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CT REGULATORY NEWS: BREWERY ALTERNATING PROPRIETORSHIP

CTDPCWhile Alternating Proprietorships have been in existence in the United States for more than 20 years, there has never been an Alternating Proprietorship at any brewery located in the state of Connecticut. According to the federal Alcohol and Tobacco Tax and Trade Bureau (TTB), an Alternating Proprietorship is a term used to describe an arrangement in which two or more people take turns using the physical premises of a brewery.
The department has determined that Alternating Proprietorships are allowed in Connecticut and are limited to the following permits:

  • Section 30-16(b) Manufacturer permit for beer;
  • Section 30-16(f) Manufacturer permit for brew pub;
  • Section 30-16(g) Manufacturer permit for beer and brew pub.

In general terms, the proprietor of an existing brewery, holding a CT manufacturer permit and designated as the “host brewer” agrees to rent space and equipment to a new “tenant brewer”. Both the “host brewer” and the “tenant brewer” hold TTB designations as brewers and are so licensed by the TTB.

Under this arrangement, the “tenant brewer” produces beer, keeps appropriate brewery records, labels the beer with its own name and address, obtains the necessary COLAs (Certificate of Label Approval), and pays tax at the appropriate rate upon removal of its beer from the brewery. The “tenant brewer” has title to the beer at all stages of the brewing process.

The primary purposes of an Alternating Proprietorship, according to the federal TTB and now recognized in Connecticut are to provide smaller players in the industry the opportunity to enter the beer business without having to first raise large amounts of capital to construct a brewery and, to enable a brewery owner to make efficient use of its equipment, keep the brewery running toward its capacity of operations, and keep employees employed.

Alternating Proprietorships do not require or compel that the individual breweries involved have exclusive use over the entire brewery premises when producing their products. Although there may be multiple brewers concurrently conducting operations at the same physical premises, each brewer is separately licensed on both the state and federal level and recognized as having exclusive possession and control of the premises as it pertains to those parts of the brewery which are being used by that brewer at that point in time.

Alternating Proprietorship Arrangements

  • The host and tenant brewer hold title separately to the ingredients or raw materials that they use and to the beer that they individually produce;
  • The host and tenant brewer must keep separate records of their respective beer production and removals;
  • The host and tenant brewer individually pay tax, at the rate of tax applicable to each, upon removal of their own beer from the brewery;
  • The host and tenant act as brewers and each must be qualified by TTB.

Regulatory Enforcement
Both the federal TTB and this department retain regulatory authority of these premises. Violations of the state liquor control act and its regulations may result in the department filing administrative charges against the host and tenant brewer, or both, depending upon the individual fact-pattern of each matter.

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