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In the state of Nevada, where beer wholesalers have deep political connections, self-distribution for small brewers has always been a non-starter. But craft breweries in the state are making a push for a small step forward in a bill that would allow craft breweries to move beer that is brewed at one location to their own off-site taprooms or tasting rooms without having to first sell it to a distributor.
The Illinois Craft Brewers Guild has filed legislation seeking to legalize direct-to-customer shipping for craft breweries while in New Mexico similar legislation has also been introduced in the state legislature.
Texas lawmakers have proposed legislation to allow direct-to-consumer (DTC) shipping for breweries in the state in the latest effort by craft brewers to seek parity with wineries, which are allowed DTC in most states across the country.
A bill in California supported by the Distilled Spirits Council (DISCUSS) would allow retailers with a beer and wine license to also sell spirit-based RTD’s, a move which would further blur the line that has traditionally existed between spirits and beer and wine.
In a trend that may be picking up momentum across the country, Washington state legislators are considering a bill that would lower the blood alcohol limit from 0.08 to 0.05.
Makers of RTD’s have been increasingly active in lobbying state legislators to lower taxes on the ready to drink cocktails. Their argument is that lower taxes will benefit the consumer by lowering the retail price.
But a recent analysis by Public Sector Consultants shows that in two states where the RTD tax was lowered, retail prices increased.
Starting January 1, 2023, changes to the Craft Beverage Modernization Act (CBMA) will require foreign producers of beer, wine, and distilled spirits to register with the Alcohol and Tobacco Tax and Trade Bureau (TTB) before their US importers can take advantage of reduced tax rates or credits on the imported products. CBMA tax benefits are limited in quantity, and foreign producers may only assign a certain number of benefits to their US importers for each category of product imported.
The UK government has cancelled a plan to freeze the duty tax on alcohol, less than a month after announcing the policy. Just last month the UK government said it would abolish a proposed increase in duty rates for beer, cider, spirits and wine and instead proposed a temporary measure to reduce the duty on some types of alcoholic beverages. The freeze had been due to take place in February 2023.
UK’s newly appointed chancellor Jeremy Hunt stated yesterday that the freeze would no longer take place, saving the government (US)$671 million a year. The tax on alcohol duty will now rise in line with inflation, as measured by the retail price index (RPI), currently at 12.3%.
The announcement was met with anger by UK alcohol industry bodies. According to an article in Just Drinks, British Beer & Pub Association CEO Emma McClarkin called the move “a huge blow to brewers and pubs”, adding the relief would have helped “keep a lid on spiraling costs and keep the price of pint affordable for pub goers this winter.”
The UK government is abolishing a proposed increase in duty rates for beer, cider, spirits and wine and instead proposed a temporary measure to reduce the duty on some types of alcoholic beverages.
The announcement was made in a mini-budget delivered by UK Chancellor of the Exchequer Kwasi Kwarteng, during which the government detailed its plans to cut taxes and provide relief to inflation hit business. Kwarteng said that the government will extend draught relief to cover smaller kegs of 20 litres and above to help smaller breweries.
More details on the story here.
Last July the New Jersey Division of Alcoholic Beverage Control (ABC) released new restrictions on breweries in the state such as limiting the number of events a taproom can host annually, placing a cap on the number of special events a brewery can hold and prohibiting food trucks at breweries among other restrictions.
Last week, Death of the Fox Brewing, in Clarksboro, NJ, filed a lawsuit against the ABC in a state appellate court contending that the state is unjustly limiting breweries’ rights to free speech by limiting the amount of advertising they can do. The brewery also claims that the ABC didn’t follow the proper procedure to enact the rules, like going to the state legislature for approval and holding a public comment period as codified in the state law.
More on the story here.
In what could be a pivotal and landmark court case, three brewers in Washington state have filed a lawsuit against the state of Oregon seeking to ship beer directly to consumers (DTC) and self-distribute to retailers in Oregon.
The three breweries filing the suit are Mirage in Seattle, Vancouver-based Fortside Brewing Co. and Garden Path Fermentation in Burlington.
The well-known “Granholm decision” (Granholm v. Heald, 544 U.S. 460), in 2005, was a court case decided by the US Supreme Court which ruled that laws in New York and Michigan that permitted in-state wineries to ship wine directly to consumers but prohibited out-of-state wineries from doing the same were unconstitutional.
In response to petitions and industry member requests, the Alcohol Tabaco Tax and Trade Bureau (TTB) is proposing to establish a standard of identity for American single malt whisky.
In Notice No. 213, Proposed Addition of American Single Malt Whisky to the Standards of Identity for Distilled Spirits, The TTB proposes to amend the regulations in 27 CFR part 5 that set forth the standards of identity for distilled spirits to include “American single malt whisky” as a type of whisky that is a distinctive product of the United States.
Under the proposal the product must be distilled entirely at one U.S. distillery, and must be mashed, distilled, aged in the United States. The product also must be sourced from a fermented mash of 100% malted barley, at a distillation proof of 160° or less, and stored in oak barrels not exceeding 700 liters. In addition, allowable coloring, flavoring, and blending materials would be permitted.
The New Jersey Division of Alcoholic Beverage Control (ABC) has released long-awaited new restrictions on breweries in the state, shoving craft brewers back to the past by imposing new restrictions on their businesses. The new ABC ruling places restrictions on the number of events a taproom can host annually, puts a cap on special events a brewery can hold, prohibits food trucks at breweries and even prohibits a brewery from selling coffee at taprooms. There are a total of 18 new restrictions that breweries must now comply with.
The ruling has been years in the making and the final outcome was delayed by the pandemic. It’s a complicated and divisive issue, with bars and restaurants on the opposite side as breweries. On-premise alcohol license holders such as bars, taverns and restaurants pay a hefty license fee, upwards of $7,000 per location, while beer manufacturers pay much less. Many in the restaurant trade believe that the popularity of brewery taprooms dilutes the value of their liquor licenses.
There was talk late last week that the New Jersey legislature may bring forward legislation to overrule or modify the ABC directive, but in the meantime, breweries in New Jersey will be forced to curtail many business practices they have been using for years.
The Alcohol and Tobacco Tax and Trade Bureau (TTB) is continuing its effort to streamline the licensing and permitting process for alcohol beverage industry members. The latest TTB rulemaking proposal would streamline much of the qualification requirements for Brewer’s Notices as well as cut back on the requirements for reporting certain brewery businesses changes.
The proposed changes would remove requirements that brewers intending to sell and serve beer on brewery premises designate and maintain a separate “tavern” area within the brewery for such activities, and including instead general provisions to account for beer sold and served to customers anywhere on brewery premises and tailoring requirements to describe the brewery premises more narrowly.
Potentially the proposed changes would require less paperwork and time for brewers, as well as for TTB staff.
After years of failed attempts to modernize some of the state’s restrictive alcohol laws, Minnesota Governor Tim Walz signed into law yesterday the ‘Free the Growler’ bill that will allow breweries up to 150,000 barrels in annual production to offer growler sales, up from the current 20,000-barrel cap.
The state’s six largest craft breweries which include Castle Danger, Fulton, Indeed, Lift Bridge, Schell’s and Surly will still not be able to sell growlers under the new cap.
The new law will also allow smaller and medium-sized breweries to sell four and six-packs from their taprooms. And it would allow micro-distilleries to increase the number of off-sale products they can offer. Other allowances were included in the bill such as allowing resorts to sell beer with an alcohol content higher than 3.2%. But 3.2% will remain the standard for grocery stores and convenience stores.
The Vermont Legislature has passed a bill that will lower taxes on spirits-based ready-to-drink beverages. As in most states, Vermont currently taxes spirit-based RTD’s at the same rate as all other distilled spirit beverages.
Under the bill, taxes on RTD’s would drop from $7.68 per gallon to $1.10 per gallon and could be sold in non-state controlled retail locations that sell beer and wine. The state excise tax on beer is $0.26 per gallon. The bill now sits on Governor Phil Scott’s desk for signature and would become effective July 1, 2022 if signed.
The Distilled Spirits Council of the United States (DISCUSS) has joined forces with state-based spirits trade groups to lower the state excise tax on RTD’s in a number of states across the country in a organized effort to gain better access to market by being regulated and taxed similar to beer. The beer industry has generally opposed such efforts.
The new TTB portal page is now live and can be accessed here. The new site provides a preview of the “one-stop shop” experience to access TTB online services and is another step towards myTTB, the agencies new integrated and personalized online system for industry members to transact business with TTB.
Also from the TTB, as part of the agencies ongoing effort to provide on-demand educational information, the TTB now offers a Trade Practices video series for the alcohol beverage industry that explains the history leading up to the trade practice rules, defines the related terms, and walks through the four prohibited trade practices. The four videos include FAA Act History & Background, Tied Hose, Exclusive Outlet, Commercial Bribery and Consignment Sales.
The American Craft Spirits Association (ACSA), American Distilling Institute (ADI) and Distilled Spirits Council of the United States (DISCUS), three trade associations representing distillers large and small, joined forces to launch “Ship My Spirits,” a coalition with the goal of modernizing the spirits marketplace by allowing direct-to-consumer shipping of distilled spirits, specifically targeting New York state where the New York legislature is currently considering two bills, S4245-A/A3275-A and S556/A2513 which would permanently allow distillers to ship their spirits products directly to adult consumers.
ShipMySpirits.Org, the coalition’s website, has an interactive map where consumers can click on their state to learn about the laws regulating spirits shipments and other data related to the spirit industry’s impact in the state. For example, the site notes that the spirits industry supports 94,000 jobs in New York and has an economic impact of more than $8.5 billion.
“Consumers want distilled spirits shipped straight from the distillery to their doorbell, and that’s the goal of the ‘Ship My Spirits’ campaign,” said Chris Swonger, president and CEO of DISCUS. “The DTC law in New York needs to be modernized to increase consumer choice, build small businesses and tourism, and create an on-ramp to distribution for new products. Allowing distillers, large and small, to direct ship supports consumers, producers, wholesalers and retailers which continues our support of the three-tier system.”
The Brewers Association took a significant leap into strengthening the association’s government affairs program by hiring two people for the newly created position of state government affairs manager.
The slots were filled by Nancy Palmer and Sam DeWitt.
The new positions will give the BA more firepower to assist state guilds in their efforts to protect independent craft brewers at the state level where most of the legislative action occurs that impacts small brewers.
The interest and enthusiasm for direct-to-consumer (DTC) beer shipping has not waned in 2022, even as the past year has brought some relief from the COVID-19 pandemic, according to a report by Sovos ShipCompliant. The report included a survey by The Harris Poll and was conducted in partnership with the Brewers Association.
The survey found that 75% of the respondents who were regular craft beer drinkers, would purchase more craft beer if they were able to have it shipped directly to their home versus having to go to a retail location to purchase it.
Interstate direct-to-consumer beer shipping is only legal in 11 states and Washington, D.C., while wine can be shipped DTC to 47 states and D.C.