Details on new bond Requirements for small craft breweries in Mississippi

Small craft breweries in Mississippi will be able to sell alcoholic beverages on their premises as of July 2017. You will need to obtain an additional surety bond in order to be legally compliant for these sales.

House Bill 1322 introduces the changes for small brewers in the state. A small craft brewery in Mississippi is defined as allowed to:

• Manufacture beer and light wine (up to 60,000 barrels);
• Sell at retail no more than 10 percent or 1,500 barrels of the beer or light wine production for the year;
• Sell no more than 576 ounces of beer or light wine to one individual within a period of 24 hours;
• Sell to wholesalers.

Here are the new requirements for getting an alcohol bond, as well as the new activities that small brewers can engage in according to the new bill.

The current bonding requirements

Any person or business wanting to manufacture beer and light wine in Mississippi needs to obtain a surety bond. This is a part of the licensing process for all small craft breweries.

The surety bond amount is between $5,000 and $200,000. It is determined by the Mississippi Department of Revenue’s State Tax Commission. The required amount cannot be more than the excise tax owed by the brewery for a 60-day period.

As other alcohol bonds, the bond required from Mississippi small brewers ensures they will comply will relevant laws and will pay any due taxes on alcohol sales made in the state.

The additional surety bond for on-premise sales

The new bill allows Mississippi small breweries that would like to sell their production on their premises to do so after posting an additional surety bond. Similarly to the standard permit bonding requirement, the new bond should be less than the excise tax that your brewery owes for a 60-day period.

In order to get bonded, brewers need to pay only a percentage of the bond amount set by the State Tax Commission. To illustrate it, If you have to obtain a $10,000 bond, the bond premium can be in the range of $100-$500 for businesses with stable finances.

The purpose of the additional bonding requirement for Mississippi small breweries is to ensure that they will pay to the state any taxes due on on-premise sales. If timely payments are not made, the Department of Revenue can impose a penalty up to the full amount of the owed taxes. Furthermore, authorities can also file a bond claim. In case the claim is proven, the brewer is liable to provide a compensation up to the bond amount.

Other changes introduced in the bill

Besides the possibility to sell their products on-premise after posting a surety bond, there are other legal changes set in the bill that may affect brewers.

The new law provides a definition of a Mississippi brewpub. It is a restaurant that manufactures beer or light wine (up to 75,000 gallons per year). The bill also allows sale of their products off-premises if they are placed in a growler. The containers can be up to 128 ounces.

Additionally, the new bill also entails that breweries, together with brewpubs, wholesalers and distributors now need to also furnish a monthly report to the State Tax Commission.

House Bill 1322 enlarges the scope of activities that small brewers in Mississippi can take up. What are your thoughts about the legal changes? Please share your insights in the comments.

Todd Bryant is the president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping business owners get bonded and start their business.