Distillery Store ($25,000) Bond - Virginia ABC in Virginia

Brief Summary

A Virginia distillery store sells spirits as an agent of Virginia ABC, and every dollar collected belongs to the Commonwealth until it is deposited. The $25,000 surety bond is how a distiller shows ABC that money is protected. You pay a premium instead of posting cash, and a clean payment record can lead ABC to waive the bond at a later annual review.

A licensed Virginia distiller that runs a distillery store under an agreement with Virginia ABC files a surety bond with the Board in an amount of at least $25,000. The bond is conditioned on payment of all taxes and other monies due the Department. ABC reviews the need for the bond every year and may waive it for a distiller that has previously demonstrated financial responsibility.

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How to Apply for a Distillery Store ($25,000) Bond:

• Hold a Virginia distiller's license and have a product listed in MIPS.
• Enter into the distillery store agreement with Virginia ABC.
• Obtain a surety bond of at least $25,000 naming the Virginia ABC Board as obligee, or the higher amount ABC sets.
• File the executed bond with the Virginia ABC Board and confirm the current form with ABC first.
• Deposit all spirits sales proceeds, including sales tax, monthly into Virginia ABC's account and send proof of deposit by the 5th.
• Keep the bond active through each annual renewal unless ABC waives it in writing.

Detailed Information About the Virginia Distillery Store ($25,000) Bond:

Why the bond exists

Virginia is a control state. Under Va. Code 4.1-119, the Board may establish government stores on a licensed distiller's premises and appoint the distiller, its officers and employees as agents of the Board to sell spirits. The distiller is not selling its own inventory at retail. It is collecting money on behalf of Virginia ABC, including sales tax, and remitting it. The surety bond backs that obligation.

Amount and condition

The Virginia ABC Distillery Manual and Operating Procedures for Distillery Stores provides that the distiller will file a surety bond with the Board in an amount of at least $25,000 unless the need for the bond is waived by decision of the Department. The bond is conditioned upon the payment of all taxes and other monies due the Department. The $25,000 figure is a floor, so ABC can set a higher amount for a particular store.

The waiver most distillers do not know about

The same provision says the Department reviews the need for the surety bond on an annual basis and may waive both the surety and the bond where the distiller has previously demonstrated financial responsibility. A new distillery store should expect to post the bond at the start. A store with a clean record of on time deposits can raise the waiver at its annual review.

The agreement behind the bond

The distillery store agreement runs for one year from commencement and renews automatically each year on the same terms unless terminated. Either side may terminate on 30 days written notice, and the Department may terminate immediately for good cause. Keep the bond in force for as long as the agreement is active unless ABC grants a waiver in writing.

Deposits and commission

The current Distillery Manual requires all monies received from the sale of distilled spirits, including sales taxes, to be deposited monthly into Virginia ABC's bank account. Proof of deposit is due by the 5th of the month, or the next business day if the 5th falls on a weekend or holiday. Va. Code 4.1-119 requires ABC to pay the distiller a commission of not less than 20 percent of the retail price on these sales.

Premium

The surety prices the bond as a percentage of the bond amount after reviewing the owners' personal credit and the business's finances. Because the bond guarantees tax and sales remittances, the underwriter looks closely at payment history. Confirm the current bond form and filing steps with Virginia ABC before the bond is issued.

Eligibility and Requirements for a Virginia Distillery Store ($25,000) Bond:

• Virginia ABC Board named as obligee.
• Bond amount of at least $25,000.
• Bond conditioned on payment of all taxes and other monies due the Department.
• Principal name matching the licensed distiller on the distillery store agreement.
• Owner credit review by the surety.

Virginia Distillery Store ($25,000) Bond FAQs:

Official and Additional Resources for the Virginia Distillery Store ($25,000) Bond: