Quenching Nevada’s Thirst for Beer: Checklist for Starting a Nevada Brewery
August 10, 2016
By: Tyler N. Ure and Bryan J. Ure
Murchison & Cumming Blog: Post 85
For many, turning their passion into a business comes with equal parts excitement and trepidation. When it comes time to turn that passion into profit, that initial enthusiasm can be quickly tempered by legal and regulatory hurdles. Those who have turned their home-breweries into commercial breweries know this pain particularly well. Nevada presents unique challenges to this process in part due to laws that have not kept up with the emerging craft brew industry.
While the manufacture and sale of beer is highly regulated at many levels, craft breweries continue to expand at an ever increasing pace. Nevada is lagging well behind other states, but it is expected that the brewery drought of the hot desert will soon be quenched. In 2015, craft breweries expanded to make up 21% of the total U.S. Beer market. With such growth, Nevada should follow suit.
The market for Nevada is prime, and this is good news for brewers. Nevada, which imposes more stringent regulations than most other states is missing out on some of this phenomenal growth. In 2014, Nevada had 25 breweries, ranking 39th in breweries per capita. This presents both challenge and opportunity for those willing to embark on their goals.
Craft Brewers are no strangers to complex tasks. Just like careful attention is paid to mash schedules and boil times to get the best product in the glass, there's a pattern to follow if you want to get that product to a paying consumer. To get started, the checklist seems easy enough, but it can be complicated by the practicalities of regulation. Because most brewers enjoy brewing first, and business second, the goals of opening a brewery can be at odds for your typical brewer. If you have the right amount of dedication (and capital), there are a few basic requirements to get started.
You’ve most likely already done step one, figure out what to call your brewery. You're going to want to make sure that the name, or a similar name, is not already taken. A quick Google search is a good place to start, but you should also check the Nevada Secretary of State, and the United States Patent and Trademark Database.
With the perfect name selected, it's time to form a legal entity and obtain trademark protection. Forming a legal entity, such as an LLC or a corporation, is an important early step as it would help protect your personal assets from the liabilities of the brewery. It's also a good time to hammer out the responsibilities between several owners of the brewery. At this point, it’s a good time to contact a lawyer specializing in the brew industry. A mistake on your corporate setup could cost you both time and a lot of money. Especially if you have partners and employees, the process becomes more complicated legally. Contacting qualified legal counsel will also be beneficial for the remaining few steps on your way to opening a Nevada brewery or brewpub.
A trademark protects your brand name and logos associated with the brewery's goods. The trademark process can take 12 to 18 months and begins by filing an application with the United States Patent and Trademark Office ("USPTO"). If the USPTO determines that there is a reason your mark should not be registered, you will be notified and given an opportunity to respond. If there is no objection to application, the mark is published giving others a chance to object. If there are no objections, the mark becomes registered by the USPTO. Each name and individual label for your beer should be trademarked.
You are also going to need to file a "Brewer's Notice" with the Alcohol and Tobacco Tax and Trade Bureau ("TTB"). It can be a daunting and lengthy process, so it is best to start as soon as practical. Before you begin making beer for sale, the TTB has to approve your operation, recipes, and beer labels.
Nevada also requires a brewer to obtain a license from the State of Nevada, as well as other local license. There are two routes at this point: the operation of a brewery or the operation of a brew-pub. Brew pubs are an exception to the three-tier scheme which allows a brew-pub operator to sell directly to consumers. There is, however, currently a 15,000 barrel annual cap on production. There is no cap on a brewery's production, but a brewery is prohibited from selling beer directly to the public. In addition to obtaining a state license, a brew pub must obtain an appropriate local retail liquor license.
If you've decided to open a brew-pub, it's time to start brewing. If you've opened a brewery, one more note of caution-- you're going to want to carefully consider your agreements with distributors. A contract with a distributor is a long-term arrangement and can be difficult to terminate. This is perhaps the single most significant hurdle to starting a brewery and making it profitable. Nevada law on distribution is unique and challenging, but there are solutions.
Despite the legal hurdles, momentum is still strong in the craft-brewery industry. Having the right information and guidance is critical in ensuring your business opens smoothly. If you would like more information on how to start a Nevada brewery, we can help. As Nevada and California lawyers, we maintain the experience necessary to helping you open and run your brewery without having to worry about the regulations that reduce most brewer’s plans into nothing more than wort.
Tyler N. Ure is an attorney and home brewer who has a fondness for brewing german altbier. Bryan J. Ure is also an attorney, who has a fondness for drinking german altbiers.
