Successor Brewers Under The Beer Industry Fair Dealing Act
It’s a BIFDA Thursday here at the blog. These are fun days. We present, for...
Alcoholic Beverage and Cannabis Regulatory and Legal Updates
Winsconsin State Assembly Set to Rule on Hombrewer’s Rights
It’s a different kind of Super Tuesday in Wisconsin today as the State Legislature...
Classifying Your Beverage Isn’t a Matter of Taste – It’s About Money
Anyone who’s read Richard Unger’s wonderful work “Beer In the Middle Ages and the Renaissance” understands that the medieval history of beer isn’t just taste, quality, ingredients, and anecdotes about witches and overindulging monks – it’s money. Fermented beverages and laws involving them are inextricably linked with the government’s purse strings.
Alcohol production and taxes are fait accompli, which is the origin and explanation for the majority of regulatory structures and laws that control production, distribution, and consumption.
So when the Nebraska Supreme Court recently took up the question of whether a flavored malt beverage (think Mike’s Hard Lemonade or Smirnoff Ice) was a beer or a spirit, they weren’t indulging in the kind of philosophical exercise that you’d expect in the waning hours of a meeting at your local homebrewers’ association. The Nebraska Supreme Court was determining how much the state was going to make off a gallon of the stuff and noted the point in the first sentences of their opinion in Project Extra Mile v. The Nebraska Liquor Control Commission:
We are asked to decide whether a flavored malt beverage is a beer or spirit under the Nebraska Liquor Control Act. It makes a difference. Beer is taxed at 31 cents per gallon; spirits are taxed at $3.75 per gallon.
The debate about flavored malt beverages usually concerns whether they’re improperly aimed at the youth market and has been around for a while. In 2007 the New York Times wrote about them, and in 2009, the National Conference of State Legislatures posted a short article on the debate that’s a decent primer.
In Project Extra Mile, the Nebraska Supreme Court was faced with a few questions based on a lack of legislative action.
The Nebraska legislature hadn’t passed a bill on how to classify flavored malt beverages. In fact, a bill had been introduced to follow the federal regulations on the subject back in 2006 and it was never passed by the legislature. But, even though the legislature hadn’t decided, the Nebraska Liquor Control Commission still needed to determine how to tax FMBs under the Nebraska Liquor Control Act because they were served in, and imported to, Nebraska – they couldn’t hide their head in the sand. And the NLCC determined FMBs were beer by doing just what the legislature had attempted to do by statute, adopting a rule enacting the Tax and Trade Bureau’s regulations from 27 C.F.R. parts 7 and 25:
7th Circuit Upholds a Ban on In-State Retailers Shipping to In-State Customers via Third-Party Carrier
1850 Cowperthwait – Mitchell Map of IndianaSince Granholm v. Heald, we’ve seen a piecemeal erosion of state imposed restrictions on the interstate shipment of wine that hasn’t really found its way to an express inclusion of beer an liquor. People should be excited about these cases. Not just because they’re changing the way individuals have access to a new, freer, market for alcohol, but also because they’re consistently decided on grounds that represent a tour de force in Constitutional law pitting citizens utilizing the commerce clause or the supremacy clause against some state restriction grounded in the state’s rights under the 21st Amendment.
In one of these cases, the 7th Circuit recently found against Indiana wine retailers who wanted to ship directly to in-state customers in violation of an Indiana law stating that retailers needed to deliver the product themselves and couldn’t use a third-party carrier:
IC 7.1-3-10-7 Scope of permit Sec. 7. … (c) A liquor dealer may deliver liquor only in permissible containers to a customer’s residence or office in a quantity that does not exceed twelve (12) quarts at any one (1) time. However, a liquor dealer who is licensed under IC 7.1-3-10-4 may deliver liquor in permissible containers to a customer’s residence, office, or designated location. This delivery may only be performed by the permit holder or an employee who holds an employee permit. The permit holder shall maintain a written record of each delivery for at least one (1) year that shows the customer’s name, location of delivery, and quantity sold.
The case, Lebamoff Enterprises, Inc. v. The Indiana Alcohol and Tobacco Commission, upholds a district court ruling and finds that the proscription against retailers using third-party carriers is valid because the regulation on the delivery of alcohol and the regulations Indiana put in place regarding that delivery represent a strong state interest in alcohol policy that falls within the state’s 21st Amendment powers
Chicago Craft Beer Week Website is Up and Running
The much anticipated webspace for this year’s Chicago Craft Beer Week is up and...
A Must Read for Those Exporting to Missouri – 8th Circuit Rules Law Protecting Wholesalers Not Applicable Where Requirements Not Met
In an informative opinion for anyone shipping their product to Missouri for distribution by a wholesaler, the 8th Circuit Court of Appeals has rejected a wholesaler’s attempt to avail itself of the Missouri franchise protection statutes for that second tier of the three-tier system based on the fact that the parties didn’t actually create a franchise agreement that would allow for the protections because the wholesaler didn’t get a trademark license with its distribution agreement.
Anyone wanting to avoid the protectionist statutes that would keep you from changing distributors in Missouri will want to be familiar with this opinion as a way to possibly avoid Section 407.413 of the Missouri Revised Statutes which has provisions that would, like many states, protect the wholesaler unless the amorphous “good cause” can be shown. Two important provisions of this section read as follows:
2. Notwithstanding the terms, provisions and conditions of any franchise, no supplier shall unilaterally terminate or refuse to continue or change substantially the condition of any franchise with the wholesaler unless the supplier has first established good cause for such termination, noncontinuance or change.
3. Any wholesaler may bring an action in a court of competent jurisdiction against a supplier for violation of any of the provisions of this section and may recover damages sustained by such wholesaler together with the costs of the action and reasonable attorney’s fees.
Brewers’ Input Needed for the NASS Hops Survey
The United States Department of Agriculture’s National Agricultural Statistics Service keeps the information and...
Public Incentives for Financing an Expansion
Anyone interested in some public support and the possibility of offers or low interest...
Front of Packaging Labeling Q&A
For those of you with product lines that go beyond alcoholic beverages, the FDA’s...
Chicago’s Craft Beer Scene
It’s been tweeted and retweeted since Thursday, but the article is a testament to...
TTB Issues a Not-So-Subtle Reminder on Tie-in Sales
Much like the tax code, almost as instantaneously as the government codifies an alcohol regulation, people start to look for ways around those regs. And when you offer examples of your rules in practice, every so often you’re going to have to update the circulars to keep up with changing industry practices. That’s what just happened with TTB Circular 2012-2. An update to 2003-3, it looks like a few reminders and some new information seemed necessary to ensure both the letter and spirit of the law were being enforced.
The circular offers some interesting examples, as did 2003-3. Restated from the previous circular, an important point concerns certain holiday mixes or brews that will be of interest to anyone offering holiday or seasonal products. Offering them to retailers, tied to your regular product is expressly in violation of the definition for “tie-ins” under 27 CFR § 6.72:
A retailer must purchase a certain amount of regular distilled spirits, whether bottled or cased, in order to be allowed to purchase distilled spirits in a special holiday container or packaging.
