Cheers to a New Year! Beverage Alcohol Updates for 2024

January 25, 2024

And that’s a wrap on 2023! As we close out the first month of the new year, here is a look at the California Alcoholic Beverage Control’s (“ABC”) significant legislative changes affecting the industry in 2024:

  • Bars to Offer Drug Testing Kits: Starting July 1, 2024, AB 1013 requires Type 48 (On-Sale General Public Premises) licensees to offer drug testing devices to patrons. The devices (test strips, stickers, straws, etc.) are designed to detect the presence of certain controlled substances commonly used to spike drinks and may be available for sale or free of charge. Licensees must also post signage in a prominent location on the premises: “Don’t get roofied! Drink spiking drug test kits available here. Ask a staff member for details.” Unless renewed, the law sunsets January 1, 2027.
  • Sale of Shochu: Effective January 1, 2024, AB 416 permits on-sale licensees with wine privileges (Type 41, 42) to sell shochu, an imported Japanese distilled spirit up to 24% alcohol by volume. A similar exception already exists for soju, a Korean distilled spirits product.
  • Craft Distiller Direct Shipping Extended: AB 1088 allows licensed craft distillers to continue direct to consumer shipping of distilled spirits manufactured or produced by the licensee through 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.” The privilege is extended only to craft distillers (Type 74) – it does not include larger distilled spirits manufacturers (Type 04). The law was previously set to sunset at the beginning of this year – it is now extended to January 1, 2025.
  • Increased Fine Amounts for License Violations: Effective January 1, 2024, SB 489 authorizes ABC to increase the maximum fine amount a licensee may pay in lieu of a license suspension for a sale to minor or intoxicated person by up to 200%, depending on the severity of the incident.
  • Updates to Tied-House Restrictions: AB 546 amends section 25503 of the California Business & Professions code (CA B&P) to clarify the tied-house restriction prohibiting manufacturers and wholesalers from providing anything of value to retailers applies to all alcoholic beverage suppliers (not just distilled spirits suppliers) and also extends to out-of-state beer manufacturer certificate holders. The bill prohibits providing credit or rebates (not just money) for sign or advertisement placement on a retailer’s premises, but expressly allows a wholesaler to provide customized signs to retailers for current market price. Lastly, AB 546 repeals the prohibition against brandy manufacturers offering tastings at their premises in the form of a cocktail or mixed drink.
  • Expanded Tied-House Advertising Exceptions: Effective January 1, 2024, manufacturers are permitted to purchase advertising space and event sponsorships from retail licensees in connection with events held at eight additional colleges and universities, specifically seven Cal State University campuses and Saint Mary’s College in Contra Costa County (AB 840); a wave basin complex in Kings County aka Kelly Slater’s Surf Ranch in Lemoore, CA (AB 1294); and an 18,000 seat arena in the City of Inglewood aka Intuit Dome, future home of the LA Clippers when it opens in 2024 (SB 392).
  • New Priority On-Sale Licenses: AB 1668 and SB 787 authorize ABC to issue up to 10 new original Type 47 licenses (on-sale general licenses for bona fide public eating places) in Placer and Nevada Counties, respectively. ABC may not issue more than four of the new licenses in each county per year. The licenses may not be transferred from one county to another nor sold by the licensees for more than the original cost to the seller.
  • Other noteworthy legislation includes: SB 76, allowing the City and County of San Francisco to create “entertainment zones” where open alcoholic beverages can be purchased and consumed during special events and expanding eligibility for music venue licensees to obtain duplicate licenses; AB 1217, extending COVID-19 temporary catering authorizations to July 1, 2026; SB 247, clarifying the alcohol license exemption for beauty salons and barbershops in CA B&P Section 23399.5 applies to all such businesses licensed by the State Board of Barbering and Cosmetology; and SB 788, removing production volume requirements for beer manufacturers, enabling small beer manufacturers (Type 23) to produce cider or perry. Finally, two urgency bills effective September and October of 2023, respectively: SB 844, allowing retailers to return beer to a wholesaler or manufacturer under certain conditions and revising the definition of “seasonal brand of beer”; and AB 1704, requiring ABC to conduct priority drawings via live video feed and expanding eligibility for the brewpub-restaurant license exchange program.

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

SKJ Welcomes Roger Clayton as a Partner

December 04, 2023

The partners at Strike Kerr & Johns are pleased to announce the elevation of Roger Clayton from Senior Associate to Partner!

Roger joined the firm as an associate in 2019. Prior to developing an expertise in alcohol regulatory law, Roger was a trial attorney in San Diego and a litigator with an international law firm. Roger regularly assists clients with trade practice issues, marketing promotions, tied-house compliance, third-party alcohol delivery, distribution agreements and administrative actions.

If you have any questions regarding the above, or relating to Chicago sports, Roger likely has the answers. Learn more about Roger here.

Alaska to Regulate Direct to Consumer Alcohol Shipping Beginning January 1, 2024

November 03, 2023

In 2022, Alaska Governor Mike Dunleavy signed Senate Bill 9 (“SB 9”), an omnibus beverage alcohol bill that includes new requirements for direct to consumer (“DtC”) shipping. Starting January 1, 2024, in- and out-of-state manufacturers must apply for a Manufacturer Direct Shipment license to ship product directly to Alaska residents. Manufacturer Direct Shipment licensees may only ship holder’s product through approved common carriers, and may not ship to any address in a zip code that has adopted a local option rule prohibiting the sale of alcohol. The Alcohol and Marijuana Control Office (“AMCO”) will compile a list of zip codes that are located within local option areas and notify Manufacturer Direct Shipment licensees of changes to the list. The bill’s language suggests that a permit holder may only ship wines of its own production, but the wording is ambiguous on this issue.

Previously, Alaska was one of only a few states where DtC shipping was permitted without a license. In-state and out-of-state manufacturers were able to ship direct to consumers under a blanket letter from AMCO stating that Alaska does not regulate alcoholic beverages imported in to the state for personal use. With the passing of SB 9, licensees will need to apply for the Manufacturer Direct Shipment license to continue shipping DtC.

The Manufacturer Direct Shipment license authorizes Alaska brewery retail, winery retail, and distillery retail licensees, as well as holders of manufacturer licenses issued in other states, to sell and ship their product directly to Alaska consumers, subject to quantity limits:

  • Distilled spirits: Licensees may not ship more than 1.5 liters in one transaction or more than 4.5 liters to a purchaser in a calendar year.
  • Wine: Licensees may not ship more than 18 liters in one transaction or more than 108 liters to a purchaser in a calendar year.
  • Beer: Licensees may not ship more than 288 ounces in one transaction or more than 13.5 gallons to a purchaser in a calendar year.

Manufacturer Direct Shipment licenses will not be issued to licensees that annually produce more than 300,000 barrels of brewed beverages or more than 50,000 proof gallons of distilled spirts. There are no production limits for winery licensees.

The new legislation also includes age verification requirements for Manufacturer Direct Shipment licensees. Prior to shipping, licensees must verify that the person submitting the order is at least 21 years of age using an age verification service or other method and require a signature by a person who is at least 21 years old upon delivery. Licensees must also label the shipping container as containing alcohol and include written or electronic information to the purchaser regarding fetal alcohol syndrome. Licensees should retain records relating to DtC sales for at least two years.

Manufacturer Direct Shipment licensees will also be subject to state excise tax starting in 2024. Licensees are required to file monthly statements and remit taxes to the Alaska Department of Revenue. Reports must include the total number of gallons sold, the name and Alaska address of each buyer, and the gallonage of each kind of beverage sold to the respective buyers.

The Manufacturer Direct Shipment license application will be available through AMCO and cost $200 biennially. We expect that AMCO will publish additional guidance soon. If you’re interested in applying for a license or have questions about the new legislation, contact an attorney at Strike Kerr & Johns.

CA ABC Announces License Authorizations for 2023

August 19, 2023

This week, California ABC announced new priority and intercounty license authorizations for eligible counties. This year’s announcement includes five (5) new Type 87 licenses for specified census tracts in San Francisco, as well as new on-sale liquor licenses in Napa, Mariposa, Alpine, Shasta, and El Dorado counties. A full list of the new license authorizations can be found here.

Introduced in 2016, Type 87 licenses are known as Neighborhood Restricted Special On-Sale General Licenses, issued to applicants in specific neighborhoods in the city and county of San Francisco. Type 87 licenses are typically designated for bona fide eating places and authorize the sale of beer, wine, and distilled spirits for consumption on the licensed premises, and generally subject to the same privileges and restrictions as a Type 47 license. These licenses require unique public notification and community interaction and approval during the formal application process and are generally non-transferrable. If there are more applicants than the five (5) licenses available in the specified
neighborhoods, a drawing will take place.

Another notable announcement includes a number of new on-sale authorizations in counties where priority licenses are generally unavailable. ABC announced new on-sales licenses in Napa County (10), Mariposa County (2), Alpine County (1), Shasta County (4), and El Dorado County (4). Priority license application form for all counties should be available August 23rd.

Between September 11th and 22nd, 2023, ABC district offices will accept applications for priority and intercounty licenses in eligible counties. This year, priority license fees are $17,335 and intercounty license fees are $6,570, to be paid at the time of filing. If there are more applicants than licenses available, priority drawing will be held the week of October 23rd. More information on specific dates and time for each drawing should be available October 16th.

There are residency requirements to be eligible for these licenses and the priority application process has become more cumbersome in recent years, resulting in some priority drawing winners later being deemed ineligible. As such, we recommend having experienced alcohol counsel review your applications prior to submission. If you’re interested in applying for a new or intercounty priority license, or have additional questions about the drawing process, contact an attorney at Strike Kerr & Johns.

Industry Trade Organizations Update Ad Codes to Reflect Census Data

June 01, 2023

Over the last week, leading industry trade groups have announced updates to their respective codes of advertising and marketing standards. These revisions are based on the latest 2020 census data released by the United States Census Bureau and aimed at ensuring alcohol advertising reaches an appropriate adult audience and complies with the industry’s commitment to responsible promotion.

Under the new guidelines, alcohol advertising should not appear in any media where more than 26.3% of the audience is under 21 years old, the legal purchasing age. The previous threshold, based on the 2010 census data, was 28.4%. The decision to revise the standard was prompted by the 2020 census data, which revealed that 73.8% of the U.S. population is 21 years of age and older, an increase from the previous figure of 71.6%. This adjustment ensures that alcoholic beverage advertisements are effectively targeted towards the intended adult audience. By aligning advertising strategies with the revised codes, industry members can demonstrate their commitment to responsible marketing and product promotion.

The adoption of the census-based standard was originally recommended by the Federal Trade Commission (FTC) in its 2008 report on “Self-Regulation in the Alcohol Industry.” Periodic updates to these voluntary standards ensure the industry practices reflect changes to modern society and technology.

Trade organizations including The Wine Institute, The Distilled Spirits Council of the United States (DISCUS), American Craft Spirits Association (ACSA), American Distilled Spirits Alliance (ADSA), Beer Institute, and Brewer’s Association are among the groups that have released updated guidelines.

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 14, 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.


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