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Legislative & Regulatory

News relating to the state and federal politics of beer and regulatory structure

Will Biden Executive Order to Reduce Competition in the Alcohol Industry Get Anywhere?

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The United States is the most profitable market for beer, wine and spirits producers in the world. But it is fragmented and covered by a maze of regulations that vary state by state. President Joe Biden could be about to change all that, so states an article in The Drinks Business.

At the end of Prohibition, Congress enacted legislation that among many things, prevented vertical integration of the industry. The 21st Amendment and legislation that followed was intended to moderate over consumption of alcohol. For instance, an alcohol beverage producer is prevented from owning licenses in the distribution and retail segments of the business in most states.

Over the years, many industry players have tried to chip away at these tied-house provisions. And a growing number of both state and federal legislators have backed these attempts, unable to rationalize tied house laws in today’s modern marketplace.

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Tips From TTB: Top Three Errors that Delay Label Approval

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Straight from the source, the TTB offers tips on how to avoid the three most common errors that cause a delay in label approval.

The three errors are incorrect class/type designation on formula-exempt products, not including formula approval for certain beers and net contents stated incorrectly. The TTB offers tips on how to ensure a speedy label approval here.

SF Imposes Proof of Vaccination to Enter On-Premise Establishments – Other Cities May Do the Same

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In a move that will includes brewery tasting rooms and brewpubs, San Francisco will require customers to show proof of complete vaccination against COVID-19 to enter on-premise dining and drinking establishments as well as gyms and other indoor venues. The requirement will take affect starting Aug. 20th for patrons and Oct. 13th for employees.

Additionally, San Francisco’s order creates a new proof of vaccination requirement for large events at indoor venues, requiring attendees who are age 12 or older at events with 1,000 people or more to provide proof of vaccination. Previously, state and local rules required proof of vaccination or testing to attend indoor mega-events with 5,000 people or more.

The mandate will be more stringent than the requirement announced by New York City Mayor Bill De Blasio last week. San Francisco will require proof of full vaccination for all customers and staff, while New York mandated proof of at least one shot for indoor activities. It will take effect next Friday. The updates to San Francisco’s Safer Return Together Health Order are a response to the continued spread of COVID-19 most recently driven by the Delta variant primarily among unvaccinated people.

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New Hampshire Governor Signs Bill to Provide New Privileges for Brewers

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Life just got better for craft brewers in New Hampshire.

Gov. Chris Sununu signed legislation that allows brewers to operate a stand-alone retail outlet to sell their beers and also lifts a cap on how many cases of beer a brewer can sell to a single customer. Under previous state law, brewers with an on-premise component are prohibited from selling the equivalent of more than one case of 12-ounce beers directly to a customer.

The new law also allows a brew pub to enter into a contract brewing arrangement with a contract brewer brewing in the state of New Hampshire and allows certain brewers to ship direct to the consumer in the state.

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Recent White House Executive Order on Competition and Implications for the Alcohol Beverage Industry

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In response to a recent Executive Order from the White House on promoting competition in the American market, the Treasury Department last week issued a request for information to solicit comments about the current market structure and competition in the U.S. beer, wine, and spirits markets.

What does this mean exactly and what is the possible outcome? Robert M. Tobiassen, the former TTB Chief Counsel and currently the President of the National Association of Beverage Importers (NABI) takes a deep dive on the subject to see where the “tea leaves” may be pointed.

See his post here.

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TTB Seeks Input on Promoting Competition – Brewers Can Submit Comments

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In response to a recent Executive Order from the White House on promoting competition in the American market, the Treasury Department has issued a request for information to solicit comments about the current market structure and competition in the U.S. beer, wine, and spirits markets.

Among other things, the Executive Order requires the Treasury Department, in consultation with the Attorney General and the Chair of the Federal Trade Commission, to submit a report “assessing the current market structure and conditions of competition [for beer, wine, and spirits], including an assessment of any threats to competition and barriers to new entrants.”  The report is to include discussion of unlawful trade practices; patterns of consolidation in production, distribution, or retail markets; and “any unnecessary trade practice regulations of matters such as bottle sizes, permitting, or labeling that may unnecessarily inhibit competition.”

To inform these efforts, the Treasury Department is seeking comments on these topics from participants in the beer, wine, and spirits markets, consumer groups, public interest groups, and interested private parties.

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A Peek Ahead: The Future of Cannabis and the Beer Industry

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The recent proposal in Congress to decriminalize cannabis is the latest step forward in legalizing the drug nationally. Even if Congress doesn’t pass the current legislation, it is only a matter of time before it does. Eighteen states currently allow recreational cannabis.

How this eventual rollout of legalized cannabis will impact the beer and beverage industry is worthy of exploring. Forbes magazine recently spoke with Dr. Keith Villa, who had a thirty-two-year career with MillerCoors, is the founder of CERIA Brewing Co, Colorado’s first THC-infused, non-alcoholic craft beer, and the author of Brewing with Cannabis: Using THC and CBD in Beer.

If anyone has a good perspective of how legalized cannabis will dovetail into the craft brewing industry, Keith would be that person. See the full interview here.

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What’s In a Name – Trademark Suits Swirl Around Canopy

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During the burgeoning growth spurt of the last 10 years there have been numerous lawsuits in the craft brewing industry over beer names. That seems to have calmed down, but bigger stakes abound in the industry. Canopy Growth, the Canadian cannabis company, is being sued by Remy Cointreau at the same time as Canopy’s biggest shareholder, Constellation Brands, is in a fight with Anheuser Busch InBev over the right to use the Corona brand name in the alcoholic flavored water sector.

Remy Cointreau alleges in a Manhattan court, that Canopy’s Quatreau infused sparkling water infringes and dilutes its trademarks.

Meanwhile, an even bigger battle is raging over use of the Corona brand name. As part of the antitrust process involved with the takeover of Grupo Modelo in 2012, ABInBev gave up the rights to produce and market the Corona brand to Constellation in the U.S. But wait….is Corona’s new hard seltzer not considered “beer” and therefore not part of the antitrust settlement? Only time, and the courts will tell.

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Biden Executive Order Could Have Favorable Impact on Craft Brewers

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The Biden administration has issued an Executive Order intended to promote competition in the economy which could have an impact on the alcohol beverage industry that would benefit small craft producers.

“The Brewers Association applauds President Biden for recognizing the need to promote a fair, open, and competitive marketplace in the sale and distribution of beer,” said Marc Sorini, general counsel for the Brewers Association. “Over the past three decades the American beer consumer has embraced a diverse beer market filled with the unique, quirky beers produced by over 8,500 small, independent breweries. Longstanding federal and state policies helped fuel that success by, for example, prohibiting large brewers or wholesalers from dominating retail channels through “slotting fee” payments and similar practices.”

The Executive Order could prompt the  federal Alcohol and Tobacco Tax and Trade Bureau (TTB), the Department of Justice and the Federal Trade Commission to take a more aggressive and favorable position on trade practice regulations and violations in the industry.

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Indiana Rye Whiskey Gets Legal Regional Designation

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Craft distillers in Indiana scored a big win this week when a bill was passed allowing distillers to label their product with the term “Indiana Rye” whiskey.

With more than 30 distilleries currently producing rye whiskey in the state, Indiana provides the lion’s share of the rye whiskey consumed on today’s market, with its famous MGP distillery alone knocking out ryes for Bulleit, WhistlePig, Angel’s Envy, High West, Redemption, and more.

According to the new bill, in order for a whiskey to be called an “Indiana Rye,” it must be either a sour or sweet mash with at least 51% rye as the base ingredient. The juice has to come off the stills at 80% ABV or less, go into the barrel at no more than 62.5% ABV, and be bottled at 40% ABV and above. The whiskey must be aged for a minimum of two years in new white American oak barrels.

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Founder of Flying Dog, George Stranahan, Dies at 89

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George Stranahan, who founded Flying Dog Brewery in Aspen, Colorado in 1994, has died at 89.

Flying Dog is well-known for its eccentric and occasionally crude beer labels. Stranahan was a friend and neighbor of famed gonzo journalist and First Amendment crusader Hunter Thompson and Flying Dog’s labels were designed by Ralph Steadman, who illustrated Thompson’s books.

The brewery challenged the Colorado Liquor Board which declared a Flying Dog beer label as obscene and banned the beer from the marketplace in 1995. After a five-year legal battle, and with help from the American Civil Liberties Union, the brewery beat the state.

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Kris Spaulding Elected as New BA Board Member

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The Brewers Association has announced that Kris Spaulding, owner and president of Brewery Vivant, Grand Rapids, Mich., has been elected to serve as a pub brewery representative on the Brewers Association Board of Directors, according to a BA statement. Her term starts immediately and expires February 2023. The next association board meeting will be June 30 and July 1, an in-person meeting in Boulder, Colorado.

The Brewers Association held a special election for pub brewery members earlier this month after former board member Sean Casey vacated the position.

Kris co-founded Brewery Vivant in 2010 and continues to own the brewery with Jason Spaulding. In 2012, the brewery was awarded a Leadership in Energy and Environmental Design certification (LEED – Silver). In 2014, Brewery Vivant became a certified B Corporation, meeting “rigorous standards of social and environmental performance, accountability, and transparency.”

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New Jersey Becomes Battle Ground in Effort to Lower RTD Taxes

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Spirits companies have been fighting for lower excise taxes for decades. Citing “equivalency” as a reason to reduce the much higher state and federal tax on liquor, they have had little to no success. But now that RTD’s (ready-to-drink spirits-based cocktails) are booming in the marketplace, the spirits industry may be at it again. And since RTD’s are generally about or only slightly higher in alcohol than beer and look like beer (usually in 12-ounce cans), they may have a stronger argument.

New Jersey’s legislature is currently considering SB 3452, which would reduce excise taxes on RTD’s below 9.9% ABV to the same state rate as beer at 12 cents per gallon as opposed to the current $5.50 per gallon. How this plays out in New Jersey won’t be the end-all, but it may help set the course one way or the other.

More details here.

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Through the Eyes of the TTB – Avoiding Common Mistakes in Label Approval

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Direct from the source, the TTB shares some tips for how to avoid some of the common problems they see on applications for malt beverage label approval and beverage formula approval.

According to the TTB, the top two mistakes when brewers send in their forms for label approval are “improper net contents descriptions” and “missing support documents.”

See the full details here.

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Legislation to Allow USPS to Ship Beer is Introduced in Congress

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Legislation was introduced yesterday in Washington DC that would allow the USPS to ship alcohol in states where it is currently legal to do. The United States Postal Service (USPS) Shipping Equity Acy was introduced by Representatives Jackie Speier (D-Calif.) and Dan Newhouse (R-Wash.), and Senator Jeff Merkley (D-Ore.).

Direct shipping to the consumer (DTC) helped many craft brewers stay afloat during the pandemic as their tasting rooms and most on-premise accounts were forced to close. The USPS Shipping Equity Act would allow for another shipping option in addition to private carriers such as FedEx and UPS.

“The Brewers Association applauds the introduction of the USPS Shipping Equity Act. The pandemic has shown the increased demand for direct-to-consumer delivery of beer, and the viability of shipping as a way for breweries to get a broad variety of their product to market. As alcohol shipping laws become commonplace in more states, consumers, small and independent breweries, and the postal service would all benefit if the USPS could legally and safely ship alcohol in states where it is legal to do so,” Bob Pease, President and CEO of the Brewers Association said in a statement.

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Texas is the Latest State to Make Cocktails ‘To-Go’ Permanent

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Texas Governor Abbott has signed HB 1094 into law making permanent restaurants’ ability to sell alcohol with pickup and delivery food orders.

The bill requires that all alcoholic beverages be sealed either in their original, manufacturer-sealed container, or in a tamper-proof container that is labeled with the business’ name and the words “alcoholic beverage.”

Alcohol to-go has been temporarily allowed in many states across the country to provide relief for the struggling on-premise business. A number of states have passed legislation to make it permanent.

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New Staff Positions at NBWA and BI

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The Beer Institute, which represents the large brewers and beer importers in the U.S announced it has named Troy Wittek as director of research. Troy will add depth in data analysis and research to the Institute.

“Troy will be a valuable asset to the beer industry as he brings his years of economics experience to the Beer Institute team,” said Jim McGreevy, president and CEO of the Beer Institute. “Decision makers around the world rely on the Beer Institute’s economic reporting, and Troy brings new insight and analysis that will create tremendous value for our members and the beer industry.”

Meanwhile, the National Beer Wholesalers Association announced that they hired Erin Donar as Vice President of Communications.

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Small Step Forward for Self-Distribution in Tennessee

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A bill that would expand self-distribution rights for brewers in Tennessee has passed the legislature and sits on the governor’s desk where it is expected to be signed.

Current Tennessee law prevents breweries from self-distributing beyond county lines. Senate Bill 177 will allow a craft brewery to distribute up to 1,800 barrels of beer annually across the state without being required to use a wholesaler

The bill was the result of negotiations between the Tennessee Malt Beverage Association, a coalition of the state’s beer distributors, and the Tennessee Craft Brewers Guild.

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