Qualified Small Distiller Certificate

How do I file an annual application to be a qualified small distiller?
The 2022 Michigan Qualified Distiller Application period is September 1 – September 23. Upon receipt of the form by MDARD, applicants will receive an email from MDARD-QualifiedDistiller@michigan.gov with an invoice that must be paid within 15 business days. All applicants will receive an invoice by September 30, 2022.

How much does the application cost?
The qualified distiller application fee is $500.00 annually.

What if I submitted my application but did not receive an emailed invoice within seven business days?
Contact Jenelle Jagmin at 517-930-0696 or MDARD-QualifiedDistiller@michigan.gov

When will the qualified small distiller certificate need to be renewed?
July 1, 2023

What is eligible to be qualified distilled product?
A qualified distilled product contains the base distillate of the small distiller or the out-of-state entity that is the substantial equivalent of a small distiller which is at least 40% distilled from qualified grain grown and harvested in this state.

What records are necessary to determine if I have a qualified distilled product?
A qualified small distiller shall keep a complete and accurate set of records and accounts of all transactions pertaining to the operation of its distillery, including, but not limited to, records and accounts of all qualified grain received in or withdrawn from the distillery, all acknowledgment forms and Michigan certification of origination statements in the qualified small distiller’s possession, copies of all contracts, and acknowledgment forms returned to and settled by the qualified small distiller.

Information must include amounts of all ingredients (Michigan and non-Michigan) to determine the 40% threshold required for qualified products.

When will the price of each qualified distilled spirits manufactured by a qualified small distiller return a gross profit to the commission of 32.5%?
January 1, 2023 and each January following.

What is the penalty if I knowingly supply false information?
A small distiller or an out-of-state entity that is the substantial equivalent of a small distiller that knowingly supplies false information to MDARD or the MLCC is guilty of a misdemeanor punishable by imprisonment for not more than 1 year or a fine of not more than $3,000.00, or both. A small distiller or an out-of-state entity that is the substantial equivalent of a small distiller that knowingly supplies false information as described in this subsection shall pay the commission the difference between the gross profit the commission would have received under subsection (1) if the small distiller or the out-of-state entity that is the substantial equivalent of a small distiller was not a qualified small distiller, as determined by the commission.

What can I expect during an audit?
Qualified Small Distillers must be able to provide supporting documentation for all qualified products. During the audit, specific qualified products will be selected for review and the distiller must be able to provide adequate documentation on the amount of grain, and its origin, that was used in the mash.

What kind of documents may be asked for as proof of Michigan qualified grain?
Documentation can include but is not limited to a Michigan Certification of Origination statement, scale tickets, contracts, Bill of Ladings, affidavit or signed certification from supplier, and invoices from a grower/producer which includes address.

What if the distillate was not mashed and fermented on site and was purchased elsewhere?
The company that produced the distillate must provide either a letter, affidavit, or statement on the invoice certifying the origin of the grain used for the distillate. This should be obtained no less than annually.

How long should I keep my records?
Records must be kept for all qualified products throughout the duration they are listed. For example, if a qualified product was mashed and fermented 10 years ago, the qualified distiller must have records to show it qualifies at any point it is listed as a qualified distilled product.

How will I be notified of an audit?
MDARD and/or MLCC examine the records and accounts pertaining to the qualified small distiller’s qualified grain handling business at any time during normal business hours. Documentation requests may occur on premise at your facility and/or through written communication.

Will sensitive data be kept confidential?
Yes, specific details regarding recipes, suppliers, customers, and other sensitive information will not be maintained.

What happens if I cannot provide proof of the origin of the grain that was used for my qualified product?
MDARD and/or MLCC may commence with compliance follow-up processes.

How often can I be audited?
Qualified distillers may be audited anytime throughout the year that a qualified distilled product is listed.

Is a processor, distributor, or handler required to deduct and remit commodity assessments?
They may be required to in accordance with the Agricultural Commodities Marketing Act 232 of 1965, Section 5 (c) Pursuant to the marketing program and for convenience, the processors, distributors, or handlers of the agricultural commodity or agricultural commodity input may be required to collect and remit producer assessments to the committee at no cost to the marketing program unless the marketing program expressly provides for the payment of a reasonable fee for making the deduction and remittance.

In the case of a marketing program that provides for the imposition of an assessment, the processors, distributors, or handlers dealing with the producer shall collect the assessment from the producer by deducting the assessment from the gross amount owing to the producer and shall remit the assessment and data to the committee within a reasonable time period as established by the committee. A processor, distributor, or handler who fails to deduct or remit the assessment is liable to the committee for any assessments not deducted or remitted.

Here's more information about the Agricultural Commodities Marketing Act.

Is a distiller considered a processor?
Yes, a processor is a person engaged in canning, freezing, dehydrating, drying, fermenting, distilling, extracting, preserving, grinding, crushing, milling, or otherwise preserving or changing the form of an agricultural commodity for the purpose of marketing it.

Do I need to collect an assessment when I purchase grain from an elevator?
No, assessments are only deducted by the first purchaser, in this case the elevator has already assessed the producer.

What commodities would require a commodity assessment deduction?
If purchasing directly from a producer, the following commodities may require an assessment:  apples, blueberries, cherries, tree fruit, corn, wheat, soybeans, and potatoes. Commodity marketing boards should be contacted by distillers to answer assessment questions and provide remittance requirements.

Where can I find more information regarding the legislatively established commodity boards?
Commodity board website and contact information can be found here.