10.05.09
The Distiller and the Bureaucrat
I have a friend out in the stix. He has neighbors, but it’s definitely rural; nothing but woods and fields. He’s an individualist with a unique personality, but lots of friends. He likes to work a little, farm a little, and drink a little.
One day, he decided to combine all three: He was going to make vodka. He’d take corn, turn it into mash, let it ferment, distill it many times, filter it, and dilute it to 80 proof. As of today, he’s only a few months away from going commercial. As his attorney, I visited his still a little while ago and talked about the process . . . the legal process.
I was disgusted. Not surprised, mind you, but disgusted. The maze of regulations and requirements he had to traverse made my head spin. It took him over a year just to jump all the hurdles. Here’s a partial list:
Submit application to Michigan Liquor Control Commission, along with $1,000 application fee.
Obtain local governing body’s approval.
Confirm proper zoning and obtain necessary exceptions.
Attend training class(es).
Install specialized electric connections under the micro-management of a local bureaucrat, which was pretty much the electrical equivalent of an IRS audit.
Pass a local equipment inspection.
Pass a state equipment inspection.
Apply for a permit under the Federal Alcohol Administration Act.
Install an explosion-proof light (found on eBay for $2,000; new ones cost over $3,000)
Install appropriate locks and surveillance cameras to protect distillery from burglars.
Post a surety bond.
Submit bottle label to feds for approval, with application.
All that is just to get started. When he starts selling, the abuse continues:
He can only sell to state package dealers who enjoy a state-imposed monopoly, who will then charge a fixed price to retailers (bars and liquor stores).
When he sells his vodka to the state package dealers, he has to pay a 16% federal liquor tax. When the retailers later buy it, they have to pay heavy state taxes. The consumers later pay a six percent sales tax. On top of all that, of course, he has to pay state and federal income taxes on his net earnings, plus social security and medicare taxes. He already pays real estate taxes on the still. I didn’t have the heart to tell him that, once he goes into commercial gear, his local township can start imposing a personal property tax.
Only use corn produced by a farm that complies with Department of Agriculture requirements.
If he wants to market his vodka at a local bar, he can’t merely give away free shots. He has to pay the bar for a shot, then he can give it to the patron. Even if the bar owner doesn’t mind if he gives it away, he has to buy it.
Annual licensing fees.
Ongoing surety bond premiums.
And if he expands to the point of hiring employees, watch out: labor posters, minimum wage laws, overtime laws, Americans with Disabilities Act, workers compensation, discriminatory hiring/firing practices, bogus lawsuits for sexual harassment.
Neither of those lists, by the way, is complete. I didn’t keep notes when he told me about all the requirements. I’ve done some Internet research to make it comprehensive, but I guarantee you that I’m missing things. A guy can no more catalog all the legal requirements than he can catalog every single thing he does in an average week
