I have a buddy that just built an ethanol distillation plant in North Dakota capable of producing ~150k gallons a year.
With being a small producer, the TTB has a reduced excise tax, so the first 50,000 gallons are taxed closer to ~$5/gal instead of the ~$27/gal federal excise tax.
This is USP 200 proof ethyl alcohol — not denatured, with COAs available.
From what we’re seeing right now, most USP 200 proof ethanol is around ~$22–28/gal depending on location and volume, without shipping cost.
We’re seeing around ~$28/gal for a 275 gallon tote landed right now.
Shipping in this case is based on worst-case distance from the plant, so there may be some wiggle room if you’re closer or moving more volume.
If anyone’s curious or wants to compare numbers, shoot me a message and I’ll see if I can help.
Just rough numbers, before I get corrected by a solvent seller. A typical barrel(55 gal) of denatured costs me around ~$500-700 USD. Ethanol barrel would cost me $2000-2500. The difference is tax. Before you start committing tax fraud in hopes of making a penny… they offer tax rebates if you are not reselling the ethanol or if its a key component of manufacturing(but not the product being sold).
This isn’t about denatured. This is USP grade 200 proof ethyl alcohol.
A lot of these states legislatures specifically states use of usp/ food grade ethanol. Not denatured.
Definitely not trying to get creative with anything like that, this is all through a DSP with the reduced excise tier. The plant is part of a pilot program and fully licensed, just operating within that first 50k gallon bracket.
That’s really the only reason the numbers start to look different.
No tax fraud needed. The feds allow new producers to sell non denatured ethanol with a drastically lowered excise tax when they first start operating, until they hit the limit.
Definitely a great way to get your food grade at a huge discount without the hassle of trying to get a refund from the govt.
Tanner, thanks for getting this conversation going! Would love to learn about this option and how it is actually handled. As an ethanol producer, we can “transfer-in-bond” alcohol to another license holder. If you have an “Industrial Alcohol User Permit” with the TTB, then we (the distiller) can remove the alcohol from bond, then sell without the tax.
Otherwise, to sell undenatured 200P USP, we have to collect tax (5.40/gal on the first 50,000 gal) and $27/gal on anything above 50k gal).
I think you’re right. Technically, we are not entitled to tax credits in our space… but its commonly done. I am finding conflicting sources on it. Heres the form to apply:
I also found this link:
It states only non-profits/research/educational institutions can get free booze.
@Ganjineer710 This is the key challenge. CDA is a tax-free ethanol (completely denatured alcohol), where the ethanol producer adds 5% hexane or a denaturant. At that point, they can remove it from bond and the tax is removed. This is what they do for fuel ethanol too.
There is a suite of other denaturants, which get designated SDA (specialty denatured). This topic is for another thread.
If you are buying “undenatured” 200P USP ethanol, there will (or legally should) be an excise tax baked in. Every distillery that produces ethanol has 50,000 gal that only get taxed at $5.40/gal. Production above 50,000 gal gets taxed at $27/gal. The distillery collects this and remits it to the TTB.
Nationally, there are only a handful of distillers making USP and they are massive! Producing 20 million gallons a year. So the total pool of “tax reduced” ethanol is small.
We have a DSP (distilled spirits permit) and currently have tax reduced ethanol available. If you are paying $27/gal tax + shipping ($1-$4/gal) + raw ethanol cost ($9-$11/gal), then hit us up! We will save you at least 20% on your all in ethanol cost.