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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Congressional Committee Takes Historic Step Toward Decriminalizing Marijuana

For the first time in American history, a congressional committee approved a marijuana legalization bill. On November 20, 2019, after more than two hours of debate, the House Judiciary Committee approved the Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019 (H.R. 3884) in a 24 to 10 vote. If the MORE Act becomes law, it would effectively end the federal prohibition of cannabis in the United States. Currently, marijuana remains a Schedule I drug, alongside heroin and LSD, under the Controlled Substances Act. Schedule I drugs are those that the federal government considers to have no proven or acceptable medical use and a high abuse potential. The MORE Act, if passed into law, would remove marijuana from Schedule I. The House Judiciary Committee’s actions are particularly significant on the heels of Veterans Day. Under current federal law, doctors at the VA can discuss marijuana use with patients, but they cannot recommend it, even in states...

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House Judiciary Committee to Consider De-Scheduling Bill

This Wednesday, November 20, the House Judiciary Committee will hold a markup of H.R. 3884, the Marijuana Opportunity Reinvestment and Expungement Act (MORE Act). The bill’s sponsors and advocates for cannabis normalization say the legislation is the most comprehensive ever considered by Congress. In fact, due to the bill’s sprawling reforms, it was referred to eight separate committees for consideration according to their discrete jurisdictions. The Judiciary Committee will be the first to consider the bill and the Committee members will have opportunities to amend it. Rep. Jerrold Nadler (D-N.Y.) is the bill’s lead sponsor and the chairman of the Judiciary Committee. He introduced the bill in July and will preside over Wednesday’s markup. Fifty-four Democrats and one Republican have cosponsored the MORE Act. The most significant provision of the MORE Act decriminalizes marijuana by removing it from the Controlled Substances Act Schedule. The bill also...

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USDA Publishes Proposed GMO Labeling Regulations

The Agricultural Marketing Service of the US Department of Agriculture (USDA) recently published a proposed rule containing regulations to implement the National Bioengineered Food Disclosure Standard mandated by Congress in 2016. See 83 Fed. Reg. 19860 (May 4, 2018). The proposed regulations would govern the labeling of raw agricultural products and packaged foods whose labeling is governed the federal Food, Drug & Cosmetics Act, including wines below 7 percent alcohol by volume and non-malt beer (e.g., “hard seltzers”). The proposed regulations would not directly apply to alcohol beverages whose labeling is governed by the Federal Alcohol Administration Act, including all distilled spirits, wines containing 7 percent alcohol by volume or greater, and beer containing malted barley and hops. Nevertheless, the Alcohol and Tobacco Tax and Trade Bureau may look to the bioengineered food disclosure regulations as persuasive guidance in developing its own...

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Additional Rum Cover Over for Puerto Rico and the US Virgin Islands Approved in 2018 Budget Legislation

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...

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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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The Intersection of Spirits and Marijuana

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 to marijuana. As more states have legalized recreational cannabis, distillers have been thinking more ambitiously about combining their distilling business with one or more aspects of the emerging marijuana business. Read the full article. Originally published in Artisan Spirit: Winter 2017.

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Category Management Practices

Today’s off-premises retail landscape is dominated by large chains that rely on practices generally known as category management to maximize the profitability of their stores. Some of the activities falling under the category management umbrella require close interaction between the retailer and the producers, importers, or distributors supplying them product. As a result of this interaction, the federal Alcohol & Tobacco Tax & Trade Bureau (TTB) last year issued a ruling indicating that industry members’ participation in category management activities could result in a violation of the tied-house provision of the Federal Alcohol Administration (FAA) Act and the TTB’s corresponding tied-house regulations. Continue Reading Originally published in The New Brewer, September/October 2017.

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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,...

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