TTB provides insight for tax relief and destruction of unmerchantable beer; also changes some trade practice policies for craft distillers, craft brewers, wholesalers, bars and wineries during COVID-19.

Through a series of FAQs regarding the processes for the destruction of beer and a recent circular regarding trade practice policies for product returns, credit terms, gift cards, hand sanitizer and manufacturers and distributors donating to retailer charities. The changes in policy/application are effective for issues from March 1, 2020 through September 30, 2020 and could be extended beyond that time period if the TTB deems them appropriate.

Regarding the trade practice policies during the COVID-19 epidemic:

Newly released Circular 2020-3 reviews current tied-house policies and worries over commercial bribery in light of the current catastrophe befalling the beverage and hospitality industries with massive unemployment and a future anticipated to involve mandated social distancing, decreased occupancy, and large amounts of on-premise returns.

  1. Returns are allowed: The circular reminds distillers, wholesalers, brewers, wineries and bars that returns to manufacturers by wholesalers or retailers for cash or credit are presently allowed (though not mandated) provided the sale was not made with the privilege of return.
  2. Credit rules are extended: The present alcohol regulations 27 CFR 6.21(f) and 6.65 that discuss credit beyond 30 days being a means to induce are augmented and 120 days is currently allowed.
  3. Donations by gift card are allowed: Gift cards purchased by brewers, distillers and wineries and given to people in need are not violations provided they aren’t given to wholesalers or retailers or their employees and are not tied to specific alcohol beverage retailers, retailer groups or restaurants.
  4. Producers and wholesalers can donate to charities supporting retailer employees: Supporting and donating to charities that support alcohol retailers would normally be considered an inducement and violation of tied-house rules, but given the vast majority of programs to benefit retailers and retailer employees laid-off on account of mandated state closures and economic issues created by the virus, the TTB will not initiate investigations of donations “provided they are not conditioned on purchases of, or shelf space for, the industry member’s products.”
  5. You can give away hand-sanitizer: It is not improper to give away free hand-sanitizer and neither is it improper to co-package hand-sanitizer for consumer sales.

You can read the full circular at the link above.

Regarding the destruction of beer during the COVID-19 epidemic:

We’ve provided the beer FAQ below as craft brewers will find it informative and instructive for beer they cannot sell or beer they are buying back. Briefly:

  • Taxes can be refunded or forgiven for beer a brewer destroys.
  • The advanced notice requirement to the TTB for the off-premises destruction of beer is waived (no 12-day waiting period).
  • For those wondering – yes craft brewers can transfer beer to craft distillers for use as distilling materials (not just hand sanitizer) and taxes can get refunded on that beer.
  • Wholesalers can destroy beer for craft brewers provided they keep proper records and provide sworn statements and proof of destruction.
  • Craft brewers are encouraged to submit requests electronically for refund or relief from taxes on destroyed/distilled beer.

Here is the full FAQ regarding the destruction of beer that craft brewers should familiarize themselves with:

Ashley Brandt

Hi there! I’m happy you’re here. My name is Ashley Brandt and I’m an attorney in Chicago representing clients in the Food and Beverage, Advertising, Media, and Real Estate industries. A while back I kept getting calls and questions from industry professionals and attorneys looking for advice and information on a fun and unique area of law that I’m lucky enough to practice in. These calls represented a serious lack of, and need for, some answers, news, and information on the legal aspects of marketing and media. I've got this deep seeded belief that information should be readily available and that the greatest benefit from the information age is open access to knowledge... so ... this blog seemed like the best way to accomplish that. I enjoy being an attorney and it’s given me some amazing opportunities, wonderful experiences, and an appreciation and love for this work. I live in Chicago and work at an exceptional law firm, Goldstein & McClintock, with some truly brilliant people. Feel free to contact me at any time with any issues, comments, concerns… frankly, after reading this far, I hope you take the time to at least let me know what you think about the blog and how I can make it a better resource.

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