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
General Interest
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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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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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McDermott’s Marc Sorini Named a 2019 NLR ‘Go-To Thought Leader’

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...

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Cannabis and Hemp Update

Cannabis legalization receives widespread popular support. According to opinion polls, more than two-thirds of Americans support full legalization—a steep rise in support considering that as recently as 2005, almost two-thirds of Americans opposed legalization. The country appears on the path to full cannabis legalization, but until that time, citizens and companies should be aware of the legal risks involved in entering the cannabis space. Access the full article. Originally published in The New Brewer, July/August 2019.

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Implications of the Supreme Court’s Tennessee Retailers Decision

As virtually everyone in the US alcohol beverage industry knows, last week the US Supreme Court handed down its opinion in Tennessee Wine and Spirits Retailers Assn. v. Thomas, S.Ct. No. 18-96 (June 26, 2019). Now that over a week has passed since the release of that decision, it’s time to reflect on what it means and what is coming next.  1. Background Tennessee law imposes a two-year durational residency requirement on applicants for a license to operate a retail liquor store. (Two additional provisions struck by the lower courts—one ostensibly requiring 10 years of residency to renew a license and the other mandating that every shareholder of a corporate applicant be a Tennessee resident—were not defended by any party and therefore not at issue in the Supreme Court.) Two applicants that did not meet the residency requirements, one an affiliate of US retail giant Total Wine, sought licensing. The trade group for Tennessee’s liquor retailers, the Tennessee...

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Data Breach: How to Prepare for What Experts Have Deemed Is Inevitable

Data security experts often say there are two types of businesses: those that have been hacked and those who will be hacked. Many small business owners believe they are too small to attract a hacker or fall victim to a breach, but this is not true. Given the costs and broad reach of data breaches, small businesses must take a proactive role in preparing themselves for a breach and mitigating its effects. A small business can take practical steps to better protect itself and its brand from the effects of a data breach. Read the full article. Originally published in Artisan Spirit: Summer 2019.

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24th Annual Wine, Beer & Spirits Law Conference

On September 16–17, CLE International will host the 24rd Annual Wine, Beer & Spirits Law Conference in Charlotte, North Carolina. Those attending will include the alcohol beverage industry’s leading practitioners, including in-house counsel for producers, distributors and retailers, as well as industry lawyers and state administrators. Conference topics include: Updates on TTB developments and trends An overview of recent developments in alcohol trade practice and trademark law The significance of regulatory compliance, and the state of data security and ownership Updates on the cannabis industry, including the latest legalization efforts and how it could affect the alcohol beverage industry McDermott partner Marc Sorini serves as co-chair for the event and will also present. Other McDermott presenters will be Michael Kimberly and Anthony DeMaio. Click here for the full agenda and registration information.

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Winds of Change Blowing for Craft Brewers

For those who follow developments in the law and craft brewing with equal passion, every year has its share of substantial issues. This year has been no exception, with a pending Supreme Court case; a substantial upswing in federal trade practice enforcement activity; a massive rewrite of US Tax and Trade Bureau (TTB) labeling and advertising regulations; and prospects for extending the biggest cuts in the excise tax on beer since the repeal of Prohibition. As these developments play out over the next year, we may see changes translate into the marketplace. Find out what you can expect. Access the full article. Originally published in The New Brewer, May/June 2019.

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TTB Spring 2019 Updates to Semi-Annual Regulatory Agenda

The spring edition of the federal government’s semi-annual Unified Agenda of Federal Regulatory and Deregulatory Actions (Regulatory Agenda) has been published. Like other federal agencies, the Alcohol and Tobacco Tax and Trade Bureau (TTB) uses the Regulatory Agenda to report on its current rulemaking projects. The Regulatory Agenda provides glimpses into TTB’s policy focus and aspirations. But, readers should recognize that TTB rulemaking moves very slowly, and the Agency often does not meet the aspirational dates published in the Regulatory Agenda.  The updated Regulatory Agenda lists the following projects of interest: Wines, Distilled Spirits and Malt Beverages In terms of importance, the list must begin with TTB Notice 176—the Notice of Proposed Rulemaking (NPRM) to “modernize” the labeling and advertising regulations applicable to all three commodities. Comments on Notice 176 are due on or before June 26, 2019. Three separate entries continue to...

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Congress Can Open Financial Institutions to Legal Cannabis Industry with SAFE Banking Act

Federal statutes create risk for banks that want to operate in the cannabis space. Banks face the threat of civil actions, asset forfeiture, reputational risk, and even criminal penalties if they do business with customers in the cannabis industry. Further, because most banks will not touch cannabis money, the growers, processors, and retailers in the industry must often operate on a cash-only basis. The Internal Revenue Service has even had to build “cash rooms” to accommodate taxes paid by legal cannabis companies. Access the full article.

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