February 10, 2016
Several states restrict or ban happy hour promotions, and many people assume that these restrictions are a remnant of Prohibition. However, the practice of “happy hour”—gathering before dinner for cocktails, wine, or beer—did not actually arise until during Prohibition. Because the sale of alcohol was illegal, drinking was a surreptitious activity performed in the privacy of homes or speakeasies. Thus, enthusiastic imbibers would gather in private for a couple of drinks prior to heading out to a public establishment for dinner, where alcohol would not be served. Following the repeal of Prohibition, happy hour specials were popular at restaurants and bars across the nation. However, the 1980s brought an increased focus on preventing drunk driving, which spurred changes to alcohol laws. In 1984, President Reagan signed a bill encouraging the nationwide adoption of 21 as the minimum drinking age, and states that refused to raise the legal drinking age to 21 lost substantial federal highway funds. Also, during this time, several states and municipalities passed laws banning happy hours in an attempt to reduce excessive consumption and drunk driving.
Happy hour regulations can take many forms. Examples of happy hour promotion types that are frequently prohibited or restricted include:
Although many states have regulations prohibiting happy hour promotions, there have been some permissive changes in the past few years. In 2012, Kansas relaxed its laws regarding on-premises alcohol promotions, and drink specials that last only a portion of the day or apply only to a segment of the population are now permissible. In 2014, Virginia revised its happy hour laws slightly, allowing bars and restaurants to use the phrase “happy hour” via advertisements both on and off the licensed premises. In 2015, happy hour returned to Illinois, which now allows licensees to offer temporary drink specials for up to four hours per day, and not more than fifteen hours per week.
For advice regarding your state’s regulations governing happy hours and other alcohol promotions, contact one of the attorneys at Strike & Techel.
July 29, 2015
The cider and perry industry is booming. More and more producers are entering the market, and existing producers of other alcoholic beverages are expanding into cider and perry production. Although commonly associated with beer, cider and perry are actually considered wine under federal law, and can be interchangeably labeled as apple wine or cider, and pear wine or perry. Production of cider or perry requires a bonded winery permit from the Alcohol & Tobacco Tax and Trade Bureau (“TTB”). It must be made wholly from the alcoholic fermentation of sound, ripe apples, or sound ripe pears (the addition of sugar, water, or alcohol is permitted in specified quantities). The TTB recently updated its FAQs with a section on cider, which can be found HERE.
A cider or perry which is over 7% alcohol must be labeled in the same manner as wine, and a Certificate of Label Approval (“COLA”) must be obtained for the product from the TTB. If it is under 7%, the product is subject to Food and Drug Administration (“FDA”) labeling rules, including a required nutritional statement (see our recent blog posts on FDA alcoholic beverage labeling HERE and HERE). If any flavoring materials are added, like honey, spices, or artificial flavors, the product requires formula approval, even if it is under 7%.
Each state has its own regulatory framework for cider and perry. For example, in California, a Type 2 Winegrower can make cider and perry, and a licensed Type 1 Beer Manufacturer may also produce cider and perry without any additional state license (although they still need the TTB bonded winery permit). In New York, Breweries, Farm Breweries, and Farm Wineries can make cider and other “pome fruit” wines, including perry (again with the TTB winery permit). Interestingly, in New York, a product marketed as a cider or perry, up to 8.5% alcohol, must be brand label registered, and is not eligible for the standard wine exemption from registration.
If you have any questions about producing cider or perry, please contact one of the attorneys at Strike & Techel.
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2015 • All Rights Reserved •
May 06, 2014
Suppliers’ ability to run events for consumers in the New York market has been up in the air for a number of years now, and especially since the industry consent orders in 2006. Now, the New York State Liquor Authority (SLA) has given helpful and detailed guidance on how these events can be run.
Supplier Purchases of Alcohol from On-Premise Retailers – #2014-8
This new SLA Advisory covers the ways in which suppliers and wholesalers may purchase alcoholic beverages from on premise retailers for consumers. Under the consent orders issued in 2006, there were three ways in which this could be done: (1) on an incidental basis; (2) for employees or private guests at an invitation-only event; or (3) at a bar spend promotional event open to the general public. The new advisory clarifies the scope of those activities and also expands on them.
Purchases for Consumers on an Individual or Incidental Basis
This is unchanged from SLA’s prior position. It is not intended to be an option for promotional events. It permits a supplier rep to buy themselves a drink and to buy a drink for individual patrons of a retailer.
Business Meetings and Private Events
- Business meetings or business entertainment
This means a gathering of a supplier employees, and/or representatives for entities that do business with a supplier (including other suppliers, distributors and retailers). There must be a legitimate business purpose for the meeting, like discussing product sales, new product introductions etc. It does not include holiday parties or other special occasion events. There are no spending restrictions, or limits on the number of meetings at any particular on premise location. The event must be in a reserved area (can be as little as one table), and at least one supplier employee must be present. Retail licensees and their employees can be invited and an invite can be sent to all employees of a particular retailer. Media reps can be present.
- Private invitation only events closed to the general public
This is an event not conducted for a business purpose or for promotional purposes. It must be a gathering of invitees who have an identifiable affiliation with a supplier (e.g., a party for employees, vendors or business associates), or a common affiliation or relationship with each other (e.g. journalists, sports teams or non-profit organizations). The language of the advisory makes it clear the group cannot just be a large gathering of a group of consumers or potential consumers without meaningful commonality other than an attempt to market or target a demographic. Invitations must be sent by a supplier to invitees by individual name, each such invitee may bring only one guest. Invites can be by phone, e-mail, letter, in person, etc. Invites cannot be in any type of media advertisement or generic communication to anyone wishing to attend and cannot be sent to a “mailing list” of consumers obtained or created by a supplier. The event must be in a reserved area (can be as little as one table) and at least one supplier employee must be present. Despite the stated non-business and non-promotional purpose of the events, retail licensees and their employees can be invited, as can the media. A supplier cannot send a general invite to all employees of a retailer or a retail chain.
Promotional Events Open to the General Public – No Invitation Required
Prior to the advisory, a bar spend was limited to $500 (plus 20% tip) and no more than six events per retailer, per year. Now, the limit is $700 (plus 20% tip), and no more than ten events per retailer, per year. A supplier cannot purchase food, non-alcoholic beverages, or anything else from the retailer for such an event. These events can now be advertised, identifying the time, date and location. Invites may also be sent to members of the general public, but the event cannot be restricted to people that received such invitations. There is no longer a need to submit statements after these events; a supplier must maintain a record of each event for two years that includes date, time, location and duration, brands that were purchased, and names of supplier reps or agents who conducted the event.
Promotional Events Open to the General Public – Invitation Required (“Brand Experience Events”)
This is a new category of events which will be extremely helpful for supplier marketing and promotions in New York. The advisory refers to these as “brand experience” events that are “much larger” than bar spend events. At a brand experience event, a supplier can spend up to $10,000 (plus 20% tip), and may purchase alcoholic beverages, non-alcoholic beverages and food. A supplier can also apply to the SLA for advance permission to spend more than $10,000 for an event. A supplier can have up to six such events per retailer per year (whether the event is at a retail premises or whether a retailer caters the event, as catering permits in New York are only held by on premise licensees). Attendees at these events must be invited and an event can be restricted to invitees only. A supplier can invite people individually (by phone, letter, e-mail, in person, etc.), or can also place media advertisements including invitations, generic communications inviting anyone who wishes to attend to register, and “mailing lists” of consumers. A supplier can advertise brand experience events, including date, time and location. Each person registered as an invitee may bring one guest. A supplier must maintain a record of each event for two years that includes date, time, location and duration, brands that were purchased, and names of supplier reps or agents who conducted the event.
Events Where the Supplier or Wholesaler Provides the Alcoholic Beverages
In a very helpful clarification, the new advisory notes that it is only intended to cover occasions where a supplier is purchasing alcoholic beverages from a retailer. It goes on to discuss the fact that a supplier may provide alcoholic beverages for an event without being bound to any of the above exceptions. Specifically:
- Not-for-profit organizations
A supplier may donate product to a not-for-profit organization for an event which the not-for-profit organization is conducting, either at licensed premises or at an unlicensed location with a permit from the SLA. A supplier can also receive promotional benefits in exchange for the donation to the organization. The only real restriction is that a supplier cannot choose the retailer for the event. The new advisory does not use the same restrictive “bona fide charitable organization” language used in the tasting advisory published in July, 2013. It appears that non-charitable not-for-profit organizations qualify for these events.
- Private/Brand Experience events at unlicensed locations
The new advisory allows a supplier to conduct a private invitation-only event or a brand experience event at an unlicensed location and to provide the alcoholic beverages for that event without having to fit into one of the four event types above. Note that any unused alcoholic beverages must be removed by a supplier after any event under this section.
An appropriate permit must be in place for these events. This means that a supplier should use a retail licensee caterer for such events at this stage. We anticipate a new supplier event permit will available in the future.
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2014 · All Rights Reserved ·
October 10, 2013
On October 1, 2013, Governor Andrew Cuomo signed into law S. 267/A.1512, creating a new venue for New York wineries to sell their wines to consumers. As of March 26, 2014, farm market stands may apply for a new “roadside farm market license” to sell New York State labeled wine that is produced by no more than 2 licensed farm wineries, micro-wineries or special wineries located within 20 miles of the roadside farmers’ market.
This law is in keeping with Governor Cuomo’s efforts to bolster the New York wine industry. In a statement released after enacting the new law, Governor Cuomo said: “These new laws will build on our continuing efforts to promote New York’s wine industry across the state and beyond, boosting tourism, local economies and job growth. We are increasing market opportunities for local producers and farmers…Our state is home to hundreds of wineries that produce some of the best wine in the world, and we want both New Yorkers and visitors to come and enjoy them.”
The new law does not include tasting privileges at the farm stands, which is probably not surprising, given the possible connection between wine tasting at a roadside stand and driving a car. We’ll be interested to see if other states follow New York’s lead and enact legislation to license farm stands.
For the full text of the new law, click here.
Contact one of the attorneys at Strike & Techel if you have questions about licensing in New York or any other state.
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·
August 16, 2011
If you didn’t partake in the toast that New York wineries made at the end of July when New York Governor Andrew Cuomo signed bill S4143A into law, perhaps now is the time. The bill, known as the Fine Winery Bill, made a number of revisions to the state’s alcoholic beverage code regarding wineries and farm wineries. A number of the revisions to the law were originally suggested by the industry member group the New York State Grape Task Force in a 2008 report to the commissioner of the Department of Agriculture and Markets. Below is a brief outline of the legal changes:
The licensing process for up to five branch offices of a farm winery was simplified through the elimination of separate licenses for each branch. Perhaps more importantly, the privileges of the branch offices now mirror those of the farm winery, as opposed to those of an off-premise retailer as was previously the case.
Farm wineries also gained the legal authority to perform custom crush services. The individual requesting a custom crush must be present during the entire production process and purchase the final wine product.
Wineries can now obtain an annual permit allowing them to participate in events sponsored by charitable organizations. Previously, participation in a maximum of five events was allowed and the licensing process was more arduous.
Other Events & Tastings
Wineries may now charge for use of their premises and for wine tastings.
Farm wineries can now maintain interstate shipping reports on their premises and present them when requested by the State Liquor Authority as opposed to filing those reports semiannually with the State Liquor Authority, thereby reducing reporting expenses.
Elimination of Redundant Licensing
Farm wineries that produce less than 1,500 gallons of wine annually are no longer required to apply for a micro-winery license in addition to their farm winery license.
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·
April 12, 2011
Just when you thought the caffeinated alcoholic beverage saga was finally over, New York state senator Jeffrey Klein is keeping the saga alive. As a response to the ban on caffeinated alcoholic beverages that spread throughout the nation toward the end of 2010, the largest producer of such beverages, Phusion Projects, eliminated caffeine, guarana and taurine from its beverages. Senator Klein (D-Bronx/Westchester), chairman of the New York Senate Alcohol and Drug Abuse Committee, however, believes the products are still dangerous and being accessed and abused by minors. As a result, at the end of March he introduced a plan of action to decrease minors’ access to the beverages by creating a new defined term within the New York alcoholic beverage code, “Flavored Malt Beverage,” and requiring that such products falling under the new definition are only sold in New York liquor stores as opposed to convenience stores. Many phrases have been used to describe these beverages, from Progressive Adult Beverages (PABs), Flavored Alcoholic Beverages (FABs), Malternatives, Ready to Drinks (RTDs), and the catchy Alcopops. But if the new bill, S4221-2011 becomes law, it appears that FMB will become the beverages’ official title in New York. The proposed definition of FMBs set forth in S4221-2011 is:
“’Flavored Malt Beverage’ means and includes any alcoholic beverage of any name or description that is manufactured from malt, wholly or in part, or from any substitute therefore including, but not limited to, liquor, spirit or wine; and containing more than six per centum alcohol by volume and more than one per centum sugar by volume which is manufactured with the addition of flavorings or other ingredients including, but not limited to, fruit, fruit juice or fruit flavor, or herbs, nuts or spices (including, but not limited to, chocolate, licorice or vanilla, or stimulants (including, but not limited to caffeine, guarana, ginsing (sp), taurine or wormwood oil). The authority may, pursuant to subdivision fifteen of section seventeen of this chapter, further defined those alcoholic beverages that shall be included within such term. Provided that, Flavored Malt Beverages shall not be deemed to be beer, cider or a wine product.”
Senator Klein also introduced S3889-2011 to ban the sale of caffeinated alcoholic beverages, which a convenience store in Klein’s district was apparently still selling despite Phusion Project’s statement that is was no longer making the product and the agreement between New York’s largest distributors and the State Liquor Authority to stop selling the beverages to retailers. The ban in S3889-2011 also comes by way of creating a new defined term within the New York alcoholic beverage code: Caffeinated or Stimulant-Enhanced Alcoholic Beverage. The term would include alcoholic beverages with more than 5% but not more than 15% alcohol by volume that also has more than six milligrams per ounce of caffeine or other stimulant that has an effect equivalent to that of caffeine. The maximum 15% alcohol by volume in the definition is designed to exempt coffee-based liquors from the definition. The bill’s summary explains the logic for this distinction:
“The differentiation between these coffee based products and CABs is that caffeine is naturally occurring in coffee and herbs such as guarana, ginseng, taurine or wormwood oil are not added. Further, these products are sold exclusively in liquor stores, which can only be patronized by adults. In addition, coffee-based alcoholic beverages tend to be mixed with milk or cream, which makes them heavier and less vulnerable for over consumption. However, CABs tend to be lighter in body, sweeter to mask its alcohol content, and hence, are more easily subject to over consumption and abuse.”
We will continue to follow the progress of the two New York bills and are interested to see if additional states follow suit.
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·
November 17, 2010
New York is the latest state to jump on the alcoholic energy drinks ban-wagon. On Sunday, November 14, 2010, New York Governor David Paterson and Chairman of the State Liquor Authority Dennis Rosen announced a voluntary agreement with Phusion Products, the makers of Four Loko, to stop shipment of caffeinated alcoholic beverages to New York by Friday, November 19, 2010. Additionally, the largest beer distributors in New York State agreed to stop selling malt beverages containing caffeine and other stimulants. Those distributors have until December 10, 2010 to sell off the remainder of their in-state inventory. The voluntary agreement effectively bans the products from New York State. In addition, Phusion Products agreed to fund educational alcohol awareness programs concerning binge drinking. The agreement comes after NYPD sting operations revealed sales of Four Loko products to minors by numerous stores in the Bronx area.
On Tuesday, November 16, 2010, New York Senator Charles Schumer went further, indicating that the Food and Drug Administration was expected to release findings that caffeine is an unsafe food additive for alcoholic drinks. Were such findings made, the Federal Trade Commission would send letters to manufacturers of such beverages warning that marketing such products could be illegal. The FDA spokeswoman Siobhan DeLancey did not confirm whether or not such findings were expected or when any findings on the matter would be released.
Precluding the need for any such findings, however, Phusion Products announced that same day, via their website, that it would remove caffeine, guarana and taurine from Four Loko. Phusion Products maintains that their products as originally formulated were safe; however, the company felt changes were necessary due to the current regulatory environment. Phusion Products isn’t the first company to remove ingredients from an alcoholic energy drink in response to regulatory pressure. In 2008, MillerCoors announced it would remove caffeine, guarana, ginseng, and taurine from its Sparks beverages after voluntary negotiations with various state attorney generals. Anheuser-Busch InBev underwent a similar reformulation process with its Tilt beverages in 2008.
Imbiblog is published for general informational purposes only and is not intended as legal advice.
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