Starting a craft brewery is equal parts passion project and legal maze. Before you brew your first commercial batch, you'll need federal permits, state licenses, a compliant facility, and a business structure that can actually scale. Here's what the process looks like in practice.
Nail Down Your Business Structure First
Before you touch a single hop pellet, register your business entity. Most craft breweries operate as an LLC or S-Corp to protect personal assets and simplify tax treatment. File with your state's secretary of state office, get an EIN from the IRS, and open a dedicated business bank account. This paperwork takes one to two weeks and costs $50–$500 depending on your state.
Federal Licensing: The TTB Brewer's Notice
Every commercial brewery in the United States must obtain a Brewer's Notice from the Alcohol and Tobacco Tax and Trade Bureau (TTB) before selling a single pint. This is free to apply for, but the approval process typically runs 60–120 days.
You'll need to submit:
- Your business entity documents
- A detailed floor plan of the brewing facility
- A description of all brewing equipment
- Proof of premises (lease or deed)
- Personal information for all principals with 10%+ ownership
Apply through the TTB's Permits Online portal. Errors or missing documents are the most common reason for delays, so review the checklist twice before submitting.
State and Local Licenses
Once your TTB notice is in progress, start on state and local approvals simultaneously—don't wait sequentially, because this entire phase can take four to six months combined.
State licenses vary significantly. A California Type 23 Small Beer Manufacturer license costs around $900 annually; a Colorado Manufacturer's License runs $1,500+. Most states also require a separate retailer or taproom license if you plan to sell pints on-site, which is where your margins actually live.
Local permits to pursue in parallel:
- Business operating license from your city or county
- Zoning approval (industrial or commercial mixed-use zones are typical; residential zones rarely work)
- Building permit if you're doing any construction or equipment installation
- Certificate of occupancy
- Health department permit if you're serving food
Budget $2,000–$8,000 in total licensing fees depending on your state and whether you're adding a brewpub component.
Facility Setup and Equipment
A 3-barrel (93-gallon) system—a common entry point for taproom breweries—typically costs $30,000–$60,000 new, or $15,000–$35,000 used. A 10-barrel system scales to $80,000–$150,000+. Beyond the brew system itself, account for:
- Fermentation tanks: Plan for at least 2–3x your batch volume in fermenter capacity
- Glycol chiller: $3,000–$8,000
- Bright tanks and serving equipment: $5,000–$15,000
- Drainage and floor coating: Epoxy floors and floor drains are non-negotiable for TTB compliance and basic sanitation
- CO₂ system, kegs, and transfer pumps: $5,000–$12,000
Total startup costs for a small taproom brewery typically land between $250,000–$500,000 when you factor in build-out, equipment, working capital, and licensing.
Build Your Recipe Portfolio Before Opening
Your first three to five flagship beers should be brewed and refined on a pilot system before you scale commercially. A West Coast IPA, a hazy IPA, and an approachable lager or wheat beer cover the widest customer base. Have a rotating seasonal slot built into your production calendar from day one—it drives repeat visits and gives you room to experiment without cannibalizing core taps.
Set Up Distribution and Direct Sales Channels
Most states allow self-distribution up to a certain volume threshold (commonly 1,000–5,000 barrels annually). Start self-distributing to local bars, restaurants, and bottle shops before signing with a distributor, so you retain higher margins and build those relationships directly.
For direct-to-consumer sales, get your taproom operational before pursuing retail distribution—taproom sales generate the highest margin per barrel, typically 4–6x wholesale pricing. If you plan to sell merchandise, canned or bottled product, or even brewing classes, listing on a marketplace like Mercoly puts your brewery in front of customers actively searching for local craft beverage experiences, letting you capture leads and sell products beyond your four walls.
Track Your Numbers from Batch One
Set up brewing software (Ekos, OrchestratedBEER, or even a well-structured spreadsheet) to track cost per barrel, yield efficiency, and taproom revenue per handle. Knowing your cost to produce a barrel of your IPA—typically $150–$350 depending on ingredients and overhead allocation—is what separates breweries that survive year three from those that don't.
Get your TTB application submitted today, then build your licensing timeline backward from your target opening date so every permit lands before your first pour.