Certificate of Exemption

In Plain English

Not every alcoholic beverage needs a full COLA. A Certificate of Exemption is an alternative for products that only sell within the state where they are produced. If a small winery makes wine and only sells it in their tasting room and at local stores within the same state, they may qualify for an exemption instead of a full COLA. The key distinction is interstate commerce. Once a product crosses state lines, it needs a COLA. Products that stay within their home state can use this simpler exemption process. This is particularly common for small craft producers who have not yet expanded their distribution beyond their local area.

Technical Detail

Certificates of Exemption are issued under 27 CFR 4.21 (wine), 5.51 (spirits), and 7.21 (malt beverages). The exemption applies to products bottled or packed and sold exclusively within the state of production. The label must still comply with all applicable federal labeling requirements including mandatory statements, health warnings, and class/type designations. The exemption only waives the pre-market approval requirement, not the substantive labeling standards. Applications are submitted on TTB Form 5100.31 (the same form as COLA applications) by checking the exemption box. Once a producer begins interstate sales of a product, they must obtain a COLA for that product. Exempted products cannot legally be shipped to other states or exported.

Why It Matters

Understanding Certificates of Exemption helps identify gaps in COLA data. Some producers operating under exemptions may not appear in the COLA database until they expand distribution to other states, at which point they file their first COLA and may appear as a "new company" signal despite having been in business locally for years. For compliance consultants, advising clients on when they need a COLA versus an exemption is a common engagement.

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