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
Trade Practices
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Legal and Policy Issues Surrounding Taprooms

Rapid growth in the number of small and independent breweries that rely on taproom sales has received a lot of attention—not all of it positive—across the beer industry. Until this unprecedented growth, taproom sales went largely unnoticed. Competing retailers, beer wholesalers, and even well-established craft brewers were pleased with steadily growing craft beer sales and consumer demand. As demand has leveled out and competition has increased, taprooms are receiving increased scrutiny. In an article published by The New Brewer, Art DeCelle addresses this disruptive change in a mature market and the unique combination of laws and policies that can oftentimes create confusion. Since each state licensing law authorizing brewery taprooms and brewpubs operations is different, he recommends that brewery owners are best served by gaining a full understanding of their state’s licensing requirements. He notes that some states follow the federal model, treating...

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7th Circuit Issues Lebamoff Opinion

As you likely have read in the trade press already, on Wednesday, November 28, 2018, the US Court of Appeals for the Seventh Circuit issued its opinion in Lebamoff v. Rauner. The opinion adds three judges of the Seventh Circuit to the collection of legal minds rejecting the notion that the dormant Commerce Clause non-discrimination principles applied by the Supreme Court in Bacchus (1984) and Granholm (2005) should be limited to laws discriminating against producers and products. Like other cases brought by Lebamoff and its legal team, this case involves a challenge to state laws that prohibit direct-to-consumer wine shipments by out-of-state retailers. Illinois, like many states, permits in-state retailers to deliver wine directly to Illinois consumers located anywhere in the state. The law, however, denies that same privilege to out-of-state retailers. This distinction, according to the plaintiffs, amounts to discrimination against out-of-state economic...

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What’s New in US Constitutional Law Developments

During the International Wine Association’s 2018 Conference, Marc Sorini presented on the latest law developments, including the Commerce Clause and First Amendment. The topic was made particularly timely by the Supreme Court’s September 27 decision to grant certiorari review of the Byrd v. Tennessee Wine and Spirits Retailers Association decision. View the full presentation.

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Recent Retailer Direct Shipping Opinion Illustrates Stakes in Upcoming Supreme Court Review

The recent US District Court for the Eastern District of Michigan opinion strikes down a Michigan statue and authorizes out-of-state retailers to sell and ship wine directly to Michigan consumers. Lebamoff Enterprises v. Snyder, E.D. Mich. Case No. 17-10191 (Sept. 28, 2018). More fundamentally, the Lebamoff decision underscores the stakes in the upcoming (as of September 27) Supreme Court review of the Sixth Circuit’s decision in Byrd v. Tenn. Wine and Spirits Retailers Ass’n. The Lebamoff case involves 2016 legislation that amended Michigan law to: (1) make it easier for in-state retailers to ship directly to consumers by employing third-party carriers and (2) prohibit completely the sale and shipment of alcohol beverages to Michigan consumers by out-of-state retailers. The plaintiffs include an Indiana retail chain, its owner and several Michigan wine consumers. The Lebamoff opinion first recaps the familiar dormant Commerce Clause analysis that: (a) asks...

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Latest Stage in Missouri Tied House First Amendment Litigation Could Change Economics of Industry Advertising

The latest development in a lengthy legal challenge to advertising restrictions in Missouri's tied house laws and regulations raises practical economic issues for the alcohol beverage industry and significant legal and policy issues for legislators and regulators at all levels of government. On June 28, Judge Douglas Harpool of the US District Court for the Western District of Missouri filed a decision in Missouri Broadcasters Association vs. Dorothy Taylor. The Missouri Broadcasters Association (MBA) is a trade association representing media outlets. Two licensed Missouri retailers were also plaintiffs in the lawsuit. Ms. Dorothy Taylor is the Supervisor of the Missouri Division of Alcohol and Tobacco Control (DATC). The basic issue in the case is whether several Missouri alcohol beverage advertising restrictions violate the plaintiffs' commercial speech rights protected by the First Amendment to the US Constitution. The June District Court decision follows...

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Son of Granholm Inches Closer

Two recent developments reinforce my expectation that the Supreme Court will need to clarify the scope of its 2005 Granholm v. Heald decision within the next few years. Granholm struck down state restrictions on the interstate sale and shipment of wine by wineries, where the state permitted in-state wineries to engage in such direct-to-consumer sales activities but withheld that privilege from out-of-state wineries. According to that decision, such facially-discriminatory laws are virtually per se unconstitutional under the so-called “dormant” Commerce Clause, and are not saved by the additional power that states have over alcohol sales under the 21st Amendment. The Granholm court also referred to the three-tier system as “unquestionably legitimate.” In the years since Granholm, lower federal courts have wrestled with the question of whether or not the Commerce Clause’s non-discrimination principle is limited to state laws imposing different rules on in-state...

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Five Issues That Impact Craft Brewers

In an article published by The New Brewer, Marc Sorini discusses five issues most likely to have a meaningful impact on craft brewers in the coming years, including: The Craft Beverage Modernization and Tax Reform Act’s (CBMTRA) new tiered excise tax rate structure, its extending benefits to foreign producers, and its authorization for brewers to transfer beer in bond between breweries of different ownership. The Sixth Circuit’s published opinion in Byrd v. Tennessee Wine and Spirits Retailers Association, affirming a decision finding that the “durational-residency” requirements imposed by Tennessee law for alcohol beverage retail licensees are unconstitutional under the “dormant” Commerce Clause. The TTB’s creation of a new unit within its Trade Investigations Division to focus on trade practice enforcement. The opinion in Mission Beverage Co. v. Pabst Brewing Co. from the California Court of Appeals, which found that “an existing distributor’s receipt of...

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FDA Extends Compliance Date for Updated Nutrition Facts Label

The Food and Drug Administration (FDA) is extending the compliance dates for updating the familiar Nutrition Facts labels, from July 26, 2018 to January 1, 2020, for manufacturers with $10 million or more in annual food sales. Manufacturers with less than $10 million in annual food sales will receive an extra year to comply – until January 1, 2021. FDA explained that after considering a range of stakeholder comments, there was a need for manufacturers to have additional time to make required label changes. The approximately 18-month extension accomplishes this goal and will provide sufficient time to transition to the new version of the Nutrition Facts label. Finally, FDA said it is committed to ensuring that all manufacturers have guidance to help implement the required label changes by the upcoming compliance dates and the additional time will help FDA achieve that objective.

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District Court Dismisses Pending Trade Practice Case, With Leave to Amend

This month, the United States District Court for the Northern District of California issued an opinion in Arena Restaurant and Lounge, Inc. v. Southern Glazer’s Wine and Spirits, No. 17-CV-03805-LHK. The Arena case, also called Nguyen after its original named Plaintiff, seeks to certify a class action against Southern Glazer’s for a wide range of allegedly fraudulent, deceptive, and otherwise illegal acts related to the sale and distribution of wine and spirits in California. The court’s recent order, issued on April 9 and amended on April 16, 2018, dismisses all claims brought by the Plaintiffs in their Second Amendment Complaint (SAC). Significantly, however, the court will allow the Plaintiffs to file an amended complaint within 30 days in an attempt to cure defects in many of the SAC’s claims. At the center of the Arena case are allegations that Southern Glazer’s engaged in practices such as selling to unlicensed persons and hiding such sales by recording...

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