Entering the sake industry can be both an exciting and complex journey—particularly when it comes to regulatory compliance. One of the most common questions we receive from industry members is: Does a sake brand owner need to apply for a permit from the Alcohol and Tobacco Tax and Trade Bureau (“TTB”)? The answer depends on your business model and how you operate.
If your company is directly involved in brewing, blending or rectifying, or bottling sake, then you will likely need a Brewer’s Notice from TTB. However, if your company is working with a third-party licensed brewery that will bottle sake under your brand, your company may only require a TTB Federal Basic Wholesaler’s Basic Permit.
Many sake companies partner with contract brewers who handle brewing, blending, bottling, and labeling, making this arrangement ideal for companies looking to enter the market without the high costs of equipment, licensing, and real estate. Additionally, the contract producer typically manages regulatory approvals, including Certificate of Label Approvals (“COLAs”) and formula applications, which generally are submitted on the TTB permit of the contract producer. This model truly can save a brand owner a significant amount of time when seeking entrance into the market.
While beneficial, companies must consider key factors before entering such agreements. It is essential to determine whether a TTB permit or a state liquor license is required based on the level of involvement in distribution and marketing. The answer from a federal (TTB) perspective typically depends on the brand owner’s involvement in the industry. Note that this article does not focus on state-level licensing requirements.
Does a Sake Brand Owner Need a TTB Permit?
If your company is a sake brand owner and sources finished, bottled sake from a contract producer, co-packer, or bottling facility, you may be required to obtain a TTB federal basic permit. If your company is purchasing the finished product from the contract producer or contract bottler and reselling the product to wholesalers or (where legally allowed) to retailers, then a TTB federal basic wholesaler permit is generally required.
But what about if your company is not purchasing the finished product and/or taking possession of the finished product? While it is a common misconception that if a brand owner does not physically handle or take ownership of the sake, the company is exempt from obtaining a TTB federal permit, that’s not necessarily always the case.
Even if the company does not take physical possession of the sake, its business activities may require a TTB Wholesaler’s Basic Permit if they align with wholesale operations, such as the following:
- Selecting the distributors or retailers who will carry the sake;
- Managing and financing the branding, marketing, or promotional strategies for the sake brand;
- Setting the pricing and market positioning of the product.
For more detailed information, read TTB’s Sake FAQs here. The specific requirements will depend on how your brand operates within the three-tier system. If you are unsure whether your business requires a TTB permit, consulting an alcohol beverage attorney is recommended to ensure full compliance with federal regulations. Our firm routinely assists alcohol beverage brand owners and can happily guide your company in the process of applying for a TTB federal basic permit or determining if such may be required based on your business model.
Advertising Considerations for Sake
Marketing and advertising, including social media promotions, are important factors in TTB’s assessment of wholesaler activities. Since TTB regulations govern alcohol advertising, sake brand owners must ensure their marketing practices comply with federal requirements. A sake brand owner who obtains a TTB federal basic wholesaler permit is considered an industry member and must comply with the federal regulations governing advertisements found at 27 CFR 4 Subpart G.
To determine whether your beer brand requires a TTB wholesaler permit, carefully evaluate your business operations and seek professional guidance to maintain regulatory compliance.
How Can Lindsey Zahn P.C. Assist Your Sake Brand?
At Lindsey Zahn P.C., we specialize in guiding sake business owners and sake breweries through the TTB permit application process with precision and efficiency. We navigate the complexities of TTB regulations and application requirements with expertise.
Our firm proactively identifies potential issues before submission, minimizing delays and ensuring a seamless approval process. We also provide expert regulatory guidance to help your business remain fully compliant with alcohol beverage laws.
Whether you need assistance with a TTB permit application or have regulatory concerns, Lindsey Zahn P.C. is here to help. Contact us today for a consultation at info@zahnlawpc.com or call (929) ZAHNLAW (929-924-6529).