2023! New Year, New Laws

January 18, 2023

Welcome to 2023! As industry members prepare for the year ahead, a recap of new and notable California Alcoholic Beverage Control (“ABC”) legislation to look out for:

  • ·Craft Distiller Direct Shipping: Effective September 29th, 2022, AB 920 permits licensed craft distillers to ship distilled spirits manufactured or produced by the licensee directly to consumers in California. Unless renewed, the law sunsets on January 1, 2024. A maximum of 2.25 liters may be shipped per day per consumer, and the licensee must maintain records of all shipments. The packaging label must include the words: “CONTAINS ALCOHOL: SIGNATURE OF PERSON AGE 21 YEARS OR OLDER REQUIRED FOR DELIVERY.” Notably, the privilege is extended only to craft distillers (Type 74) – it does not include larger distilled spirits manufacturers (Type 04).
  • Music Venue License: Effective January 1, 2023, SB 793 establishes a new ABC license (Type 90) to be issued to a music entertainment facility that may be open to all ages and provide alcoholic beverage service to adult patrons, including beer, wine and distilled spirits. The annual fee for a Music Venue License will vary depending on the venue’s location, ranging from $755 to $1,190. Current Type 47 or Type 48 license holders may also be eligible to exchange their licenses for a Type 90. The ABC recently provided Notice of its intent to adopt an emergency regulation to implement the provisions of SB 793, commenting that “additional clarity and specificity is required for ABC staff to perform the legislatively mandated tasks of processing, approving, and regulating music venue licensees.” The text of the proposed regulation can be found here.
  • Brewpub License Conversion: Effective January 1, 2023, SB 298 allows brewpub licensees who have held a Type 75 license since on or before December 31, 2019 to exchange their brewpub license for a Type 47 bona fide public eating place license. A license issued as an exchange would not besubject to the on-sale general license caps and may not be sold or transferred for a price greater than the fee paid by the seller or transferer.
  • Updates to Tied-House Advertising Exceptions: New amendments to California Business and Professions Code section 25503.6 add several existing venues to the list of advertising exceptions that allow manufacturer licensees to purchase advertising space and time from, or on behalf of, on-sale retail licensees. The additions include arenas in the city of San Jose, Riverside County, and the San Diego State University campus.
  • Expanded Privileges for Beer Manufacturers: Effective January 1, 2023, amendments to Section 25503.28 of the California Business & Professions Code expand self-distribution rights for beer manufacturers, as well as increase their number of authorized branch office locations and uses. AB 2301 authorizes Type 01 and Type 23 beer manufacturers to self-distribute beer of their own production to their on-sale retail locations that are located within five miles of the production facility. Previously, licensees were only permitted to self-distribute to a retail premises adjacent to the manufacturing premises. In addition, AB 2307 increases the maximum number of authorized branch office locations for beer manufacturers from six to eight, allows restaurants at four branch offices (previously only two permitted), and removes the requirement that a beer manufacturer branch office must purchase beer and wine from an unaffiliated licensed wholesaler. Branch offices are additional licensed locations that allow retail sales, storage, and distribution, and often include tasting rooms.

For more information on new ABC legislation, contact an attorney at Strike Kerr & Johns.

TTB Releases Updated Social Media Advertising Guidelines

December 15, 2022

The Alcohol and Tobacco Tax & Trade Bureau (“TTB”) recently published TTB Industry Circular 2022-2, which provides updated guidance on the use of social media in alcoholic beverage advertising. All advertisements for alcoholic beverages in any form of media – print, television, outdoor, social media, etc. – must adhere to the TTB’s advertising regulations, which are codified in the Federal Alcohol Administration Act (“FAA Act”). These regulations are intended to protect consumers by prohibiting false or misleading claims in relation to alcoholic beverage products.

As new forms of social media emerge, the TTB periodically releases updated advertising guidance. The last Industry Circular on social media advertising was released in 2013. TTB Industry Circular 2022-2 includes some notable changes, including specific provisions that address mobile websites, crowdsourcing sites, augmented reality, and social
media influencers. Some of the key takeaways are as follows:

Mobile websites: Most industry members use internet websites to advertise their products. Industry members might have a special version of their website for mobile devices that differs from their traditional desktop website. Both the mobile and desktop versions of the website must comply with the TTB advertising regulations.

Crowdsourcing/Crowdfunding sites (Kickstarter, GoFundMe, etc.): Industry members that use crowdfunding websites to raise capital or to solicit donations are required to follow the TTB advertising regulations if the crowdfunding page discusses the company or any of its alcoholic beverage products.

Augmented Reality: Industry members may enable consumers to access augmented reality technology, wherein a computer-generated image is superimposed on the user’s view of the world. Augmented reality content is subject to the TTB advertising regulations.

Social Media Influencers: Personas on social media (Instagram, YouTube, TikTok, etc.) with an audience or followers are often paid for their endorsement of certain products, including alcoholic beverages. Content produced and posted by social media influencers involving alcoholic beverages may be considered an advertisement, which would make it subject to the TTB regulations, even when the content is posted on the influencer’s own social media account.

The new guidance also clarifies that the same rules apply to all forms of social media advertising, including social media “likes” and third-party content that is reposted or “liked” by an industry member. Any content that an industry member posts, “likes,” or reposts that would cause the content to show up in their followers’ feeds is considered
advertising, and thus, subject to the TTB regulations.

For more information regarding social media advertising for alcoholic beverages, contact an attorney at Strike Kerr & Johns.

Important Changes to Craft Beverage Modernization Act for Foreign Producers and Importers

October 31, 2022

Starting January 1, 2023, changes to the Craft Beverage Modernization Act (“CBMA”) will require foreign producers of beer,wine, and distilled spirits to register with the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) before their US importers can take advantage of reduced tax rates or credits on the imported products. CBMA tax benefits are limited in quantity, and foreign producers may only assign a certain number of benefits to their US importers for each category of product imported.

Prior to 2023, US Customs and Border Protection (“CBP”) administered CBMA tax provisions for products imported into the US. Pursuant to the new changes to the CBMA, TTB will soon be responsible for administering CBMA tax benefits instead of CBP.

To take advantage of the tax credits, foreign producers must register with TTB using the online myTTB system; the current procedure of providing an authorization letter on the producer’s letterhead will no longer suffice. The registration process is fairly simple – the foreign producer is asked for basic information about the its business and ownership, its US Food & Drug Administration Food Facility Registration number, and to identify the foreign producer’s point of contact.

Once registered, the foreign producer will receive a TTB Foreign Producer ID, and an owner, officer, employee, or authorized agent of the foreign producer may assign the foreign producer’s tax benefits to its US importer. The US importer will need to provide the foreign producer’s TTB Foreign Producer ID to CBP during the Customs entry process, as well as when the importer submits CBMA import refund claim information to TTB. TTB will provide additional guidance on refund claims for US importers in early 2023.

TTB has already launched the foreign producer registration system. Additional guidance, including a user guide, can be found here.

California to Add Wine and Spirits to Recycling Bottle Bill

September 29, 2022

California will soon add wine and spirits to its container deposit program. Effective January 1, 2024, Senate Bill 1013 amends the definition of “beverage” in the California Beverage Container Recycling and Litter Reduction Act (“the Act”) to include distilled spirits, wine, sparkling wine, and wine from which alcohol has been removed. Spirits and wine containers have historically been excluded from this program. The revised Act also amends the definition of “wine and distilled spirit cooler” to include all wine and distilled spirit coolers, regardless of ABV.

The Act requires distributors to remit a redemption payment for every qualifying beverage container sold in California. The term “distributor” includes licensed alcoholic beverage wholesalers, manufacturers who sell beverages to California retailers (i.e., “dealers” under the Act), and importers who import beverages from out-of-state for sale to
California retailers or consumers. Wine direct shipper permittees also are subject to the new requirements and will need to register with the Department of Resources Recycling and Recovery (“CalRecycle”) as beverage manufacturers and distributors prior to shipping wine directly to California residents. The new law even authorizes the California Department of Alcoholic Beverage Control to suspend or revoke wine direct shipper permits for noncompliance with the Act. Importantly, tasting rooms are excluded from the “dealer” definition, and thus, containers used in tasting rooms are not subject to the new “dealer” obligations.

CalRecycle is required to deposit distributors’ redemption payments in the California Beverage Container Recycling Fund. Containers must be labeled with the California Refund Value, which is the amount paid to consumers when they recycle eligible beverage containers at certified recycling centers. The minimum refund value is 5 cents for containers
under 24 ounces, and 10 cents for containers 24 ounces or greater. The redemption payments and refund values will also apply to wine or spirits packaged in boxes, bladders, pouches, etc., which must meet postconsumer recycled plastic content requirements. These nonstandard containers, regardless of material, will have a refund value of $0.25.

The revised Act becomes effective January 1, 2024, so wine and spirits packages will be subject to the deposit at that time. However, wine and spirits labels will not have to display the California Refund Value labels until July 1, 2025, which gives producers an additional year to update their existing packaging. The revised Act also affords an extra two-years for wine and spirits manufacturers that deal in plastic boxes, bladders, pouches, etc., to comply with the Act’s postconsumer recycled plastic content requirements.

California Consumer Privacy Act… Noncompliance can be Costly

September 21, 2022

California Attorney General Bonta announced that Sephora, the cosmetic retailer, has agreed to pay $1.2 million to settle allegations that the company failed to comply with the California Consumer Privacy Act of 2018 (“CCPA”).

The Attorney General’s complaint asserts that Sephora failed to inform consumers that it was selling their personal information to third parties. Sephora also purportedly failed to process consumer requests to opt out of Sephora’s sale of their personal information. Specifically, the complaint alleges that Sephora neglected to honor opt-out requests that were submitted to Sephora via a privacy tool called a Global Privacy Control, which is a third-party browser-setting that automatically opts the consumer out of the sale of personal information on each website that the consumer visits.

Since Sephora sold consumers’ personal information to third parties, the company was obligated to alert consumers of its practices and to offer an opt-out option. Per the CCPA, the Attorney General provided Sephora with 30-days’ notice to cure its violations. However, Sephora failed to act within the statutory period.

As a result, Sephora agreed to a settlement with the California Attorney General wherein it will not only pay a $1.2 million fine, but it will: 1) update its online disclosures and privacy policy; 2) provide appropriate consumer opt-out options on its website; 3) modify its service provider agreements to comply with the CCPA standard; and 4) submit reports to the Attorney General regarding Sephora’s sales of personal information.

The Sephora case demonstrates that companies interacting with consumers in California must understand and comply with the requirements of the CCPA or risk significant monetary penalties for noncompliance. It’s important to dial-in CCPA compliance now, because on January 1, 2023, the CCPA will be amended by the California Privacy Rights Act, which will no longer include a 30-day opportunity to cure violations and stave off penalties.

Questions? Feel free to contact the attorneys at SKJ.

SKJ Welcomes Back Maddie Rowlett!

March 10, 2022

Strike Kerr & Johns is pleased to welcome Maddie Rowlett back to the firm as a regulatory compliance specialist. Maddie graduated UC Santa Barbara in 2013 and joined our team shortly after as a practice assistant, where she quickly realized her interest in the alcohol beverage industry. For the past five years, she has been working with Whole Foods’ legal team where her focus was on liquor licensing for retail grocery stores, alcohol regulatory compliance, land use & zoning, and new store development.

Her experience with Whole Foods and interest in Federal, State, and local liquor licensing for retailers and suppliers, as well as new and emerging trade practices, and alcoholic beverage policy and legislation will be a great asset to our team.

In her free time, Maddie enjoys trying new restaurants with friends, live music, traveling, and most recently exploring her new hometown of Chicago!

CA ABC Launches On-Premises Server Training Requirements This Summer

March 02, 2022

Beginning July 1, 2022, alcohol servers and managers at licensed CA restaurants and bars must hold a valid certification from an ABC-approved Responsible Beverage Service (“RBS”) training provider.

Originally scheduled to commence July 1, 2021, Assembly Bill 1221 (“AB-1221”) was delayed due to hardship and financial strain on the hospitality industry caused by the COVID-19 pandemic. The program’s intention is to educate servers on the dangers of over-serving and sale of alcohol to minors, with the overall goal to reduce alcohol-related accidents and improve local communities.

The new training and accreditation requirement applies to all alcohol servers and managers at CA ABC licensed on-premises establishments, including (but not limited to) some of the most common license types – restaurants, bars, tasting rooms, hotels, and stadiums:

- Type 41 On-Sale Beer & Wine Eating Place

- Type 42 On-Sale Beer & Wine Public Premises

- Type 47 On-Sale General Eating Place

- Type 48 On-Sale General Public Premises

Note that ABC’s definition of a server includes anyone who checks customer ID for purchase of an alcoholic beverage or entry to an on-premises licensed establishment, so the training requirement could include door security personnel as well.

The training and certification program is two-fold, with servers and managers required to complete the following within 60 calendar days from the first date of employment, or within 60 days of July 1, 2022, for current employees:

1) Complete an ABC-approved RBS training course

2) Pass an online ABC-administered RBS exam

Once the server has successfully completed the training and exam, the certification is valid for three years.

For ease of access, ABC has created an online portal where alcohol servers can search for approved training providers and take the online exam. Currently, exams are offered in English and Spanish, and the cost of the exam is $3.00, although training providers are authorized to charge an additional fee for their RBS program.

Licensees will also eventually be able to use the portal to confirm an employee’s certification and maintain online records, although this feature is still in development.

Enforcement of AB-1221 will begin September 1, 2022, and more information on the requirements can be found here.

California passes cocktails-to-go bill!

October 10, 2021

First the good news: on October 8, 2021, California Governor Newsom signed SB 389, which permits restaurants and some types of suppliers to sell for pickup mixed drinks, wine in single serving containers, and manufacturer-sealed containers of distilled spirits. SB 389 codifies California’s Covid-19 “cocktails-to-go” regulatory relief that has been in place since March 2020. Now the bad news: SB 389 does not allow all of the privileges permitted under the current regulatory relief, and most notably, it does not enable delivery of spirits, mixed drinks, or single servings of wine, and it is instead limited to pickup. The bill adds Section 23401.5 to the California Business & Professions Code, and will go into effect on January 1, 2022. The new law is set to expire at the end of 2026.

SB 389 applies to the following types of California ABC licensees, which must notify the California ABC prior to taking advantage of the new privileges: on-sale licensees with bona fide public eating places that have off-sale privileges (this includes primarily Type 41, 47, and 75 licensees that don’t have license conditions that prohibit off-premises sales); licensed beer manufacturers (Type 1 and 23 licensees); licensed wine manufacturers (Type 2 licensees); and, licensed craft distillers that operate bona fide public eating places at their premises of production (Type 74 licensees).

The above types of licensees will have the following privileges under new Section 23401.5: 1) licensees with distilled spirits off-sale privileges (applies primarily to Type 47, 74 (with bona fide eating place), and 75 licensees) can sell distilled spirits in manufacturer-prepackaged containers for pickup; 2) licensees can sell alcoholic beverages, except beer, not in manufacturer-packages containers (i.e., cocktails-to-go) provided several conditions are met, including the following:

  • The drink must be packaged in a container with a secure lid designed to prevent consumption without removing the lid, and the package must be clearly and conspicuously labeled to identify that it includes an alcoholic beverage;
  • Drinks must be sold in conjunction with a “bona fide meal” (ABC guidance as to what qualifies is available here), and only two drinks may be sold per meal ordered;
  • Wine not packaged in manufacturer-sealed containers must be sold in “single-serve containers” in one of the following sizes: 187ml, 200ml, 250ml, or 355ml;
  • Mixed drinks can include no more than 4.5 ounces of distilled spirits per drink;
  • The following warning language must be posted on the premises, online, or “in whatever manner is necessary to ensure that the consumer purchasing the beverages to which this section applies is given notice of this warning” - “Alcoholic beverages that are packaged by this establishment are open containers and shall not be transported in a motor vehicle except in the vehicle’s trunk or, if there is no trunk, the containers shall be kept in some other area of the vehicle that is not normally occupied by the driver or passengers. This does not include a utility compartment or glove compartment (See Vehicle Code Section 23225). Additionally, these beverages shall not be consumed in public or in any other area where open containers are prohibited by law.”

Orders for alcoholic beverages under SB 389 can be placed online, by phone, or in person, but must be picked-up by the consumer, and delivery is prohibited. Lastly, the new law gives the ABC discretion to impose conditions on licenses to limit or prohibit the sale of alcoholic beverages under the new law, and it includes a mechanism for licensees to challenge any such conditions.SB 389 adds California to the list of more than 20 states that have codified cocktails-to-go privileges that were first implemented in 2020 as part of various types of emergency Covid-19 relief for restaurants and other industry members. California’s Notices of Regulatory Relief (see here and here) that address cocktails-to-go expire on December 31, so the new law will allow cocktails-to-go to continue with no lapse. However, SB 389 does not extend all cocktails-to-go privileges, and most notably, delivery privileges will expire on December 31. Similarly, all other Covid-19 regulatory relief related to delivery will expire at the end of the year. For restaurants, that means delivery privileges will be limited to beer and wine in manufacturer-packaged containers, and any license conditions limiting off-sale and delivery privileges will go back into effect.

If you’d like more information about this law, contact the attorneys at Strike Kerr & Johns.


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