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A Toast to Celebrate Women’s History Month

As we celebrate Women’s History Month, our women-led Alcohol Legal Team would like to make a toast to the future and to the women who have paved the way.

Our team has worked in-house at some of the most well-known alcohol companies in the world. Led by Alva Mather, partner and head of the Alcohol Regulatory & Distribution Group, our industry-leading women work together to provide businesses with innovative insight and legal strategies needed to navigate the complex regulatory landscape.

Get to know our team of 10 – some of their favorite spirits – and join us in being inspired by what they do for the industry.





Treasury Responds to Biden Administration Executive Order with Report, Recommendations to Increase Alcohol Industry Competition

On February 9, 2022, the US Treasury Department (Treasury) released a report with recommendations for how the Tobacco Tax and Trade Bureau (TTB), Federal Trade Commission (FTC) and Department of Justice (DOJ) can help drive competition in the beer, wine and spirits markets by stepping up conduct enforcement, adopting creative and nuanced theories of harm in merger reviews and implementing new regulations to decrease the burden on smaller industry participants.

TREASURY REPORT SUMMARY

  • Treasury released a report entitled “Competition in the Markets for Beer, Wine, and Spirits” in response to President Biden’s July 2021 Executive Order 14036 that assesses the current market structure and conditions of competition, including an assessment of threats to competition and barriers to entry.
  • Treasury’s report is based, in part, on hundreds of comments received from industry participants and paints a detailed picture of the current landscape for alcohol beverage distribution and sale across the United States.
  • The report focuses on how changes could benefit smaller participants in the beer, wine and spirits industry. Given that the stated goal of Executive Order 14036 was, in part, “to reduce the trend of corporate consolidation, increase competition, and deliver concrete benefits to America’s consumers, workers, and small businesses,” it is not surprising that the report is focused on analyzing how a shift in enforcement priorities may be able to help eliminate impediments that make it difficult for smaller producers, distributors and retailers to compete with the larger players in the industry. Treasury specifically recommends that TTB cease bringing cases against “smaller industry members whose conduct does not have obvious effects on competition” (i.e., the investigation several years ago against small wineries for ‘consignment sales’).
  • Treasury makes recommendation on enforcement priorities for FTC, DOJ and TTB. To address the market concentration concerns that the report describes, Treasury makes recommendations regarding how the TTB, FTC and DOJ should focus investigations and enforcement of mergers and conduct in each of the three tiers of the beer, wine and spirits markets: producers, distributors and retailers.
  • Many of the recommendations are likely to be pursued given that the Attorney General and FTC Chair were consulted. The report and its recommendations should be considered carefully as a clear indication of the kinds of issues that FTC and DOJ are likely to focus their investigations on in beer, wine and spirits because the report was developed “in consultation with the Attorney General [DOJ] and the Chair of the FTC.”

TREASURY’S KEY RECOMMENDATIONS

  • While there are myriad competition-focused suggestions in the report, we think the areas that are most likely to receive increased focus from FTC, DOJ and TTB are the following:
    • Anticompetitive Conduct: Treasury noted that FTC, DOJ and TTB have generally not brought any conduct cases on many theories of harm for which myriad complaints were received. Treasury suggests that TTB should act on [...]

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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.




DOJ Attorneys Explain New Cannabis Enforcement Plans at Summit

US Attorneys, state officials and cannabis industry representatives met in Portland, Oregon on February 2 to discuss how to enforcement will change after Attorney General Jeff Sessions announced changes to Department of Justice (DOJ) policies on the prosecution of marijuana cases. The answer: a crackdown on illegal overproduction in states where cannabis production is legal and a focus on reducing the amount of cannabis being diverted to states where it is still illegal.

On January 4th, the DOJ released a memo that directed all US Attorneys to enforce “the laws enacted by Congress” and “follow well-established principles when pursuing prosecutions related to marijuana activities.” The memo rescinded the Cole Memo and other DOJ guidance that reduced the likelihood of federal prosecution of cannabis businesses in states that permit medical and recreational cannabis use. After the DOJ announcement, the cannabis industry was unsure of how these changes would affect cannabis operations legal under state law and uneasy about the future of the industry. (more…)




RICO Madness: Marijuana Operations Face RICO Challenges in Federal Courts

Don’t look now cannabis businesses, but your neighbors may be raising a racket. A June decision by the 10th Circuit Court of Appeals in Denver may have opened the doors to new legal challenges to marijuana operations: civil suits under the Racketeer Influenced and Corrupt Organizations Act (RICO).

RICO was originally intended to go after the mafia and other organized crime, but its broad language means it can be applied in other settings. RICO allows a private citizen to sue “racketeers” for damage to business or property due to the racketeer’s illegal activities or activities that were conducted under his guidance. Since marijuana remains illegal under federal law, the production or distribution of marijuana is considered racketeering.

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Trump Administration Indicates Plans to Increase Enforcement of Recreational Marijuana Laws

To follow up on our prediction last month that the Trump Administration may take a more aggressive stance toward the legalization of marijuana, White House Press Secretary Sean Spicer stated during the February 23 daily briefing that he anticipates greater federal enforcement of marijuana laws.  Spicer emphasized the distinction between medical marijuana (the legalization of which President Trump does not oppose) and recreational marijuana.  In discussing the latter, Spicer invoked the country’s opioid addiction crisis, suggesting a link between recreational marijuana use and such other drugs.

Spicer hinted that the Justice Department’s enforcement of federal drug laws would extend to the nine jurisdictions that have legalized recreational marijuana, potentially putting at risk the schemes many of these states have created–or are in the process of creating–to regulate marijuana.  As of today, the recreational use of marijuana is legal in Alaska, California, Colorado, the District of Columbia, Maine, Massachusetts, Nevada, Oregon and Washington.  (Note:  Congress has blocked the DC government from using funds to actually implement a system to regulate recreational marijuana, so although technically legal, there is currently no “market” for recreational marijuana in DC.)

If President Trump’s Justice Department does begin to pursue more active enforcement of marijuana laws in states that have legalized marijuana, it may meet pushback from Congress.  Just last week, four congressmen announced the formation of the Congressional Cannabis Caucus (the Caucus), a bipartisan organization seeking to change the federal government’s attitude toward legalized marijuana and, notably, to leave the legalization question to the states.  In support of this mission, earlier this month Representative Dana Rohrabacher (R-CA), a member of the Caucus, introduced a bill (HR 975) in the House that would prevent federal enforcement of the Controlled Substances Act (the Act) in states that have legalized the recreational use of marijuana.

Likely by design, the bill’s introduction occurred just a day before the confirmation of Jeff Sessions, a vocal opponent of marijuana legalization, as Attorney General.  The bill would add a new section to the Act expressly stating that the Act’s provisions concerning marijuana do not apply to persons acting in compliance with state law regarding the possession or sale of marijuana.  The bill, titled the “Respect State Marijuana Laws Act of 2017,” has been referred to the House Judiciary and Energy and Commerce Committees.

Of course, whether the bill will gain enough support to pass in Congress and survive a potential Trump veto remains to be seen.  Nevertheless, the timing of the bill’s introduction, the bipartisan support it has garnered to date (half of its current cosponsors are Republicans), and the announcement of the Caucus indicate a growing tension between Congress–including some members of President Trump’s own party–and the Administration with respect to the enforcement of federal marijuana laws.




The Trump Administration’s View on Marijuana: Reading the (Tea) Leaves

The incoming Trump Administration may usher in a more hostile climate to state efforts to legalize the sale and distribution of marijuana and products that contain the drug. The Obama Administration opposed the federal legalization of marijuana, but its enforcement approach, which focused on persons and entities whose conduct interferes with eight drug enforcement priorities, is outlined in a memorandum. This guidance does not have the force and effect of law, which means that the incoming Administration may replace it with a new guidance addressing prosecutorial discretion in marijuana cases. Below we examine the positions taken by President-elect Trump and his nominee for Attorney General, Senator Jeff Sessions, on (1) medical and recreational marijuana, (2) states’ rights, (3) attitudes toward marijuana use, and (4) enforcement of federal drug laws.

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DC Council Passes Amendments to Alcohol Beverage Code

In early December 2016, the Council of the District of Columbia (the Council) unanimously passed the Omnibus Alcoholic Beverage Regulation Amendment Act of 2016 (the Act). The Act amends a number of provisions of DC’s alcohol beverage laws, several of which particularly affect DC manufacturers, brew pubs, wine pubs and distillery pubs.

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Issues to Consider When Buying or Selling a Craft Distillery

One of the last things anyone thinks about when embarking on a new, exciting venture (like opening their own distillery), is how things will come to an end. The fun is in the journey, in the craft – and those are rightfully the focal points for entrepreneurs running their own craft distilleries. But, inevitably, the time comes for the next adventure, the next enterprise, the next journey. An entrepreneur may have to recoup the investments they have made in their business or transfer that business to the next generation to carry it forward. No matter the driving force, there comes a time in the life cycle of every business that requires an entrepreneur to consider a sale or some other form of transaction.

This article, originally published in the Winter 2016 issue of Artisan Spirit, addresses several issues that can arise when buying or selling a craft distillery.




US Supreme Court Asked to Clarify the Interaction Between the 21st Amendment and the Commerce Clause

The Texas Package Stores Association has asked the US Supreme Court (via a “Petition of Certiorari”) to hear a case that could clarify the interaction between the 21st Amendment and the non-discrimination between states principle of the “dormant” Commerce Clause.

The case arose in Texas, where the Court of Appeals for the Fifth Circuit ultimately held that the Supreme Court’s Granholm v. Heald (2005) decision did not limit the reach of the Commerce Clause in alcohol cases to situations where a state discriminates against producers or products. Decisions by two other federal Court of Appeal’s Circuits (the Second and the Eight) have expressly limited Granholm’s reach to discrimination against producers and products. Thus, the Texas Package Stores Association would like the Supreme Court to reverse the Fifth Circuit and explicitly limit the non-discrimination principle of Granholm to cases involving alcohol products and producers.

The Supreme Court hears only a small fraction of the cases brought before it on a Petition of Certiorari, so the chances that the Supreme Court ultimately reviews the Fifth Circuit’s decision remain low. Nevertheless, the existence of a “split” of opinion between different federal Courts of Appeal increase the chances of Supreme Court review.




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