Broker-Sales Agent: Florida’s Virtual Beverage Manufacturer
The Florida Broker-Sales Agent (BSA) license lets you act like a beverage manufacturer without requiring the manufacturing.
Starting a traditional beverage manufacturing business–whether it is a brewery, winery, or distillery–is capital intensive. Space must be leased, equipment must be purchased, ingredients must be purchased, and federal and state licenses must be obtained. For entrepreneurs primarily interested in taking an alcoholic beverage product to market, the BSA license is a powerful and versatile alternative to investment in a brick-and-mortar manufacturing plant.
For a state licensing fee of $500 per year, a broker-sales agent is licensed to arrange for the sale and shipment of alcoholic beverages to licensed manufacturers and distributors. By contracting with one or more manufacturers, a BSA can have its private label products made and packaged according to its own specifications. The BSA can then sell its products to a distributor, just like a Florida manufacturer. The distributor would then pick up the BSA’s products directly from the contract manufacturer. Although the BSA never takes physical delivery of the products, the paper trail shows that the contract manufacturer first sold the products to the BSA, and then the BSA sold the products to the distributor.
The BSA doesn’t have to be physically located in Florida. Its principal address can be outside the state, but a Florida address is required for licensing.
For other state licensing purposes, BSAs are treated just like licensed manufacturers and distributors. BSAs are subject to Florida’s Tied House Evil Law, which prohibits having financial interest in licensed vendors or providing gifts and incentives to licensed manufacturers. Like manufacturers and distributors, BSAs are required to file monthly reports with the Florida Division of Alcoholic Beverages and Tobacco (ABT). However, because the BSA is always selling its products to another manufacturer or distributor, the BSA is not responsible for paying state excise taxes. To track responsibility for taxes, sales by a BSA must be supported by invoices or sales tickets including specific information required by Florida’s beverage regulations.
Because the BSA does not take possession of tax unpaid alcoholic beverages, no federal license is required. However, BSAs must ensure that their products comply with Federal formula approval and label approval requirements. If a BSA’s products require specific formula or label approval, the approval application should be made under the manufacturer’s federal license.
Sales Between Manufacturers
Perhaps the most powerful attribute of the Florida BSA license is the ability to sell alcoholic beverages to other manufacturers. For instance, a BSA can purchase in bulk wine produced by Winery A, and sell that wine to Winery B for bottling. Florida breweries and wineries are not permitted to make direct manufacturer-to-manufacturer sales, unlike distilleries. The BSA could thus play a crucial role in allowing Winery B to augment the products it has available for sale to distributors and at retail.
Whether BSAs can play this useful go-between role between Florida breweries is a bit less clear. Florida Statutes Section 561.14(4), which authorizes the BSA license clearly permits sales by the BSA to licensed breweries without qualification. In contrast, Florida Statutes 561.221(2)(c), which was added to the Florida Beverage Laws in 2015, states: “Malt beverages and other alcoholic beverages manufactured by another licensed manufacturer, including any malt beverages that are owned in whole or in part by the manufacturer but are brewed by another manufacturer, must be obtained through a licensed distributor that is not also a licensed manufacturer, a licensed broker or sales agent, or a licensed importer” (emphasis added). Further complicating the matter, the Florida Senate analyses of that 2015 bill described Section 561.221(2)(c) this way: “Requires all malt beverages and other alcoholic beverages that are not manufactured at a brewery owned by the brewer to be obtained through a distributor, an importer, a sales agent, or a broker” (emphasis added). Further changes to the Florida Beverage Laws or regulations from the ABT might be required to clear up this statutory discrepancy.
Are you interested in starting a Florida virtual beverage manufacturer? We’d love to discuss it with you. Contact us at email@example.com to schedule a 15-minute introductory call at no charge.
Because we’re attorneys: This blog post is provided on an “as is” and “as available” basis as of August 11, 2019. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel–hopefully BrewerLong.