ALCOHOL LAW ADVISOR
ALCOHOL LAW ADVISOR
Regulatory and Distribution Law Updates for the Alcohol Industry
ALCOHOL LAW ADVISOR
Regulatory and Distribution Law Updates for the Alcohol Industry

Non-Alcoholic Beer Regulation 101

As part of the general move to better-for-you beverages, non-alcoholic (NA) options have been and will likely continue to be on the rise. However, how NA is treated, or not treated, as “beer” has significant impact on its potential route to market. The below summarizes the overall treatment of NA beer under US federal law, as well as examples of restrictions on direct-to-consumer (DTC) shipments imposed by certain states. FEDERAL TREATMENT OF NA BEER Tax Treatment: The Alcohol and Tobacco Tax and Trade Bureau’s (TTB) regulations define “beer” as a fermented beverage containing 0.5% or more alcohol by volume (ABV) and brewed or produced from malt, wholly or in part, or from any substitute for malt. (See: 27 C.F.R. § 25.11.) The regulations refer to a malt beverage containing less than 0.5% ABV as a “cereal beverage.” (See: 25.11.) Because NA beer contains less than 0.5% ABV, TTB will not treat it as a “beer” under the Internal Revenue Code (IRC), and...

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CBD Products in the Time of COVID-19: Best Practices for Making Your (Trade)mark

In the midst of an unprecedented and unsettling global pandemic, one constant remains: certain entrepreneurial-minded folks will not miss the opportunity to file trademark applications for new “brands” that align with the latest news cycle. COVID-19 is no different. The United States Patent and Trademark Office (USPTO) has experienced a swell of new US trademark applications for COVID-related trademarks, with many of the marks using descriptive terms or phrases that have become commonplace in a shelter-in-place, #wfh and social distancing world. Unfortunately for the applicants of these pandemic-related trademarks, very few are likely to achieve registration. In many cases, applicants of “news cycle” trademarks are unable to demonstrate the requisite bona fide intent to use a trademark, or they never get around to actually using the mark in commerce. In other cases, the USPTO might find a COVID-related trademark to be “merely descriptive” of the applied-for...

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Thank You to Our Readers

We greatly appreciate our readers over the past year and are pleased to share that we were once again recognized for our food and beverage thought leadership in the 2020 JD Supra Readers' Choice Awards, which acknowledge top authors and firms for their thought leadership in key topics during all of last year. Through our various blogs and thought leadership pieces, we are dedicated to maintaining our position as a leading firm for alcohol and cannabis work, and keeping clients abreast of significant and relevant topics in the industry.

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Detailed Summary of Federal Requirements for Production of Hand Sanitizing Products

To meet the growing need for hand sanitizing products, various federal agencies including the Alcohol Tobacco Tax and Trade Bureau (TTB), Federal Drug Administration (FDA), Health and Human Services (HHS) and Congress have been rapidly updating and providing guidance for alcohol manufacturers interested in producing or supplying alcohol for the production of these important products. The below neatly summarizes the key issues surrounding the production of alcohol for use in or production of hand sanitizers for distilled spirts plants (DSPs). Tax Treatment: Denatured and undenatured alcohol may be withdrawn from the bonded premises after December 31, 2019 and before January 1, 2021 free of tax for use in or contained in hand sanitizer made in accordance with FDA guidance. Formula requirements: No prior formula approval is required for DSPs or industrial alcohol users if: the hand sanitizer is produced in accordance with World Health Organization (WHO)...

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Importing and Exporting Beer

Importing and exporting beer or other alcohol beverages involves multiple levels of government regulation and taxation. Some regulations, taxes, and reporting requirements mirror your existing compliance obligations as a brewery. Other obligations are unique and include government agencies that are not involved in regulating domestic producers, such as US Customs and Border Protection (CBP) and the Commerce Department. The nations you target for selling or importing can have layers of regulations just as daunting as they are in the United States. Multinational trade agreements, treaties and laws at the national, state, provincial or municipal levels may apply to your activities and govern critical topics, including: Excise and other taxes Product classification and tariffs National support for domestic producers and exports Impediments to trade In addition to government regulation, entering new import or export agreements with businesses requires diligence....

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TTB and FDA Relax Restrictions on the Production of Hand Sanitizers by Alcohol Manufacturers

With the increasing pace of the spread of the Coronavirus (COVID-19) and the related emergent need to increase the available supply for hand sanitizer products across the United States, the Alcohol and Tobacco Tax and Trade Bureau (TTB), followed by the Federal Drug Administration (FDA), have relaxed requirements for certain alcohol producers to produce these products without first amending their existing permits or obtaining prior formula approval. On March 18, 2020, TTB came forward advising industry members that it has found it necessary and desirable to waive provisions of the internal revenue law to provide certain exemptions and authorizations for distilled spirits permittees to produce ethanol-based hand sanitizers to address the demand for such products during this time of national emergency. More specifically, TTB’s guidance provides: The exemptions are in effect through June 30, 2020. Alcohol fuel plants (AFPs) and beverage distilled spirits plants...

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TTB Relaxes Consignment Sale Restrictions in Wake of Coronavirus Cancellations

On Friday, March 13, 2019, in the wake of growing concerns and related mass cancellations of large events all across the United States, the federal Alcohol and Tobacco Tax and Trade Bureau (TTB) announced that it is relaxing federal restrictions on alcoholic beverage returns that might otherwise violate prohibitions associated with consignment sales. As a refresher, the Federal Alcohol Administration (FAA) Act 27 C.F.R., Part 11, Subpart D, and more specifically 27 C.F.R. § 11.31, provides that “it is unlawful to sell, offer to sell, or contract to sell products with the privilege of return for any reason, other than those considered to be ‘ordinary and usual commercial reasons’ arising after the product has been sold.” Sections 11.32 through 11.39 provide those circumstances that are considered “ordinary and usual commercial reasons” under the FAA, including: Defective products Discrepancies between the products ordered and delivered Products that may no...

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Florida Federal District Court Rules GRAS Regulation Preempts Florida Statute Criminalizing Ingredient

In an important ruling dismissing a proposed class action, the US District Court for the Southern District of Florida ruled that the US Food and Drug Administration’s (FDA’s) generally recognized as safe (GRAS) regulation preempts a Florida statute that criminalized adding grains of paradise to liquor. More specifically, the Court in Marrache v. Bacardi USA, Inc., 2020 US Dist. LEXIS 13668 (January 28, 2020), ruled that the Florida statute was preempted because it conflicts with the Federal Food, Drug and Cosmetic Act (FFDCA) and the FDA’s regulations (21 C.F.R. § 182.10) which establish that grains of paradise are GRAS. 2020 US LEXIS 13668, at *4. The case started when Florida resident Uri Marrache purchased a bottle of Bombay Sapphire gin at a Winn-Dixie store in Florida. After consuming the gin, Marrache filed suit under Florida’s Deceptive and Unfair Trade Practices Act, claiming that Bacardi (the producer of Bombay Sapphire) and Winn-Dixie had engaged in...

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Mississippi Supreme Court Rejects ‘Passage of Title’ DTC Theory

Last week, the Supreme Court of Mississippi handed down an opinion in Fitch v. Wine Express Inc., No. 2018-SA-01259-SCT. A state court decision on the rather dry subject of personal jurisdiction often merits little comment, but the Fitch opinion features an emphatic rejection of the legal theory relied upon by many direct-to-consumer retail alcohol sellers today. As a “control” state for wine sales, Mississippi law generally prohibits the importation, transportation and sale of alcoholic beverages (a term that includes wine) outside of the state’s monopoly control system. And, as in virtually every state, the retail sale of wine to consumers is reserved to state licensees and, in the case of control jurisdictions, the state itself. In 2017, the state investigated online wine retailers. While most did not accept orders for shipment to a location in Mississippi, the state found three online retailers that accepted such orders. After further investigation, the...

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Oklahoma Supreme Court Strikes Down New Distribution Statute as Unconstitutional

In a win for alcohol beverage suppliers, on Wednesday the Oklahoma Supreme Court issued an opinion in The Institute For Responsible Alcohol Policy v. State ex rel. Alcohol Beverage Laws Enforcement Comm’n. In a 5-4 ruling, the court struck down as unconstitutional a statute requiring the top 25 wine and spirits brands in the state, by volume, to be offered to all wholesalers without discrimination. The effect of the ruling is that a supplier of any brand of alcohol is free to choose its preferred or potentially exclusive distributor in the State of Oklahoma. As background, Oklahoma has historically prohibited suppliers of wine and spirits from having an exclusive distribution relationship with an Oklahoma wholesaler, and required suppliers to sell their products to any Oklahoma wholesaler desiring to purchase them. For those familiar with the concept of “franchise” laws in the alcohol beverage industry—which typically require suppliers and wholesalers to...

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