In another blow to the constitutionality of alcohol beverage laws, the Court of Appeals for the Eighth Circuit struck down on First Amendment grounds a number of Missouri’s alcohol beverage advertising laws on the basis that Missouri failed to meets it burden to demonstrate that such laws both advanced the state’s substantial interest and were narrowly tailored to achieve that interest.
There are many laws at both the federal and state level that govern the production and distribution of distilled spirits. For example, craft distillers must comply with licensing and permitting requirements, trade practice laws, advertising restrictions, and, depending on the jurisdiction, alcohol franchise law. One of the most fundamental—and most complex—areas of law governing distilled spirits is excise taxes.
An article authored by McDermott’s Bethany K. Hatef in the Winter 2020 issue of Artisan Spirit Magazine provides a high-level overview of the federal alcohol excise tax system and some specific features that apply to distilled spirits, and also explains the current status of the Craft Beverage Modernization Act, the legislation temporarily providing for reduced tax rates for certain amounts of distilled spirits.
Originally published in Artisan Spirit Magazine: Winter 2020.
Yesterday, the Environmental Protection Agency (EPA) announced its approval of 10 new pesticides for use on hemp products. EPA’s approval of nine biopesticides and one conventional pesticide provides greater certainty to hemp farmers in time for the 2020 planting season.
The hemp industry awaits further guidance from other federal regulatory agencies.
We are very pleased to share that one of our editors for Alcohol Law Advisor and head of McDermott’s Alcohol Regulatory & Distribution Group Marc E. Sorini was named a 2019 National Law Review Go-To Thought Leader. The National Law Review’s 2019 “Go-To Thought Leader Awards” spotlight 75 legal authors—less than 1% of the publication’s 15,000 thought leaders—selected from a pool of over 100,000 news articles published in 2019. Sorini was one of three thought leaders recognized in the “Food & Drug” category. According to the awards description, “The NLR Go-To Thought Leadership recipients not only demonstrate a depth of legal knowledge but also outline the steps needed for compliance and/or adaptation. These designated authors are not only reader favorites but are often quoted in other publications and/or syndicated in other media.”
Recognized as one of the leading lawyers in his field, Sorini has represented alcohol beverage suppliers before federal and state courts, the US Alcohol and Tobacco Tax and Trade Bureau (TTB) and Federal Trade Commission (FTC) and state alcohol beverage control agencies. He advises clients on compliance with the regulations and policies of the TTB, FTC, Food and Drug Administration (FDA) and Customs and Border Protection (CBP). Here, he shares his thoughts on the recognition, how he stays on top of industry trends and the advice he has for peers and future thought leaders.
Q: What are your thoughts on being named a NLR ‘Go-To Thought Leader’?
A: My first instinct is to say, “Dude, it rocks!” But sincerely, I’m honored to be included in such a selective list of my peers. Over the past year especially, our practice group has focused on optimizing our content: getting to the heart of why, say, a regulatory update really matters and how readers should take action in response. It’s validating to see that approach has resonated.
Q: What have you found most useful in your tenure in terms of staying on top of industry trends for this practice, which led you to this recognition?
A: It starts with discipline, first and foremost. I carve out the time to read up on industry developments through daily updates like Alcohol Issues INSIGHTS, Beer Business Daily, INSIGHTS Express and Wine & Spirits Daily. I also try to keep tabs on bills and case law, as well as the monthly and bimonthly publications like The New Brewer and Artisan Spirit Magazine. Making the time to stay up to date really pays dividends, in my experience. Court cases, for instance, become old news very quickly if you don’t stay on top of them.
Q: As an established thought leader, what would you advise the peers and future thought leaders? How are you already working with the next class to ensure a continued stream of valuable content in this space?
A: As we know, the way lawyers are compensated can sometimes create a perverse incentive: The instant reward is for putting in billable hours, not for the deeper practice development hours put toward things like reading up on industry developments. I can remember when I was an associate, I would hit my 2,000 hours—but barely. I would make the time for business development activity, because I knew it would be beneficial long term. I was certainly on the low end of the bonus spectrum at that time, but the decisions I made then paid off in the long run.
Many of my clients expect and rely on my thought leadership; they ask for it. Plus, thought leadership can quickly solidify relationships with general counsel, for example. Within three to four months of working with them, if you consistently send them thought leadership that is relevant and helpful to their business, they not only recognize your name, but also associate your name with instant, consistent value.
Q: How has the way you approach writing your thought leadership changed over your tenure?
A: It used to be that a big part of the game was being the first one out of the gate. But these days, any announcements worth talking about get picked up by the trade press. Thus, being first out of the gate is no longer viable for big-news announcements; so you have to adjust what it means to deliver meaningful thought leadership.
Now, instead of putting an announcement out right away, I’ll often come in a week later with some real insight about a big news development. You don’t want oversimplified spins on an announcement just because you want to be the first to publish it (you won’t be). Delivering nuanced explanations and genuinely helpful advice is now the most value thing you can do as a thought leader.
See Marc E. Sorini’s National Law Review bio here.
Over the past several months, 15 notable deals have taken place in the craft beer space, continuing a trend toward consolidation in the industry. While the terms of most transactions remain undisclosed, the deals generally fall into three buckets:
- Strategic deals designed to combine leading brands and brewers and leverage distribution capacity;
- Targeted asset acquisitions designed primarily to expand brewing capacity; and
- Restructuring transactions.
McDermott’s Marc Sorini, Thomas Conaghan and Daniel McGuire walk through notable strategic deals, asset/capacity purchases and restructurings.
Originally published in The New Brewer, November/December 2019.
Last week FDA issued a public release on CBD titled, “What You Need to Know (And What We’re Working to Find Out) About Products Containing Cannabis or Cannabis derived Compounds, Including CBD.”
The FDA document does not break much new ground, though it emphasizes again FDA’s concern with the safety of CBD, some of which comes from FDA’s review of the CBD-based epilepsy drug Epidiolex. FDA does not believe it has enough information about certain aspects of CBD, such as what happens if someone takes CBD daily for sustained periods. In addition, FDA specifically identifies as a potential harm the use of CBD with alcohol because of the increased risk of sedation and drowsiness, which can lead to injuries. FDA, in addition to issuing this document, sent 15 warning letters to companies marketing CBD products that FDA views as unapproved drugs primarily because of the drug like claims made for such products.
FDA appears to be on a path toward considering a regulation to allow the marketing of CBD in conventional foods or as a dietary supplement. This approach will likely take a long time—perhaps some 2-4 years—absent legislative changes that do not appear likely in an election year. In the meantime, FDA continues to view putting into interstate commerce a food to which CBD has been added or to market CBD as or in a dietary supplement as a violation of the Federal Food, Drug, and Cosmetic Act (FD&C Act).
For the first time in American history, a congressional committee approved a marijuana legalization bill. On November 20, 2019, after more than two hours of debate, the House Judiciary Committee approved the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019 (H.R. 3884) in a 24 to 10 vote. If the MORE Act becomes law, it would effectively end the federal prohibition of cannabis in the United States.
Currently, marijuana remains a Schedule I drug, alongside heroin and LSD, under the Controlled Substances Act. Schedule I drugs are those that the federal government considers to have no proven or acceptable medical use and a high abuse potential. The MORE Act, if passed into law, would remove marijuana from Schedule I.
This Wednesday, November 20, the House Judiciary Committee will hold a markup of H.R. 3884, the Marijuana Opportunity Reinvestment and Expungement Act (MORE Act). The bill’s sponsors and advocates for cannabis normalization say the legislation is the most comprehensive ever considered by Congress. In fact, due to the bill’s sprawling reforms, it was referred to eight separate committees for consideration according to their discrete jurisdictions. The Judiciary Committee will be the first to consider the bill and the Committee members will have opportunities to amend it.
Yesterday, the United Stated Department of Agriculture (USDA) released its interim final rule setting forth the proposed rules and regulations regarding the production of hemp under the provisions of the Agricultural Improvement Act of 2018, or the “2018 Farm Bill.” As mandated by the 2018 Farm Bill, the proposed regulations outline provisions for both the approval by the USDA of State or Indian Tribe proposed plans as well as the development of its own federal plan for the production of hemp in the absence of an applicable approved State or Tribal program.
First introduced in 2013, the SAFE Banking Act just passed the House 321-103. This bill, an exciting and promising development for cannabis advocates, provides safe harbor to banks and financial institutions doing business with state-legal cannabis businesses, and allows cannabis businesses to move away from conducting business exclusively in cash.