Brewery and Winery Resale Certificate Guide: Buy Ingredients and Packaging Tax-Free
Running a craft brewery, winery, or distillery is capital-intensive. Between ingredients, packaging, equipment, and licensing, costs stack up quickly. A resale certificate reduces one of those costs by letting you purchase ingredients, packaging materials, and other items tax-free when they become part of a product you sell.
A mid-size craft brewery spending $15,000 per month on grain, hops, yeast, cans, and labels saves $12,600 per year at a 7% tax rate. A winery buying $8,000 monthly in grapes, bottles, corks, and labels saves $6,720. Those numbers compound year over year.
Brewery and Winery
How the Resale Exemption Applies to Beverage Producers
You are a manufacturer. You buy raw ingredients, transform them into a finished product (beer, wine, spirits), and sell that product to consumers or distributors. The ingredients and packaging that become part of the final product are resale purchases.
This is true whether you sell through a taproom, a tasting room, a distributor, or directly to retailers. The production inputs that physically become part of what the customer buys qualify for the exemption.
The complication for beverage producers is that you also operate in a heavily regulated industry with excise taxes, three-tier distribution requirements, and state-specific alcohol laws that interact with sales tax rules.
Apply for Your Resale Certificate
What You Can Buy Tax-Free
Ingredients (Brewing, Winemaking, Distilling)
- Malt and base grains (barley, wheat, rye, oats)
- Hops (pellet, whole leaf, extracts)
- Yeast (liquid and dry, both standard and specialty strains)
- Grapes (purchased from growers or brokers)
- Fruit and adjuncts (berries, citrus, honey, coffee, chocolate, spices)
- Sugar and dextrose used in fermentation
- Water treatment chemicals (gypsum, calcium chloride, lactic acid) that become part of the product
- Neutral grain spirits purchased for blending (distilleries)
- Barrel-aging spirits used as ingredients in blended products
Packaging Materials
- Cans and bottles (aluminum cans, glass bottles)
- Crowns, caps, and closures (bottle caps, screw caps, corks)
- Labels (pressure-sensitive, shrink sleeve)
- Carriers and cartons (six-pack holders, four-pack carriers, case boxes)
- Kegs purchased for filling and distribution (this gets complicated; see below)
- Shrink wrap and packaging tape used to secure packaged products for sale
- Growlers and crowlers sold to the customer
Items That Transfer to the Customer
- Branded glassware sold or included with a purchase
- Merchandise (t-shirts, hats, stickers) purchased for resale in the taproom
- Gift boxes and sampler packs assembled for retail sale
What You CANNOT Buy Tax-Free
| Item | Why It Is Taxable |
|---|---|
| Brewing equipment (fermenters, kettles, mash tuns) | Business equipment |
| Bottling/canning line machinery | Business equipment |
| Taproom furniture, bar equipment | Business fixtures |
| Cleaning and sanitizing chemicals (PBW, StarSan) | Consumed in production, not transferred to customer |
| CO2 tanks and gas (for carbonation) | Consumed in production (some states exempt; check yours) |
| Lab equipment (hydrometers, pH meters) | Business tools |
| Forklifts and warehouse equipment | Business equipment |
| Office supplies and software | Business operations |
| Taproom glassware used for on-premise service | Business use (you keep the glass) |
The CO2 Question
Carbon dioxide is a gray area. In beer production, CO2 becomes physically part of the product (the carbonation in the finished beer). Some states recognize this and allow a resale exemption for CO2 used in carbonation. Others treat it as a manufacturing supply. Check your state's specific guidance, because this can be a significant cost item for breweries.
The Keg Question
Kegs are another gray area. If you sell a keg to a customer or retailer (they keep it), that is a resale transaction. But most breweries retain ownership of their kegs and charge a deposit. In that case, the kegs are your reusable business equipment, and the resale exemption may not apply to the purchase. Some states make exceptions for returnable containers used in the beverage industry. Ask your state's tax authority or your accountant.
The Three-Tier System and Sales Tax
Most states require alcohol to flow through a three-tier distribution system: producer to distributor to retailer. Each tier has different sales tax implications.
Tier 1: Producer (You)
When you sell to a distributor, that is a wholesale transaction. The distributor provides you with their resale certificate, and you do not charge them sales tax. Your resale certificate covers your ingredient and packaging purchases.
Tier 2: Distributor
The distributor sells to retailers. Retailers provide their resale certificates to the distributor.
Tier 3: Retailer
The retailer (bar, restaurant, liquor store) sells to the consumer and collects sales tax.
Direct-to-Consumer Sales (Taproom, Tasting Room)
When you sell beer, wine, or spirits directly to a consumer in your taproom or tasting room, you are acting as the retailer. You must collect sales tax on those sales. Your resale certificate covers the ingredients and packaging for those products, but you are responsible for collecting and remitting tax on the final sale.
| Sales Channel | You Collect Sales Tax? |
|---|---|
| Taproom/tasting room pours | Yes |
| Bottles/cans sold to-go | Yes |
| Growler fills | Yes |
| Sales to distributors | No (they give you their certificate) |
| Sales to restaurants/bars (where legal) | No (they give you their certificate) |
| Online direct-to-consumer (where legal) | Yes (and watch for nexus in other states) |
State-Specific Notes for Beverage Producers
California
California has a complex alcohol tax structure with separate excise taxes for beer, wine, and spirits. Sales tax applies to taproom and tasting room sales. California's seller's permit functions as the resale certificate for purchasing ingredients and packaging. Manufacturing equipment may qualify for a partial exemption under California's manufacturing equipment exemption. Details at the California guide.
Texas
Texas charges sales tax on all alcohol sold to consumers. Breweries and wineries with taprooms collect the standard rate (up to 8.25%). Ingredients and packaging purchased for production are exempt with a resale certificate. Texas also has specific permits (Brewer's License, Winery Permit) that interact with sales tax obligations. See the Texas guide.
Oregon
Oregon has no general sales tax, which makes it unusual for beverage producers. You do not collect sales tax on taproom sales in Oregon. However, if you sell to customers in other states (online sales, wine clubs), you may need to collect sales tax in those states.
New York
New York has a complex farm brewery, farm winery, and farm distillery licensing structure that affects where and how you can sell. Sales tax applies to all direct-to-consumer sales. Ingredients for production are exempt with a resale certificate. Check the New York guide for more.
Colorado
Colorado's craft beverage industry is massive, and the state allows self-distribution for breweries. Sales tax applies to taproom sales at the combined state and local rate, which varies significantly by municipality. Denver's combined rate is over 8.8%.
Manufacturing Exemptions Beyond the Resale Certificate
Several states offer manufacturing equipment exemptions separate from the resale certificate. These can exempt your brewing kettles, fermenters, bottling lines, and other production equipment from sales tax.
States with notable manufacturing exemptions for beverage producers:
- California: Partial exemption on manufacturing equipment (currently 3.9375% rate instead of full rate)
- New York: Manufacturing equipment is exempt from state and local sales tax
- Texas: Manufacturing equipment is exempt
- Ohio: Manufacturing equipment is exempt
- Colorado: Manufacturing equipment is exempt from state tax (local may still apply)
These exemptions use different forms and have different requirements than a resale certificate. Consult your accountant or state tax authority for the specific application process.
Real Savings for Beverage Producers
| Business Type | Monthly Input Costs | Annual Tax Savings (7%) |
|---|---|---|
| Nano brewery (< 1,000 bbl/yr) | $3,000 | $2,520 |
| Small craft brewery (1,000-5,000 bbl/yr) | $15,000 | $12,600 |
| Mid-size brewery (5,000-15,000 bbl/yr) | $40,000 | $33,600 |
| Small winery (< 5,000 cases/yr) | $5,000 | $4,200 |
| Mid-size winery (5,000-25,000 cases/yr) | $20,000 | $16,800 |
| Craft distillery | $8,000 | $6,720 |
For a small craft brewery, $12,600 per year in tax savings on ingredients and packaging is meaningful. It can cover a significant portion of your hop contract or grain bill.
Common Mistakes Beverage Producers Make
Using the Certificate on Equipment
Your fermenters, bright tanks, and canning line are production equipment, not resale items. Do not use your resale certificate for these purchases. Instead, check whether your state has a separate manufacturing equipment exemption.
Not Collecting Tax on Taproom Sales
When a customer walks up to your bar and buys a pint, that is a taxable retail sale. Some new taproom owners forget this, especially if they came from a distribution-only model.
Ignoring Nexus From Wine Club and Online Sales
If you ship wine, beer (where legal), or spirits to customers in other states, you may have sales tax nexus in those states. This is separate from your alcohol shipping permits. Read our economic nexus guide to understand the thresholds.
Confusing Excise Tax and Sales Tax
Excise taxes (federal TTB taxes, state excise) are separate from sales tax. Paying excise tax does not exempt you from collecting sales tax on consumer sales. They are two different tax systems.
Misclassifying Taproom Glassware
The pint glass a customer drinks from in your taproom is your business property. You wash it and reuse it. That is not a resale purchase. But branded glassware you sell in your merchandise section is a resale item. Keep the purchases separate.
How to Get Started
- Apply for your resale certificate. This is separate from your brewery, winery, or distillery license. Apply through your state's tax authority or use our application service.
- Present the certificate to all suppliers. Grain suppliers, hop dealers, yeast labs, can manufacturers, label printers, bottle suppliers. Every vendor who provides ingredients or packaging should have your certificate on file.
- Separate your purchases. Track ingredients and packaging (exempt) separately from equipment, cleaning supplies, and operational costs (taxable).
- Register to collect sales tax. If you have a taproom or tasting room, you must register with your state to collect and remit sales tax on consumer sales.
- Check for manufacturing exemptions. Ask your accountant whether your state offers additional exemptions for production equipment.
Apply for Your Resale Certificate Today