AP agreement

I recently leaned about something called an alternate proprietor agreement (right?) when you can make wine under another winery’s bond.

Can anyone shed some light on what this “agreement” is?

What would I need to do in order to make this happen?

What should I do to respect/be thankful for the opportunity to do so?

It’s basically an agreement to share a bonded winery space. Let’s say a winery has a space already and it is fully licensed. They can allow another winery to apply for “duplicate” bonds and licenses with a written agreement to share the space. The second winery then has pretty much all the rights of the first winery, according to the agreement.
These agreements are hard to get, and usually expensive for the 2nd winery.
We’ve tried it before, and found it not to be a workable arrangement, so we no longer do it.

If we are talking about alternating proprietorship I’m surprised they would be difficult to get. My understanding is that clients of custom crush facilities would need this to operate and there are many such facilities and customers…Gary

add - see W10 & w11 on this page …TTBGov - Wine FAQs

Basic definition from TTB on an A/P

Alternating Proprietor: Others would also like to make wine for commercial purposes, but are not interested in building or buying a winery of their own. These companies find that sharing a winery facility with other companies will suit their purposes, and will qualify with TTB as an Alternating Proprietor winery. Each alternating proprietor must separately qualify, just as a stand-alone winery does, including obtaining their own registration, basic permit and bond, and maintaining their own records. This alternating proprietorship qualification is also specific to an entity, activity and location.

TTB has a lot of info available on their website. Here’s a link that might help

http://www.ttb.gov/industry_circulars/archives/2003/03-07.html

Most custom crush clients get a 17/20. Easier to get, less paperwork / less reporting but some big restrictions.

We have an AP and it fits with what we do.

What I meant was is that most wineries will not dole out an AP without significant cost, or volume guarantees.

Right. I don’t really want the risk and headache of having an A/P under my roof if you’re not making at least 2K cases a year.

Angel Camp operates with an AP at Balo Winery in Anderson Valley

AP does require a lot of additional paperwork for the host winery. You need a legally defined space in the winery to house your bonded wine. During crush common processing areas need to transfer from one one bond to the other. If you want your winery name on the back label as produced and bottled by then you need an AP. If you don’t care then it will just say produced and bottled in town x , CA.

Now that 17/20 permit holder can pour at events in CA there is not many reasons to be 02 over 17/20 from a start up point of view, unless you have your own facility.

However the biggest difference I see between a 02 and 17/20 is that 02’s are required to be on a accrual accounting method. A federal regulation going back to the repeal of prohibition. Which means you can not write off the cost of goods sold for the bottle of wine until its sold/sampled/donated. You end up with a warehouse full of inventory cost which with custom crush fees can be quite large. A 17/20 on the other hand can operate on a cash basis were you get the write off in the year you had the expense drastically reducing the start up cost and tax liability of a small project.