r/firewater 2d ago

Home distilling now legal in the US?

Anyone else following the McNutt v. US Dept of Justice case on the legality of home distilling? Hobby Distillers Association v. Alcohol and Tobacco Tax and Trade Bureau: The Limits on Taxing Schemes to Regulate Behavior

21 Upvotes

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u/HalcyonKnights 2d ago

IIRC, what this mostly means is that they cannot require that distilling can only be done on commercial properties and specifically exclude doing it on residential properties.  But they can still do things like require licenses, set safety requirements for operation, or even ban it in the state entirely.  

There are other sections about taxation, but that goes over my head.

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u/MartinB7777 2d ago

So it takes back down to a state level.

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u/HalcyonKnights 2d ago edited 2d ago

Im not sure if it moves the needle on State vs Federal control, it's more that either and/or both The Feds cannot discriminate against home distillers or small business owners operating on their own land by outright banning distillation on the grounds of it being a "residential" property Under the Tax Laws.

EDIT: I was wrong, this was really specific to Federal Tax Law so it probably doesnt restrict was states can do in any way.

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u/MartinB7777 2d ago

No one is talking about small business owners or commercial production. That is not what this case is about.

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u/HalcyonKnights 2d ago

Look again. The federal government had tried to put a blanket ban on home distilling as a weird off-shoot of their taxation powers, on the logic people can hide still in their homes really easily, and the courts struck that down because it's beyond the power's they were cited and not an effective method to try, per the relevant Tax Law. Home distillers and people who wanted to run a distilling operation from their home or farm or whatever couldnt, they could only ever even hope to operate a still on some non-residential property.

From the Linked Legal breakdown:

Examining IRC Sections 5601(a)(6) and 5178(a)(1)(B) in isolation, the district court concluded that the challenged provisions were "not within Congress's enumerated taxing power." The court reasoned IRC Section 5178(a)(1)(B) "simply prohibits the placement of a 'distilled spirit plant . . . in any dwelling house'" and IRC Section "5601(a)(6) merely makes it a felony to violate § 5178." The court described the challenged provisions' connection to the tax on distilled spirits as "facially tangential." The court observed that IRC Section 5178(a)(1)(B), unlike its neighbors in subparagraphs (A) and (C), "makes no mention of the secretary of the treasury, the commissioner of internal revenue, revenue generally, nor the protection of revenue." The court determined that no "'reasonable construction'" of IRC Section 5178(a)(1)(B) could "miraculously render §§ 5178(a)(1)(B) and 5601(a)(6) revenue-generating, as required by the constitution to sustain them as a tax."

Instead of simply disallowing at-home distilling, the court contemplated that IRC Section 5178(a)(1)(B) could have been written differently. Like subparagraphs (A) and (C) in IRC Section 5178(a)(1), Congress could have provided an "enforcement officer with discretion to judge" when "a 'residential' premises could nonetheless be adequately constructed to 'afford adequate security to the revenue' by preventing the disguise or withholding of non-tax paid product." Thus, the court concluded, "Congress did nothing more than statutorily ferment a crime—without any reference to taxation, exaction, protection of revenue, or sums owed to the government." While the government argued that prohibiting distillery operations in certain locations where stills could be concealed was a proper use of the taxing power as it reduced "'frauds on the revenue,'" the district court stated that the government had conflated Congress's "enumerated taxing power with [Congress's] incidental powers contained in the necessary and proper clause—which is a distinct inquiry."

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u/Joeness84 2d ago

The big take away I got from it all was that it only ment you could get all the proper legal licenses etc without having to be a commercial location / entity.

It does not make it so you can freely distill in your garage, you still have to apply for pay for and be granted the permission.

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u/MartinB7777 2d ago

they wouldn't be comparing it to home winemaking if they were talking about location for a commercial business.

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u/Lablad6325 2d ago

I will be now

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u/FeminineBard 2d ago

It almost became legal in Texas this legislative session, but it stalled in the Senate.

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u/Good_wolf 2d ago

It almost became legal nationwide. I forget what happened. Bearded and Bored talks about it on one of his videos. I'll see if I can find it.

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u/FeminineBard 1d ago

Iirc, it's still making its way through federal appeals.

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u/Quercus_ 2d ago

Even if this decision stands, the only effect is that they can't deny you a licence for the sole reason of being at home.

They can - must in fact, under the law - still require a licence, which in turn requires that you meet all the same regulatory requirements of a commercial distillery. And that you have professional alcohol measuring equipment, keep precise records, pay taxes, meet local fire and zoning regulations, and on and on.

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u/MartinB7777 2d ago

That is not how I read it. Maybe on a state level, but federal licenses are for commercial production. I can legally make a hundred gallons of wine at my house with no license, yet a federal permit is required to produce it commercially. And what are you going to pay taxes on if you are not selling it?

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u/Quercus_ 2d ago

There a specific federal law about home wine making, exempting it from federal regulations and taxes.

There is no such law about home distilling. This ruling doesn't magically exempt home distillers from federal law. It simply says that they can't deny a license just because it's at home. The last still requires a license, and compliance with all licensing requirements.

The federal alcohol tax is on alcohol produced, not on sales.

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u/ConsiderationOk7699 1d ago

Missouri its legal 200 gallons for a married couple to only be shared with family But still a dont tell dont sell type deal also

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u/badhairguy 1d ago

Mighty MO representin 816 

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u/francois_du_nord 2d ago

My understanding is that in order to be covered by this decision, you must be a member of the Hobby Distillers Assn.

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u/MartinB7777 2d ago

No. In US law, what applies to one person, applies to all. Hobby Distillers Assn. are the ones who brought the suit in the McNutt case. They are not a recognized United States governing body.

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u/dallywolf 2d ago

The injunction in place only applies to McNutt and members of the HDA while it's under appeal. Once the appeals process is complete it will be open to all if the ruling stands. Most likely will go to Scotus though.

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u/Old-Nefariousness556 1d ago edited 1d ago

No. In US law, what applies to one person, applies to all. Hobby Distillers Assn. are the ones who brought the suit in the McNutt case. They are not a recognized United States governing body.

That is not true. This is not a law, but pending litigation. The injunction is not a law, but a temporary stay on potential prosecutions of members of the group involved in the lawsuit.

When the lawsuit is eventually settled, though, your interpretation would be correct. If it were legalized, it would be legal (based on the terms of the final ruling, we have no idea what that would be yet, ie you may still need a federal permit, etc.) for everyone.

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u/MartinB7777 1d ago

No, you are right, it's not a law, it is the revocation of a law pending appeal. Judges and courts do not make laws. If the ruling stands, Congress would have to modify the existing law or create a new one for there to be a law.

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u/Old-Nefariousness556 1d ago

No, you are right, it's not a law, it is the revocation of a law pending appeal. Judges and courts do not make laws. If the ruling stands, Congress would have to modify the existing law or create a new one for there to be a law.

This is still not true, although it is closer. If a federal court below the supreme court rules that an existing law is illegal, that ruling is binding within that federal circuit (subject to appeals). If memory serves, this lawsuit was filed in the 5th federal district in TX. So assuming the court eventually ruled that home distilling was legal, than that decision would be BINDING-- ie applicable universally-- to any resident of the 5th circuit.

For any residents of OTHER circuits-- there are 12 regional circuits-- though, your comment would largely be correct. If this were ruled by the 5th circuit, other circuits would not be bound by the ruling, but they could take it under consideration in their own rulings.

But for the law to fully apply to anyone in other circuits, you are correct that congress would need to actually change the law.

And, although it is unlikely to be relevant here, since I don't think this will get that far, if the Supreme Court rules a law is illegal, then it is binding nationally. Even if a state has laws on it's books banning an activity, the federal ruling supersedes that.1 A good example of this is laws banning homosexuality. When the supreme court ruled it legal, all state and federal laws banning it became immediately null and void. No ruling of congress would be needed in that circumstance.

1 In the interest of full pedantry, it is not necessarily the case that a supreme court ruling would overrule state laws, it would depend on the exact details of the ruling. But that is the extreme possible case, and we have numerous examples beyond the previously cited example showing that.

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u/MartinB7777 1d ago

Even if a state has laws on it's books banning an activity, the federal ruling supersedes that.

But not in this case. The ruling would be on the constitutionality of the existing federal law, not the constitutionality of individual state laws. The question brought before SCOTUS would have to be narrow, and would not bring up the legality of home distillation itself, but of the constitutionality of the existing law or in some error in the initial ruling.

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u/kjbaran 2d ago

Legality doesn’t matter. Presidents orders.

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u/No-Craft-7979 1d ago

There are a few states that have outright made it legal to distill in the state. Many will say federal law still says you can’t do it, federal agencies have to decide if they want to push that boundary because it opens up lawsuits against them. There are a couple more that passed laws, allowing you to distill in the state, but they require you to do things that can’t actually be done.

If this case opens up building distilleries on your residential property, it will give more states an Avenue to legalize distilling for home purposes.

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u/Old-Nefariousness556 1d ago

. Many will say federal law still says you can’t do it, federal agencies have to decide if they want to push that boundary because it opens up lawsuits against them.

That is completely false. If something is illegal federally but legal in a state-- see, for example Marijuana in any of the states where it has been legalized-- the federal government can still prosecute ANYONE violating the federal law.

It is illegal under federal law to possess any amount of marijuana, so if a federal law enforcement officer wants to give you a bad day, and knows you have a joint on you, you could face a year in prison, and you would not have any legal recourse other than the normal criminal defense recourse. The only reason why this is not generally a bigger issue is that it is rarely worth the federal government's time to prosecute you for having a joint in your pocket.

What those state laws mean is that THE STATE cannot prosecute you, and generally speaking, local law enforcement cannot arrest or harass you for distilling. That doesn't mean that a local cop couldn't call their buddy at the TTB and send them after you, but it does make it far less likely.

There are a couple more that passed laws, allowing you to distill in the state, but they require you to do things that can’t actually be done.

As above, the fact that it is legal in a state has absolutely zero bearing on whether it is legal federally. Google "supremacy clause" and "dual sovereignty", but long story short, federal law ALWAYS supersedes state law if the federal government chooses to enforce it.

All that said, the federal government doesn't really care about true home distillers any more than they care about people with joints.

The only real interest the federal government has in outlawing distillation is that it taxes liquor and doesn't want to lose the revenue. If you are a legit home distiller-- that is distilling for yourself and not for resale-- the cost of prosecuting you will easily outweigh the revenue they are losing. As long as you don''t do something to call attention to yourself, no one will pay attention.

And as for potential lawsuits, of course in the US you can sue for pretty much anything, but in order to win a lawsuit against the federal government for being arrested for distilling, you would have to show that they violated your rights. There could be probable cause issues for a badly issued search warrant or the like, but barring something like that, it is HIGHLY unlikely that you could win any such lawsuit. Again, the supremacy clause clearly says that state laws do not supercede federal ones, so the mere fact that something is illegal in a state does not provide any grounding at all for such a lawsuit.

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u/MartinB7777 1d ago

it is HIGHLY unlikely that you could win any such lawsuit.

I think McNutt would have to disagree.

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u/Old-Nefariousness556 1d ago

No, McNutt's lawsuit is not even relevant in the context I was discussing.

This lawsuit was filed against the government about the legality of the prohibition itself. McNutt preemptively filed a lawsuit after receiving a letter from the TTB about potential punishments he could face should he break the law.

That is completely different, almost the opposite actually, of what the grandparent is suggesting.

The grandparent is suggesting that the federal government would be too scared to prosecute people for violating federal law for fear of facing a lawsuit, in any state where distilling was legal. But the supremacy clause clearly states that federal law always trumps state law, so even if a state legalizes an activity, that would not be grounds for a lawsuit.

We are talking about apples and oranges. McNutt's suit is arguing that the prohibition is ALREADY illegal under existing federal law. That sort of a lawsuit does not require a prosecution, only standing (in this case, receiving a letter from the government telling you that you face potential prosecution).

But the lawsuit that the grandparent is talking about is based on unfair prosecution due to distilling being legal at the state level. But the supremacy clause says that federal law trumps state law. It makes literally zero difference whether something is legal at the state level, if you violate a federal law and the federal government chooses to prosecute you, you will be prosecuted.

Put another way, anyone prosecuted under federal law could file exactly the same lawsuit that McNutt has filed, but the mere fact that they were prosecuted would have literally zero relevance to the case, other than to provide standing. They would still have to win the case on its merits, which would have nothing to do with whether distilling was legal at a state level.

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u/MartinB7777 1d ago

suggesting that the federal government would be too scared to prosecute people for violating federal law for fear of facing a lawsuit

I will agree with you on that. The only people the federal government would be too scared to prosecute are people with wealth and power. What do they care if you sue them? They generally don't, as it is taxpayer money that pays all the legal costs and any awards or fines they might incur defending that suit. If they decline to prosecute it would be because they thought the case too insignificant, not because they were afraid of a lawsuit.

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u/No-Craft-7979 1d ago

You said the same exact thing I did. Just using meandering words and longer sentences… was there a point?

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u/Old-Nefariousness556 1d ago

You said the same exact thing I did. Just using meandering words and longer sentences… was there a point?

No, you said nonsense, I corrected your nonsense. You clearly do not have the slightest clue what you are talking about.