How to Start a Distillery in North Dakota: $100 Domestic Distillery License, 25,000 Gallons and the 40,000 Gallon Manufacturing Distillery That Must Use ND Farm Products

If you want to make spirits in North Dakota, the state offers two small-scale licenses that cost the same $100 a year but follow very different rules. A domestic distillery can sell spirits it produced on-site and off-site, up to 25,000 gallons a year. A manufacturing distillery can produce up to 40,000 gallons a year, but it sells off-site only and must use a majority of North Dakota farm products. This guide walks through how to start a distillery business in North Dakota, from entity filing to your first sale.

Disclaimer: This article is informational, not legal or tax advice. Alcohol rules are detailed, and fees, forms and deadlines can change. Confirm every figure with the agency named, and consult a qualified attorney and a CPA before you commit money.

What You Need Before You Start

Gather these items before you file anything with the state:

• A business entity, usually a limited liability company (LLC), formed with the North Dakota Secretary of State
• A federal distilled spirits permit from the Alcohol and Tobacco Tax and Trade Bureau (TTB). North Dakota will not issue either distillery license until your federal registrations and permits are in place.
• A production site that local zoning allows for distilling, with a floor plan showing the still, fermentation area, storage and tasting space if you plan one
• A sales and use tax permit, if you will make taxable sales
• Recipes, a production log and purchase records showing where every grain lot came from
• Equipment: a mash tun or cooker, fermenters, a still, storage tanks or barrels, filtration, bottling equipment, labels and packaging
• Ingredients: grain such as corn, rye, barley or wheat, yeast, enzymes and water that meets your recipe and water quality needs

Step 1: Choose the Right License Type

North Dakota distilleries are licensed under NDCC 5-01-19 (domestic distillery) and NDCC 5-01-19.2 (manufacturing distillery). Both are handled by the Office of State Tax Commissioner. Compare them before you pick one:

Feature	Domestic distillery (NDCC 5-01-19)	Manufacturing distillery (NDCC 5-01-19.2)
State license fee	$100 a year, in lieu of other state license fees	$100 a year
Annual production limit	25,000 gallons total	40,000 gallons a year
Where you may sell	On-sale or off-sale spirits it produced	Off-sale only
Direct in-state sales	Limited to 9 liters a month per person	Limited to 9 liters a month per person
Ingredient rule	No farm product requirement is stated for this license	Must use a majority of North Dakota farm products

A domestic license fits a producer who wants a tasting room and on-site sales. A manufacturing license fits an operation built around local grain and off-site distribution. Distributing to bars, restaurants and liquor stores works differently under each path, so plan your sales channels now (see Step 9).

Step 2: Form Your Business Entity

Most distilleries form an LLC by filing Articles of Organization under NDCC Chapter 10-32.1 through the FirstStop portal at firststop.sos.nd.gov. The filing fee is $135. Keep these rules in mind:

• Name: The name must contain the words limited liability company, LLC or L.L.C. It may not contain corporation, incorporated, limited partnership or their abbreviations. It must be distinguishable in the Secretary of State's records from every other registered entity, reserved name, trade name and trademark. Search the database at firststop.sos.nd.gov/search/business before you settle on a name.
• Name reservation: $10 for 12 months, renewable in 12 month periods, if you need to hold a name while you finish your permits.
• Registered agent: You must maintain a North Dakota registered agent with an in-state physical address. The business cannot serve as its own agent, and you must get the agent's approval before naming them. Failure to do so can lead to involuntary dissolution.
• Processing time: The Secretary of State does not publish a guaranteed turnaround. Call Business Services at (701) 328-2900 for current timing.
• Annual report: $50, due every year on November 15 for business LLCs. A $50 late fee applies after the due date under NDCC 10-32.1-92.

If you will sell under a name other than your LLC's legal name, register a trade name with the Secretary of State through FirstStop. Registration costs $25, and you must renew it every 5 years. A trade name grants exclusive use of that name within North Dakota only. Trade names are registered with the state, not a county.

For official information, start at the Secretary of State's site at sos.nd.gov.

Step 3: Get Your Federal Permit First

The state requires federal registrations and permits before it issues a distillery license, so treat TTB as your first regulatory filing after the entity is formed. TTB requires a federal permit to produce distilled spirits, and it also reviews labels before bottled spirits can be sold. Application details, supporting documents and timing change, so confirm the current requirements directly with TTB before you sign a lease or order equipment. Your production layout will need to match what you file.

Step 4: Confirm Zoning and Local Rules

North Dakota has 53 counties. Counties do not license businesses, and cities license only specific activities. Your local concern is zoning. Call the city or county planning office and ask three questions: Is distilling permitted at this address? Is a tasting room permitted? Do local ordinances apply to special events? Get the answers in writing where you can. A zoning problem found after you buy equipment is expensive.

Step 5: Apply for Your State Distillery License

Once your federal registrations and permits are in place, apply for your domestic or manufacturing distillery license with the Office of State Tax Commissioner at tax.nd.gov. The license costs $100 a year. Ask the Tax Commissioner for the current application process, the renewal date and the documents they need from you, because the state will not issue the license until the federal side is complete.

Do not assume that any other state license is also required. North Dakota has no general statewide business license, and the $100 distillery license replaces other state license fees for these operations under NDCC 5-01-19. Confirm that with the Tax Commissioner for your specific setup.

Step 6: Register for the Sales and Use Tax

Any business making taxable sales must hold a sales and use tax permit from the Office of State Tax Commissioner. Apply through ND TAP at tap.tax.nd.gov about 30 days before you open. The state sales tax rate is 5%, and city and county taxes are added on top, so confirm the combined rate for your location.

Step 7: Set Up Workers' Compensation

Workers' compensation in North Dakota is a state monopoly administered through WSI (WorkForce Safety & Insurance). You cannot buy it from a private carrier. Enroll with WSI before you hire anyone or run production with employees, and confirm your reporting obligations with WSI directly.

Step 8: Build Your Production Records

Your records matter more than most new founders expect. For a manufacturing distillery, you must show that a majority of your ingredients are North Dakota farm products, so keep purchase invoices that identify the grain's origin for every batch. Ask the Tax Commissioner what documentation it accepts. For either license, track gallons produced each month against your annual cap of 25,000 gallons (domestic) or 40,000 gallons (manufacturing). Keep a monthly log of production and sales that you can hand to an auditor on request.

Step 9: Plan Your Sales Channels

A domestic distillery that produces no more than 12,000 proof gallons a year may sell directly to licensed retailers, such as bars, restaurants and liquor stores, under NDCC 5-01-19.1. The limit is 200 cases a year in total, and a single common-carrier shipment cannot exceed 3 cases a day for each retailer. Beyond that, sales to other retailers must go through a licensed North Dakota liquor wholesaler. A wholesale liquor license costs $1,000 under NDCC 5-03-02, but that license belongs to the wholesaler, not to you.

Distilleries may also hold up to 40 special event permits a year, subject to local ordinance. These can support festivals, fairs and tastings, but each event still needs your local rules checked.

Step 10: Understand Your Tax Obligations

Plan for three layers of tax:

• Spirits gallonage tax: $2.50 per gallon under NDCC 5-03-07. Confirm with the Tax Commissioner when the tax applies, how it is reported and how it interacts with your sales channels.
• Income tax at the owner level: An LLC taxed as a partnership or disregarded entity passes income through to its owners, who pay North Dakota individual income tax at 0%, 1.95% or 2.50% depending on bracket.
• Corporate tax, if you elect it: An LLC that elects federal C corporation treatment pays state corporate income tax at 1.41%, 3.55% and 4.31% by bracket.

North Dakota has no franchise tax. The $50 annual report is the only recurring state charge on the LLC itself. Choosing a tax structure is a decision for your CPA.

Common Mistakes to Avoid

• Filing with the state before the federal permit. The state will not issue the license first, so you lose time and may have to refile.
• Treating $100 as your total cost. The state license is one small line item. Equipment, building work, insurance, labels and legal help make up most of the budget.
• Selling wholesale yourself. Direct sales to licensed retailers are capped at 200 cases a year for a domestic distillery under 12,000 proof gallons. Route everything above that through a licensed wholesaler.
• Choosing the manufacturing license without a sourcing plan. Confirm your supply of North Dakota farm products before you commit to the 40,000 gallon license.
• Not tracking gallons. Exceeding the 25,000 or 40,000 gallon cap creates a compliance problem that is hard to fix after the fact.
• Missing the November 15 annual report. The late fee is $50 on top of the $50 report.
• Choosing a name that is too close to an existing one. Run the Secretary of State search before you order labels.
• Assuming a county license exists. Counties do not license businesses. Ask about zoning instead.

Expected Results

A distillery can build a local customer base, but results depend on product quality, pricing, location, distribution and marketing. This guide does not promise sales or profit. Your timeline also depends on government processing, and no North Dakota agency publishes a guaranteed turnaround for the steps above.

Keep your product claims accurate and modest. Describe flavor, process and origin, such as using North Dakota grain, and avoid statements that a spirit is healthful, treats a condition or has medical benefits. Label rules are set at the federal level, so confirm your wording with TTB before printing.

Cost Summary

Item	Amount	Agency or source
LLC Articles of Organization	$135	Secretary of State, through FirstStop
Name reservation	$10 for 12 months	Secretary of State
Trade name registration	$25 (renew every 5 years)	Secretary of State
LLC annual report	$50 a year, due November 15, with a $50 late fee	Secretary of State
Distillery license	$100 a year	Office of State Tax Commissioner
Spirits gallonage tax	$2.50 per gallon	Office of State Tax Commissioner
Federal distilled spirits permit and label approval	Confirm with TTB	Alcohol and Tobacco Tax and Trade Bureau
Registered agent	Confirm with the Secretary of State	Secretary of State
Zoning and local permits	Confirm with your city or county	City or county planning office
Sales and use tax permit	Confirm on the ND TAP application	Office of State Tax Commissioner
Equipment, buildout and ingredients	Get written quotes	Vendors

Next Steps

Start with a name search and the federal permit, then confirm zoning in writing before you buy equipment. Once those are settled, file your LLC, apply for the state license and set up your sales tax permit and WSI enrollment. Build your records from day one, because the gallon caps and sourcing rules are checked against them.

Official resources: North Dakota Secretary of State, Office of State Tax Commissioner, and ND TAP. Before you sign a lease, file anything with the state or buy equipment, speak with an attorney and a CPA who work with alcohol producers.