Note to Readers: I wrote this article in 2010. On September 21, 2011, Section 23016 of the CA Business & Professions Code was amended to allow on-sale licensed businesses to color, flavor, or blend distilled spirits or wine products on their on-sale licensed premises to be consumed on the licensed premises. -Lauren Tyson
The food and drink editor at the San Francisco Chronicle recently blogged about the Department of Alcoholic Beverage Control and its recent investigations of restaurants with liquor licenses that are reportedly infusing (“rectifying”) distilled spirits with other ingredients.
Another blogger jumped on the bandwagon and called ABC investigators “thugs.”
The number of negative reader comments on these blogs just astounded me. Sometimes when people have negative feelings about law enforcement agencies, they seem to get blown out of proportion.
Here are some of the issues raised, along with some information based upon my 29 years experience with the Alcoholic Beverage Control:
1. What is rectification?
The Alcoholic Beverage Control issued an Industry Advisory in 2008, which explains rectification:
Rectification is any process or procedure whereby distilled spirits are cut, blended, mixed or infused with any ingredient, which reacts with the constituents of the distilled spirits and changes the character and nature or standards of identity of the distilled spirits. One example of rectification is, but not necessarily limited to, creating products such as ‘lemoncello’ or ‘limoncello’ in which sugar and citrus products are combined with vodka and stored, initiating a maturation process which consequently changes the character and nature of the vodka, and possibly its alcohol content. The simple mixing of alcoholic beverages with other ingredients for immediate consumption is not considered rectification. [Emphasis added.]
2. Who can rectify?
Any person who rectifies requires a Rectifier’s license issued by the Alcoholic Beverage Control. This type of license, with a few exceptions carved out by the legislature, is not issued to anyone holding a retail license such as a bar or restaurant. Section 23368 of the California Business and Professions Code says:
“23368. A rectifier’s license authorizes the person to whom issued to cut, blend, rectify, mix, flavor, and color distilled spirits and wine upon which the excise tax imposed by Part 14 of Division 2 of the Revenue and Taxation Code has been paid, and, whether so cut, blended, mixed, flavored, or colored by him or any other person, to package, label, export, and sell the products to persons holding licenses authorizing the sale of distilled spirits.”
3. Alcoholic Beverage Control investigators are a bunch of thugs and bureaucrats
Alcoholic Beverage Control investigators are well educated, highly-trained law enforcement professionals who have a job to do. Protect public health and safety. Just like police and firefighters. Their job is to enforce existing laws created by the California legislature. They actually do it very well. California is viewed as one of, if not the, finest liquor control agencies in the U.S, and a model for other agencies throughout the country in terms of effective, efficient and fair licensing, enforcement and prevention.
4. “Mixologists . . . bring revenue to the ABC through sales”
ABC is a special fund agency. It is funded entirely from license fees paid by the alcoholic beverage industry (retailers, wholesalers and manufacturers). It also receives grants for special programs (such as decoy programs) through the California Office of Traffic Safety from the National Highway Traffic Safety Administration. All revenue from the fines ABC collects goes directly into the State’s General Fund.
5. One of the blog comments said, “Is there a meeting at the [Alcoholic Beverage Control] with a bunch of people sitting around deciding that it’s time to focus more attention on recipe creation than, let’s say–underage drinking?”
ABC doesn’t have time to sit around and ask, “Who are we gonna pick on this week?” Investigations are based on complaints. These complaints may come from competitors, disgruntled employees, parents, spouses, local law enforcement, public health officials or others.
When investigators are at restaurant or bar based upon a complaint, they may discover another violation at the same time.
Sales to minors and underage drinking is one of the Department’s highest enforcement priorities. They will even respond 24-7 to any alcohol-related emergency involving a minor, to trace the source of the alcohol.
6. What are the consequences of rectifying without the proper license?
A retailer who does so would be misusing their license privileges. It’s not likely a business owner or bartender will get carted off to jail for it. However, the Alcoholic Beverage Control could issue a warning or file an accusation resulting in a suspension or fine. It looks at each case individually and decides what to do.
If people feel that bartenders should be allowed to rectify, they should contact their local legislator. Meantime, Alcoholic Beverage Control investigators are obliged to enforce existing laws in a fair and impartial manner — far from thuggery. I don’t know if that’s a word or not, but it sure seems to fit.
So its illegal to mix Lemoncello at home for home-consumption?
That is so absurd!
Hi Joe – I’m not aware of the term “virtual distillery,” but to me “virtual” these days means online only, and not having a physical premises such as an owned or rented commercial space or, for some types of licenses, a home office space. All license types must have a physical premises that are properly zoned for the operation. In the case of distilleries, the TTB requires certain equipment and materials as well. Distilleries require a Type 07 distilled spirits manufacturer’s license from the state. This allows the license holder to produce, package, bottle, rectify, flavor, etc. Distilled spirits manufacturers generally may not sell distilled spirits to retail licensees; a wholesaler must be the go-between. I believe there may be an exception under Section 23363 of the Business & Professions Code. I would recommend before paying a consultant, that you contact the ABC’s Trade Enforcement Unit at 916-419-2500 or email headquarters@abc.ca.gov. The staff of that unit are very knowledgeable and helpful. In case you still want a referral, will email you privately someone who is more familiar with this area than I am. I hope this helps a bit. Thanks. Lauren
P.S. I just noticed your question was submitted in February. I have been having problems with my website host and did not receive notice in February of your question. Sorry for the terrible delay! Working to get back to normal here.
Lauren,
Thanks for the site. My question is if I am a virtual distillery, only taking receipt of the product after if has been rectified, do I also need a rectifying license? Also, do I have to use a wholesaler, or can I sell to on and off premise myself? I know about the 3 tiers, I am just wondering if a lower volume can be self-distributed. Also, I’ll take a recommendation of a license consultant if you are still offering.
Thanks again.
Joe
Hi Peter,
I know how frustrating it can be dealing with a governmental agency—even one that aims to be “business friendly”–can seem indifferent and unresponsive. Sometimes it all depends upon who you talk to. I’m not sure who you spoke to, probably someone at the local district office, which is always the right place to start. You should make sure you speak to a sworn agent and if you aren’t satisfied you should ask to speak with the Supervising Special Agent, who is in charge of the office. I always recommend, if you have time, to put your question or request in writing because it is less likely to be ignored or forgotten by staff. That way, a piece of paper is sitting on someone’s desk, staring them in the face!
That being said, you’re right, the rectification law (Section 23016) was amended effective September 21, 2011. The law now reads, in part, “’. . . Rectifier” does not include an on-sale licensee that colors, flavors, or blends distilled spirits or wine products on the on-sale licensed premises to be consumed on the licensed premises.” However, in looking at ABC’s website under Trade Practices Advisories, the ABC has taken the policy position that creating lemoncello, which involves mixing sugar with citrus products and vodka, and then stored, is still considered rectification. It says:
“Rectification is any process or procedure whereby distilled spirits are cut, blended, mixed or infused with any ingredient which reacts with the constituents of the distilled spirits and changes the character and nature or standards of identity of the distilled spirits.
One example of rectification is, but not necessarily limited to, creating products such as “lemoncello” or “limoncello” in which sugar and citrus products are combined with vodka and stored, initiating a maturation process which consequently changes the character and nature of the vodka, and possibly its alcohol content.
The simple mixing of alcoholic beverages with other ingredients for immediate consumption is not considered rectification”
The advisory says that you can always contact the Trade Enforcement Unit (TEU) in Sacramento by calling (916) 419-2500, writing them at ABC TEU, 3927 Lennane Drive, Suite 100, Sacramento, CA 95834, or emailing at headquarters@abc.ca.gov.
The TEU can often be the best and fastest source of information on questions on the manufacture, supply, and wholesale of alcoholic beverages. However, you should always start by contacting your local district office—which you did. I hope this helps. Thank you for writing.
Hey Lauren,
Any advice for dealing with the CA ABC? I’m a director of a club, with a club on-sale license, and would like to make limoncello for a special event. Everyone has the idea that flavoring vodka on-premise is “rectification” despite the amended law. I’ve called the ABC and been told that it’s not permitted. I’m still waiting on a response to my question about the specific amendment removing “flavoring” from the definition of rectification. At this point though, the ABC’s default answer has been “no” despite the law. Can you recommend a path forward?
Thanks!
Hi Tracy – Not a dumb question. There is no law against it. Lauren
So this might be a dumb question but, is it legal to buy alcohol and infuse it for personal consumption with no intent to sell it? Or is this also considered rectifying and needs a licence?
Corey,
My apologies for the long delay in responding. I am just now back up and running after website issues and other issues. The rectifier’s license requires you to have a “premises” that is properly zoned for your proposed business. A site that is zoned industrial is generally needed for the mixing, blending, bottling, and packaging that rectifiers do. This kind of a license requires both State ABC and Federal TTB agency approval. The TTB is concerned with equipment, security, and other issues. Lauren
Good afternoon
i have a question regarding ABC Rectifier Permit, i’m beginning a start-up company that would essentially take a wine or sake and blend with a tea for wholesale. I’m looking to keep overhead as low as possible and want to see if I can obtain the 07 rectifiers permit without having to rental commercial property first. What would your thoughts be?
Very cool. And kind of “duh” now that i think about it, but thanks for humoring me =).
I have seen this done in wine here locally at Bluxome Street Winery, where someone works with their winemakers, maybe alters it just slightly, and then re-brands it and sells it. But they all have their own licenses, and all at the same address as Bluxome. I’m hoping it will be somewhat easier to get the license at a location that’s already been licensed; the rest, it seems, comes down to figuring out a contract between me and the 07 licensee. Thanks again!
Joe,
Good question! You may contract with another Type 07 licensee to produce your liqueur,
but you still need a Type 07 license to begin with. Otherwise, you’d be operating without a license (like driving without a driver’s license). Lauren
Hi Lauren! On this topic, I am debating whether or not it is possible to partner with an existing type 07 licensee, and make a contract with them to produce my liqueur on their premises while I start to work on my own location and license? Do people do this? The goal of course is to minimize my initial capital outlay (i.e. not sign a lease agreement) until I do my first run, and prove the market for my product. In fact, mine is a seasonal product, so I’d love to just plug myself into someplace for 3 months / year so as to not pay rent year round. Thanks!
Ray,
You only need the Type 07 to bottle and sell infused spirits. And, as you said, you must comply with the laws pertaining to both the Type 07 and the Type 18 licenses. The basic fee for the Type 07 Rectifier’s License is $100, with an annual fee of $462. So, you would pay $562 the first year (plus fingerprint fees of $63 per owner), and $462 annually thereafter. If you need help with the federal, state and local licenses, there are independent consultants who can help you. ABC will help you (to some extent) with the state licensing. Still, people often need help from an independent consultant because ABC doesn’t exactly hold your hand through the whole process. I can provide an excellent referral for you and will email you privately with his contact information. Thank you for your question. Lauren
Great article.
So, if i was to plan on bottling and selling infused spirits, I would need a type 07 AND a type 18? Or does having the type 07 cover the type 18 as long as I’m zoned and compliant with type 18 regulations?
Also, I’ve found annual fees pricing, but couldn’t find how much the actual license costs. Would you have any info on that?
Lastly, are there independent agencies out there that help you figure file for all of the federal, state and local licenses and permits? Or would ABC be able to guide and help me accomplish all tasks?
Thanks
Aryn – No other license is needed with the Type 07 Rectifier’s License. With the Type 07 license, you may function as a distilled spirits wholesaler and sell directly to bars. However, if you do, then you will have to be subject to all the various laws that pertain to a distilled spirits wholesaler. As for where you can make the product, you will have to contact your local planning department about whether you are zoned properly. Usually, mixing, blending, bottling and packaging require industrial zoning. You’ll need tanks and bottling machinery. You must be actively bottling at the time you receive your Type 07 license, or within 30 days after that. There are other requirements as well, not only State ABC requirements, but the U.S. Department of the Treasury, Alcohol & Tobacco Tax & Trade Bureau as well. So, don’t rush into it without doing your homework. Lauren
HI! What a helpful blog! I am wondering, my associates and I want to start a business infusing liquor. It looks like we become rectifiers with an 07 license. Do we need any other license as well? Are we able to then sell directly to bars? Or do we need to sell to a wholesale distributor? Are we allowed to make the infusions out of our home or do we need a commercial kitchen or something of the like? And what about storage of the product?
Thanks so much for your help!
Justin,
When you say, “manufacturer” I assume you mean a licensed distilled spirits manufacturer. A distilled spirits manufacturer (Type 04 licensee) may sell distilled spirits packaged by or for him only to distilled spirits wholesalers, other Type 04 licensees, distilled spirits manufacturer’s agents, and distilled spirits rectifiers (Section 23363, 23356 CA Business & Professions Code).
A Type 04 licensee may also sell industrial spirits or nonbeverage spirits to nonlicensees for use in the trades, professions or industries, and the containers or packages must be larger than one gallon (Section 23385).
Please contact the Dept. of the Treasury, Alcohol Trade & Tax Bureau, about setting up a Manufacturer of Non-Beverage Products operation.
I hope this helps. Lauren
Good day Lauren,
I have developed an extraction method for flower essences using alcohol. I would like to buy bulk orders (1000 liters or more) of alcohol for this process. I spoke with a manufacturer who told me that I would need a rectifier license for him to sell bulk orders to me. Is this the only way that I can buy bulk orders in California? And since I am evaporating all of the alcohol in the extraction process, do I need any special licensing to then sell that product here in California? Thank you for this wonderful blog!
Brian,
Yes, it’s true. Senate Bill 32 is currently working its way through the legislature. According to the bill analysis online,
SB 32 will clarify the definition of “rectifier” within the state liquor law so that an on-sale licensee will be allowed (without the need for a separate rectifier’s license) to color, flavor, or blend distilled spirits or wine products on the licensed premises for consumption on his or her premises. There is a hearing on the bill set for July 6, 2011. You can follow the progress of the bill, or even subscribe to updates concerning it, at the legislative info website at:
http://www.leginfo.ca.gov/bilinfo.html
Thanks for your question. Lauren
I read on another website that a bill was introduced in the state legislature that would make it legal for a license holder to infuse spirits for consumption on the premises. Do you know if this law has passed and what changes it will bring? Thanks
David,
The Type 07 allows you to sell to a bar (retailer) as long as it’s a bar with a full liquor license, and not just a beer bar or beer and wine bar.
As to a home-based business, you would have to be zoned properly for that activity. So check with your local planning department. The CA Department of Alcoholic Beverage Control (ABC) cannot issue a license contrary to any valid zoning ordinance. If you are properly zoned, then the ABC might license your location. There are businesses who operate out of their homes, though I can’t say I’ve ever heard of a rectifier operating out of his or her home.
A Type 07 may function as a distilled spirits wholesaler (Type 18) and sell to retailers, but you’ll have to comply with all the laws regarding distilled spirits wholesalers. Among other things, you’ll need “warehouse space” large enough to maintain a “reasonable stock” of distilled spirits. You could lease the warehouse space in a licensed warehouse.
Labeling of distilled spirits is handled by the U.S. Department of the Treasury, Alcohol & Tobacco Trade and Tax Bureau. There’s a lot of good information on their website, and you could always call and speak with an agent personally. I’ve found them to be very responsive. I will send you additional details via email about Type 07 and 18 requirements. Lauren
Thank you for the prompt response – does a type 07 license allow me to produce small batches from home for sale to authorized vendors (like a bar?), or would I have to set up a commercial operation somewhere, get a storefront, etc.? And what are the regulations regarding labeling? The regulations are very confusing regarding spirits; they seem much more well-defined for beer and wine. You have my email, perhaps we could discuss my situation in more detail offline? Thank you very much for all help and advice.
Good Morning David,
A Type 07 rectifier’s license would allow you to rectify your product, and to package, label, export and sell the product to persons holding licenses authorizing the sale of distilled spirits. However, the license would not authorize you to sell directly to consumers. Thanks for your question. Lauren
I recitfy a popular lithuanian drink by combining honey, spices and everclear, entirely for personal consumption. I am interested in obtaining a licence to sell it legally, but would like to do so directly to the public (I’m not able/wanting to do so on a large enough scale to sell it to retailers). Is that possible? Thanks.