What the new Illinois “of value” regulations say about using social media. (Illinois’s new “of value” standards Part 2.)

Today we continue our updates regarding the Illinois Liquor Control Commission’s new regulations governing and addressing of value standards for the beer, wine, and spirits industry.

(You can read and download the full text of the of new Illinois of value regulations here.)

Specifically, we’re looking at the Social Media section of the new Illinois “of value” regulations amending the Illinois Liquor Control Commission’s Administrative Code and adding a new section – Section 100.500 – entitled “Of Value Provisions – General Applicability.”

The new regulations regarding social media advertising in beer, wine, and spirits are meant to provide clarity to the statutory provisions of the Illinois Liquor Control Act – section 6-5 of the act – (235 ILCS 5/6-5) which, if you ask me, was already pretty straightforward and required no real guidance as it provided that:

• A manufacturer, distributor, or importing distributor may furnish free social media advertising to a retail licensee if:
  • the social media advertisement does not contain the retail price of any alcoholic liquor, and
  • the social media advertisement complies with any applicable rules or regulations issued by the Alcohol and Tobacco Tax and Trade Bureau of the United States Department of the Treasury.
• It also provided that in a social media advertisement a brewer, vintner, distributor, distiller or importing distributor may list the names of one or more unaffiliated retailers.
• The statute regarding social media advertising for alcohol also stated that nothing in the statue was to be deemed:
  • to prohibit communication between the tiers on social media or the sharing media on social media between the tiers and nothing in the statute; or
  • to prohibit a manufacturer, distributor, or importing distributor from sharing, reposting, or otherwise forwarding a social media post by a retail licensee, so long as the sharing, reposting, or forwarding of the social media post does not contain the retail price of any alcoholic liquor.
• Under the statute, a retailer may request free social media advertising from a manufacturer, distributor, or importing distributor.
• Finally, regarding payments, the statute directs that:
  • No manufacturer, distributor, or importing distributor shall pay or reimburse a retailer, directly or indirectly, for any social media advertising services, except as specifically permitted by the Illinois Liquor Control Act; and
  • No retailer shall accept any payment or reimbursement, directly or indirectly, for any social media advertising services offered by a manufacturer, distributor, or importing distributor, except as specifically permitted by the Illinois Liquor Control Act.

The social media rules laid down by the TTB regarding alcohol advertising in social media are addressed in the TTB Industry Circular 2013-1. The circular is fairly straightforward in reiterating that the platform of social media doesn’t offer much by way of augmenting the laws and regulations regarding alcohol advertising.

Of note from the TTB Circular regarding social media and alcohol advertising:

• Alcohol industry member fan pages or social media account pages on different platforms, including video platforms as well, still need to contain (or contain conspicuous links to) the mandatory advertising statements required for the various forms of alcoholic liquors – wine, beer, and spirits, found at 27 CFR 4.62, 27 CFR 5.63, and 27 CFR 7.52 (for videos, if there is no “channel” or profile page for the industry member that allows for the mandatory statements, then they must be contained within the video);
• The regulations regarding prohibited practices in alcohol advertising apply to social media posts and advertising for brewers, vintners, and distillers as well as reposting content created by others – they are found at 27 CFR 4.64, 27 CFR 6.65, and 27 CFR 7.54;
• Posts on microblog sites like Twitter and Pinterest that are constrained by their character or other limitations make it impractical for industry members to include the mandatory statements but the regulations regarding prohibited practices still apply to microblog posts; and
• Apps created by industry members that can be downloaded and contain information like drinks recipes or locations to purchase products are considered “consumer specialty items” under the regulations and as such, do not need to contain accordingly, under 27 CFR 4.62(c)(2), 27 CFR 5.63(e)(2), and 27 CFR 7.52(c)(2), the only mandatory statement required to appear in the app is the company name or the brand name of the product (prohibited practice restrictions still apply).

The new Illinois of value regulations found at 11 Ill. Admin Code 100.500(d)(7) provide much of what is already in the statute – thereby negating the purpose of a regulation, which is to expound on and provide guidance concerning statutory language, for instance, the regs on social media state that payment cannot be made or received for the posting as between the retailer and the brewer, vintner, distiller, or distributor, nor can the social media posting contain the price and must comply with the TTB’s regulations.

The new Illinois of value regulation goes on to add some language that is arguably supported by other provisions of the “of value” statutory provisions found in the Illinois Liquor Control Act such as the social media postings of an “industry member” (apparently everyone involved in producing and distributing alcohol except a retailer) cannot favor a specific retailer to the exclusion of other “similarly situated” retailers.

The big issue here is 1) that the statute about this stuff is a two-way street regulating and discussing both alcohol manufacturer/distributor and retailer social media use but this reg was drafted only to deal with manufacturers and distributors posting about retailers, 2) the people that crafted this used such imprecise and nebulous language that some of these aren’t really helpful – for instance, the “exclusion” of another retailer – what does that even mean? How can a posting exclude someone if you’re allowed to only post about one retailer within a post under the statute? But that just leads to 3) the fact that so much of this is the regulation of commercial speech that’s likely completely unfounded as to achieving a restriction or authorized state purpose that would be compelling enough to override the First Amendment rights of the brewers, winemakes, distillers, and distributors. A decent challenge like we’ve seen recently in the 8th Circuit would likely see most of these regs and much of the statute held unconstitutional as these regulations have no real relationship to any stated goals.

Finally, there is a portion of the new regulation that goes well beyond what the statute says and states that a “product location communication” (another completely undefined and useless set of words) must be “limited to allowing a consumer to determine the availability of a specific product at a retailer.” Where’s that in the statute? The same subsection goes on to mandate with completely unfounded candor that “If the social media pre-announces promotional activity at a retailer’s premise, the focus of the social media advertising must be the product promotion and any reference to the retailer should provide only necessary information, such as location of the event.” Again, where does the statute say that? Also, why wouldn’t time and date be listed along with location there?

The bottom line is that if you find yourself on the wrong end of a citation regarding these regulations, there may be a very good claim to challenge them.

Bonus: For those looking for the whole text of the new Illinois of value regulations for alcohol advertising concerning social media who don’t want to download them, here:

7) Social Media Advertising. An industry member may use social media to advertise product location communications that inform the public where its products may be purchased (retail locators) and pre-announcing any promotional activity to be held on a retailer’s premises, if otherwise permitted by the Act, provided:

A) The industry member does not give compensation to, or receive compensation from, directly or indirectly, the retail license holder for social media advertising.

B) If the social media advertising is a product location communication, the purpose of the communication must be limited to allowing a consumer to determine the availability of a specific product at a retailer. If the social media pre-announces promotional activity at a retailer’s premise, the focus of the social media advertising must be the product promotion and any reference to the retailer should provide only necessary information, such as location of the event.

C) The advertisement does not contain the retail price of the product.

D) All social media advertising must also comply with all applicable rules and regulations issued by the Alcohol and Tobacco Tax and Trade Bureau of the United States Department of the Treasury.

E) The industry member does not offer social media advertising to a specific retailer to the exclusion of other, similarly situated retailers.