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
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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 Label Approval System Survives First Amendment Challenge from DC Brewery

I. Factual Background During the 34-day government shutdown occurring between December 2018 and January 2019, producers and importers of beer, wine and distilled spirits needing label approval to bring new products to market were forced to wait until the shutdown was resolved, when TTB could begin again to process COLA applications. The difficulties presented by this situation included the prospect of needing to destroy valuable, perishable inventory. Unable to obtain a COLA due to the shutdown, Atlas Brew Works (Atlas) filed suit in January in the US District Court for the District of Columbia, challenging the constitutionality of the COLA system. Atlas alleged that the requirement to obtain label approval violates the First Amendment, since, in the event of a government shutdown, the COLA requirement amounted to a prior restraint on protected speech. As the court explained in its opinion, Atlas’s argument boiled down to the claim that “a law that prohibits...

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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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Mississippi Supreme Court Ruling Reinstates Claims Against Anheuser-Busch, Mitchell Distributing

I. Introduction On May 23, the Mississippi Supreme Court published its opinion in the case of Rex Distributing Company v. Anheuser-Busch, LLC, et al. The ruling partially reverses the trial court’s decision to dismiss all of Rex’s claims against Anheuser-Busch and rival distributor Mitchell Distributing Company (Mitchell). The ruling will allow Rex Distributing Company (Rex) to proceed with its lawsuit alleging that Anheuser-Busch violated Mississippi’s Beer Industry Fair Dealing Act (BIFDA) by refusing to approve Rex’s attempt to sell its distribution rights to Anheuser-Busch products. In addition, the ruling will allow Rex to proceed with a claim against Mitchell for tortious interference and civil conspiracy. The ruling clarifies Mississippi beer franchise law by limiting the rights of beer suppliers in the context of distributor transfers, effectively rendering Anheuser-Busch’s “match and redirect” contractual provisions unenforceable under Mississippi’s...

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Customs and Border Protection Interim Regulations for Refunds of Excise Taxes on Imported Beer, Wine and Spirits

US Customs and Border Protection (CBP) expects to publish tomorrow Interim Regulations authorizing the refund of beer, wine, and spirits excise taxes in connection with the 2017 tax reform act’s reduced rates and credits. The Interim Regulations specify: Claims must be filed with the National Revenue Center of the Alcohol and Tobacco Tax and Trade Bureau (TTB). Claims must be filed on TTB Form 5620.8. A separate claim is required for entries made at each US port or internal revenue region. The interim regulations will be effective on the date of publication (expected to be August 16, 2018). CBP also initiated a 60-day comment period that will provide interested parties with opportunities to raise questions or identify issues that are not addressed in the interim regulations. Please let us know if you have any questions about this development.

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TTB Issues Further Alcohol Excise Tax Guidance

On Friday, March 2, 2018, Alcohol and Tobacco Tax and Trade Bureau (TTB) issued its next round of guidance concerning the alcohol excise tax provisions of the recently enacted tax law (Tax Act). TTB has not yet addressed some of the biggest ambiguities contained in the Tax Act, such as (i) how foreign producers can assign excise tax credits to US importers and (ii) how the “Single Taxpayer Rule” will work. Nevertheless, TTB continues to make incremental progress in interpreting the Tax Act. The March 2 guidance features the following: A new TTB Industry Circular, No. 2018-1 (March 2, 2018), announces the creation of a temporary “alternate procedure” (aka, variance) allowing wine producers to tax determine and tax pay wine of the winery’s own production stored untaxpaid at another bonded wine cellar as if the wine were removed from the producing winery’s bonded premises. Prior law allowed wineries eligible for tax credits under the small winery tax provisions...

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Texas Court Affirms Constitutionality of Statute Prohibiting Brewers from Selling Distribution Rights to Their Products

Texas craft beer distributors received an early Christmas present in 2017. On December 15, 2017, the Texas Court of Appeals for the Third District, at Austin issued an opinion in Texas Alcoholic Beverage Commission v. Live Oak Brewing Co., et al. (NO. 03-16-00786-CV) in which the court overturned a lower court’s determination that a statute prohibiting self-distributing brewers from selling the distribution rights to their products was unconstitutional under the Texas Constitution. In 2014, Live Oak Brewing Co., Revolver Brewing and Peticolas Brewing Co. (all Texas-based craft breweries that self-distribute) joined together in a suit against the Texas Alcoholic Beverage Commission (Commission) challenging the constitutionality of a provision in Texas’ alcohol beverage control law that prohibits brewers from selling the distribution rights to their products. The provision at issue, Tex. Alco. Bev. Code § 102.75(a)(7), provides that it is unlawful for a brewer...

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Mississippi Court Dismisses Multiple Claims in Distributor Termination Case

On December 15, 2017, a Mississippi trial court issued a series of orders dismissing a substantial number of the claims brought in Rex Distributing Company v. Anheuser-Busch et al., 2nd Cir. Court No. 24C11:17-cv-00033 (Harrison Circuit Court – Gulfport). In 2016, Mississippi beer distributor Rex Distributing (Rex) agreed to sell its business to Adams Beverage (Adams) for $50.5 million. Anheuser-Busch (A-B)—by far Rex’s largest supplier—then exercised the “match and redirect” right contained in the distribution agreement between A-B and Rex, directing Rex to sell its business to Mitchell Distributing (Mitchell) on the same terms and conditions as the proposed Rex-Adams transaction. D.G. Yuengling and Son (Yuengling) refused to allow the sale of its brand distribution rights in Rex’s territory to Mitchell, citing Mitchell’s previous refusal to carry Yuengling beer when Yuengling first entered the state. Rex consummated the sale to Mitchell for $3.1 million...

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Excise Tax Relief for Breweries, Wineries and Distilleries

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. The new law also modifies existing sections of federal excise tax laws so that commonly owned manufacturers and importers get "one bite at the apple" for each beverage...

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TTB Issues Guidance on Application of Consignment Sales Regulations to Freshness Dating and Returns from Retailers

On September 29, 2017, the federal Alcohol and Tobacco Tax and Trade Bureau (TTB) issued Ruling 2017-2, which updates and supersedes older agency guidance on allowable returns of beer and malt beverage products that contain "pull dates" or other indicators of product freshness. The Federal Alcohol Administration (FAA) Act includes a general prohibition on "consignment sales," 27 USC 205(d). Congress believed that all transactions should be "bona fide" sales. Id. The intent was to prevent a wide range of unscrupulous practices that might occur if manufacturers and wholesalers furnishing alcohol beverages to retailers on consignment or with the right of return. The FAA Act prohibition on consignment sales does not apply to "transactions involving solely the bona fide return of merchandise for ordinary and usual commercial reasons arising after the merchandise has been sold." Id. TTB regulations provide an extensive list of reasons that a manufacturer or...

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