so be realistic in determining your effective date.
LITTER TAX PERMIT: Wineries and farm wineries must also register for Litter Tax as part of the Sales and Use Tax registration. The fee is $10 annually, due on May 1, and you will receive an invoice from the Department of Taxation early in the year to complete this payment. Litter tax cannot yet be paid online.
VDACS: Prior to opening, you also need to have an inspection completed by Virginia Department of Agriculture and Consumer Services (“VDACS”). The Food Safety Specialists like to meet with potential licensees early in the design phase to ensure that the construction, building, and process flow meet the requirements listed below. The Food Safety Specialist are very willing to speak with you and advise on potential issues and can generally arrange to meet with you within a few days.
To schedule an inspection, contact the VDACS offices as follows:
- Central and Northern Virginia – 804-786-3520; 102 Governor St., Richmond, VA 23219
- Western Virginia – 540-562-3641; 2943-E Peters Creek Road, Roanoke, VA 24019
- Tidewater – 757-363-3909; 1444 Diamond Springs Road, Virginia Beach, VA 23455
Some of the things VDACS will be looking for during their inspection are as follows:
Virginia Department of Agriculture and Consumer Services
Office of Dairy and Foods – Good Manufacturing Practices
- Education and training of personnel
- Personnel should wash hands before working with food and food contact equipment
- Personnel should be excluded from food processing areas if they have symptoms of foodborne illness or open lesions
- Unsecured jewelry should be removed that might fall into food, equipment, or containers (plain wedding bands ok)
- Effective hair restraints should be used
- Eating food, chewing gum, drinking beverages, or using tobacco should be confined to an area away from production
- Condition of the external environment of the food premises
- Maintain outside area surrounding the food processing room. Grass should be cut, trash should be taken away regularly, and harborage areas for pests should be minimized
- Use of suitable chemicals within and around the food premises including cleaning chemicals, pest control chemicals and machine lubricants
- Chemicals stored in the plant are only those necessary for operations
- Chemicals are not stored where they may contaminate food products
- Machine lubricants for food equipment should be suitable for food contact surfaces
- Cleaners and sanitizers should be used per manufacturers’ instruction
- Identification and storage of waste within and by the food business
- Adequate maintenance and cleanliness of the food premises, equipment, utensils, floors, walls and ceilings
- Effective pest control program implemented within the food premises
- Measures should be taken to eliminate pests from the food processing area
- For processes that take place outside of the facility, measures should be taken to minimize the presence of birds, insects, mice, or other pests
- Avoidance of foreign matter within the finished product. Sources of foreign matter can include wood, glass, metal, plastic, pests, paper, string, tape
- Sanitary operations in place to ensure equipment and utensils effectively cleaned and sanitized before use
- Well water used for cleaning/sanitizing equipment and utensils must be free from coliform bacteria (private laboratories can test for coliform bacteria)
- Water supply shall be sufficient for the operations intended and shall be derived from an adequate source
- Adequate water supply, plumbing, toilet facilities, sewage disposal for size of operation
- Employees must have access to a toilet facility on the premises
- Toilet facility should not open directly into the food processing room
- A hand-washing station should be conveniently located to the processing area and include soap, hot water, and paper towels or other sanitary hand-drying device and a sign directly employees to wash hands before returning to work