TTB COLAs and Formulas

TTB Industry Circular 2018-2, dated March 26, 2018, expanded the list of allowable revisions for approved Certificate of Label Approval (COLA) applications. The three new allowable revisions are to:

  1. Add, delete, or change between TTB approved responsibility statements;
  2. Add, delete, or change between TTB approved sustainable farming/environmental/eco-friendly claims; and
  3. Add, delete, or change between TTB

On February 5, 2018, the US District Court for the Eastern District of Missouri issued an opinion in one of the many false advertising class actions brought against the industry in the past five years.

Penrose v. Buffalo Trace Distillery, E.D. Mo. 4:17-cv-00294-HEA, involves the labeling of Old Charter bourbon. For years, Old Charter sold an 8-year-old version and a 12-year-old version, with their labels very prominently displaying “8” and “12” (respectively) in several places. According to the complaint, in January 2014 Old Charter “8” was re-formulated to use less-aged bourbon, described by the court as “non-age stated” or “NAS” bourbon. The labels, however, continue to prominently display the number “8” in the same manner as the prior label. In addition, while the label previously stated “aged 8 years,” the NAS bourbon’s label states “gently matured for eight seasons.” The court’s opinion catalogues a number of alleged complaints by consumers that they were deceived into purchasing the NAS product on the mistaken belief that the bourbon was still aged for eight years. Significantly, the complaint alleges that the price for Old Charter “8” remained the same after the reformulation.
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Early this morning, both houses of Congress approved the “Bipartisan Budget Act of 2018,” complex legislation that includes important modifications to an arcane law known as the “rum cover over,” which is an important revenue source for the Commonwealth of Puerto Rico and the US Virgin Islands (USVI).

The temporary excise tax relief provided to distillers in the 2017 federal tax reform law will not diminish the amount of federal excise tax revenue covered over to the treasuries of Puerto Rico and the USVI. The 2017 tax reform law included a two year reduction in the federal distilled spirits excise tax rate from $13.50 per proof gallon to $2.70 per proof gallon on the first 100,000 proof gallons of distilled spirits, and $13.34 per proof gallon on the next 22,130,000 proof gallons produced by each distillery or each controlled group of distilleries. The 2018 Budget Act treats all rum subject to the rum cover over as if it is subject to the full $13.50 per gallon excise tax rate.
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Last week in its regular newsletter, Alcohol and Tobacco Tax and Trade Bureau (TTB) announced updates to the Fall edition of the semi-annual Unified Agenda of Federal Regulatory and Deregulatory Actions (Regulatory Agenda). Like other federal agencies, TTB uses the Regulatory Agenda to report on its current rulemaking projects.

In the updated agenda, a few new items have been added, and many expected publication dates of Notices of Proposed Rulemaking (NPRMs), Advanced Notices of Proposed Rulemaking (ANPRMs) and Final Rules have changed. As always, readers should recognize that TTB rulemaking moves very slowly, and the Agency often does not meet the aspirational dates published in the Regulatory Agenda.
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This post does not constitute tax advice. It summarizes changes in alcohol beverage excise tax laws to assist industry members in planning to implement the changes. Excise tax calculations and liability must be determined for each taxpayer based on numerous variables.

The new tax law formerly referred to as the Tax Cuts and Jobs Act of 2017, provides a temporary reduction in alcohol beverage excise taxes for US brewers, winemakers, distillers and beverage importers. Temporary tax relief is available for beer, wine and spirits removed from a US manufacturing facility or released from Custom’s custody after January 1, 2018, and prior to December 31, 2019. Several provisions of the new law will require the Alcohol and Tobacco Tax and Trade Bureau (TTB) to quickly promulgate new regulations.
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In the past three years, TTB has approved an increasing number of certificate of label approvals (“COLA”) for hemp-flavored vodka, from Mill Six’s hemp, white tea and ginger flavored vodka to Olde Imperial Mystic’s hemp infused vodka. Distillers have designed labels with green smoke-like images and psychedelic sixties-style lettering to hint at their cultural connection

It’s hard to deny that marijuana has a cultural connection with craft beer, or at least with substantial segments of the craft brewing community. Many craft brewers have signaled to their fans that they know a thing or two about the rituals and lingo of marijuana consumption. But with the legalization of recreational cannabis by

On November 7, the US Food and Drug Administration (FDA) published the latest in a series of industry draft guidance documents to help implement menu labeling and nutrient disclosure regulations applicable to chain restaurants (Draft Guidance). FDA guidance documents are advisory in nature and represent the views of the FDA at a given point in

Last month the US District Court for the Central District of California issued an order in the Shalikar v. Asahi Beer U.S.A., Inc. false advertising class action case. Like many similar cases, Shalikar alleges that the plaintiffs, as representatives of a purported class of consumers, were deceived into paying more for Asahi beer because they believed the beer was made in Japan when, in fact, the beer sold in the United States was produced in Canada. In the recent order, the court denied Asahi’s motion to dismiss for failure to state a claim (a 12(b)(6) motion).

The Shalikar plaintiffs brought their case under California’s Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law, and also pled common-law claims for breach of implied warranty, fraud, intentional misrepresentation and unjust enrichment. Asahi beer that is sold in the United States is brewed in Canada, and each label states “Brewed and Bottled under Asahi’s Supervision by Molson Canada, Toronto, Canada.” Each label also states “Product of Canada” as required by US customs regulations. Plaintiffs alleged, however, they were deceived into paying more for the product because the labels and packaging use the word “Asahi,” which means “morning sun” in Japanese, and the label and packaging employs Japanese characters in several places. Plaintiffs also produced a survey purporting to show that the beer’s packaging led 86 percent of the respondents to believe that the product was brewed in Japan.
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Alcohol and Tobacco Tax and Trade Bureau (TTB) recently began testing a new version of its Permits Online system. The new interface aims to provide several big improvements for users. Among them:

  1. Currently certain types of amendments must be filed individually, forcing industry members to wait for approval of their first amendment to submit their