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!
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.
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:
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.
October 05, 2021
California Wineries Can Now Operate Two Off-Site Tasting Rooms, Duplicate Tasting Rooms Can Sell and Deliver Wine in Consumer-Provided Containers, and Manufacturers Can Promote Donations Related to Alcohol Sales.
California Governor Newsom recently signed a series of bills into law that loosen restrictions on wineries’ duplicate tasting rooms and allow alcohol manufacturers to promote their charitable donations related to alcohol sales. The bills below become effective January 1, 2022. The following synopses address these recent changes:
California Type 02 winegrowers have traditionally been limited to operating a tasting room on their primary licensed premises, as well as one “duplicate” premises where the winegrower does not conduct winemaking operations. Per SB 19’s revisions to California Business and Professions Code section 23390.5(b), a Type 02 licensee can now operate two duplicate tasting rooms located off the winery’s primary winemaking premises - three tasting rooms in total. This bill is a welcome change for wineries interested in expanding their footprints within the state.
Currently, wineries and brandy manufacturers are permitted to exercise most of their normal privileges at duplicate tasting rooms. However, there is an exception that expressly precludes wineries and brandy manufacturers from selling or delivering wine to consumers in “containers supplied, furnished, or sold by the consumer.” See Cal. Bus. & Prof. Code § 23390(a)(3). AB 239 deletes this exception and allows duplicate tasting rooms to fill bottles provided by consumers.
Like most states, California does not allow industry members to influence alcohol sales by providing premiums, gifts or free goods in connection with the sale and distribution of their products. See Cal. Bus. & Prof. Code § 25600. There is an exception that allows alcohol manufacturers to make charitable donations; however, historically, manufacturers could not advertise those donations in relation to the sale of alcohol, e.g., “buy X product and we’ll donate $$$ to charity Y.” (Those types of offers are commonplace in California, but technically noncompliant, in the view of the California ABC.)
On October 8, 2020, California ABC suspended the prohibition on advertising charitable promotions and sales as a form of Covid-19 relief. See Sixth Notice
of Regulatory Relief (permitted the promotion of donations to “a bona fide charitable organization providing relief related to the COVID-19 pandemic”). AB 1267 takes ABC’s temporary relief one step further, and amends California Business and Professions Code section § 25600 to allow winegrowers, beer manufacturers, distilled spirits manufacturers, craft distillers, brandy manufacturers, rectifiers, and wine rectifiers to “donate a portion of the purchase price of an alcoholic beverage to a nonprofit charitable organization in connection with the sale or distribution of an alcohol beverage.”
Note that several limitations apply, and unless extended by the Legislature, this new law will sunset on January 1, 2025. The above-named manufacturers are permitted to advertise their charitable donations related to alcohol sales only if the following criteria are satisfied:
(i) The donation is only related to the sale or distribution of alcohol in manufacturer-sealed containers.
(ii) Promotion or advertisement of the donation does not directly encourage or reference alcohol consumption.
(iii) The donation does not benefit a retailer, or a nonprofit charity established for the specific purpose of benefiting the employees of a retailer, and the
advertisement or promotion of the donation, cannot, directly or indirectly, advertise, promote, or reference any retail licensee. See Cal. Bus. & Prof. Code § 25600(a)(3)(A)(i)-(iii).
If you’d like more information about new California laws, contact any of the attorneys at Strike Kerr & Johns.
June 09, 2021
Alabama’s governor signed a winery direct-to-consumer (DTC) shipping bill (HB437) into law on May 13, 2021, making Alabama the 47th state to allow winery DTC. The bill will become effective on August 2, 2021 and will allow wineries to ship up to 12 cases annually. Wineries wishing to ship DTC to Alabama consumers will need to obtain a direct wine shipper license for $200, renewable annually for $150, and pay all applicable Alabama sales and excise taxes. The new law allows the use of “wine fulfillment centers” for DTC shipments, provided the fulfillment center also obtains a license. Fulfillment center licensees must obtain a separate license for each facility they use to ship DTC into Alabama for an annual fee of $500 for the first location and $100 for each additional fulfillment center. Wineries, fulfillment centers, and common carriers involved in DTC to Alabama must each file a quarterly report providing certain details of those operations. HB437 also expanded wine franchise law protection throughout the state, which is perhaps less reason for celebration by wineries.
Tennessee Amends DTC Law to License Fulfillment Houses
The Governor of the State of Tennessee signed HB0742 on May 4, 2021, which will, among other things, allow wineries to continue to use fulfillment houses for DTC sales into the state. An earlier version of the bill prohibited the use of fulfillment houses but was amended to allow fulfillment houses to obtain a license and ship direct to Tennessee consumers on behalf of licensed wineries. The Tennessee fulfilment house license costs $300, renewable annually, plus an additional $50 fee for each additional fulfillment house location to be used to ship wine into the state. The license requirement is effective January 1, 2022; in the interim, wineries can continue using unlicensed fulfillment houses.
Kansas recently passed HB2137, which created a new license for fulfillment houses shipping wine DTC for wineries. The license costs $50 and is good for two years. The new law also imposes typical carton marking, record-keeping and reporting obligations. The requirement that fulfillment houses hold the new license was effective in May 2021, so fulfillment houses shipping wine DTC for wineries will want to apply for the new license as soon as possible.
There are several other pending DTC bills in other states. Delaware may be the next state to enable winery DTC if pending bill HB210 passes. It was just introduced in May 2021, so it has a long way to go before it becomes law. Rhode Island also has pending DTC bills but both are currently on hold pending further study. A promising bill in Louisiana that would have enabled wineries to sell wines DTC that are also available through the 3-tier system passed the House but looked doomed to fail in the Senate and was withdrawn. There will no doubt be more to come on these bills and other DTC activity.
If you’d like more information about these laws or about DTC generally, contact any of the attorneys at Strike Kerr & Johns.
Alcohol.Law is published for general informational purposes only and is not intended as legal advice. Copyright © 2021 · All Rights Reserved · Beverage Law Group, LLP
January 28, 2021
In response to changes in the FDA’s regulations on gluten claims on foods, TTB issued Ruling 2020-2 in October 2020, modifying its prior position on “gluten-free” claims on labeling and advertising on alcoholic beverages. The changes are summarized below.
What Was Allowed Prior to the New Ruling?
Prior to the new Ruling, TTB allowed “gluten-free” claims (including claims such as “no gluten,” “free of gluten,” and “without gluten,”) on alcoholic beverage labels and ads only if the products were produced without gluten-containing ingredients, and provided the producer took appropriate steps to ensure the product ingredients and facilities did not have cross-contact with gluten.
Prior to the new ruling, TTB allowed labels and ads for alcoholic beverages fermented from gluten-containing grains to claim that the products were processed (or “treated” or “crafted”) to remove gluten, if the claim was accompanied by a qualifying statement and the producer has documentation to verify the steps taken to remove gluten. Such products could not include claims that they were “gluten-free,” and TTB would consider such claims to be misleading, regardless of the actual gluten content of the finished products.
What Was Changed in the New Ruling?
Distilled spirits products that are distilled from gluten-containing grains can now make “gluten-free” claims, provided they are made following good manufacturing practices to ensure the product is not exposed to gluten-containing ingredients. The distillation process removes proteins and gluten, the absence of which can be detected by scientifically valid testing methods, so TTB has determined “gluten-free” claims on these distilled products to be safe.
Producers must be prepared to substantiate, upon request, the absence of protein (and thus gluten) in the distillate, the absence of gluten in any added ingredients, and the precautions taken to prevent cross-contact, including from storage materials that may contain gluten.
Sum It All Up – What is Allowed Now?
Wine, beer or spirits products produced without gluten-containing ingredients and made in accordance with good manufacturing practices can continue to make “gluten-free” claims.
Fermented products made using gluten-containing products still cannot claim to be “gluten-free,” but can continue to make claims that their products were processed/treated/crafted to remove gluten, if (1) the producer submits a description of the method used to remove gluten along with their COLA application, and (2) the labeling and ads conspicuously bear the following qualifying statement: “Product fermented from grains containing gluten and [processed or treated or crafted] to remove gluten. The gluten content of this product cannot be verified, and this product may contain gluten.”
Distilled spirits product labels that currently make claims regarding treatment to remove gluten can be changed to say “gluten-free” without the need for a new COLA (provided they are entitled to make that claim).
It remains TTB’s policy that any other explicit or implicit claims about gluten content are prohibited if they are false or tend to create a misleading impression. TTB will evaluate such statements on a case-by-case basis, and may require a disclaimer or some other qualifying statement to dispel any misleading impression created by such statements.
Labels and ads for fermented products cannot claim a specific level of gluten in the finished product (such as “contains x ppm”) until FDA/TTB conclude that a scientifically accurate testing methodology exists for such products.
Why Are Distilled Spirits, Fermented Products, and Foods Treated Differently?
Under FDA regulations, labels and ads for food products produced with gluten-containing ingredients can make “gluten-free” claims if the product has been processed to reduce gluten to below 20 ppm (i.e., 20 mg or more per kilogram). However, FDA and TTB are not aware of any scientifically valid testing method to measure gluten in fermented products, such as beer or wine, so until such testing is available, TTB will not allow “gluten-free” claims on fermented products made with gluten-containing ingredients. Similarly, FDA will not allow “gluten-free” claims on wine under 7% abv and beer made without malt, which products are subject to FDA labeling regulations, if they are made with gluten-containing ingredients. Distilled spirits, on the other hand, can be determined to be gluten-free because of the absence of protein (and gluten) eliminated in the distillation process, which is why TTB treats spirits differently and allows “gluten-free” claims.
If you have questions about the new TTB ruling or about alcohol labeling and advertising generally, please reach out to one of the attorneys at Strike Kerr & Johns.
Alcohol.law Digest is published for general informational purposes only and is not intended as legal advice. Copyright © 2021 · All Rights Reserved ·
January 14, 2021
The state of Kentucky enacted a direct-to-consumer (DTC) shipping law for beer, wine, and spirits, effective July 15, 2020, and on December 14, 2020, finally issued the regulations to implement the new law. Here’s the new law in a nutshell:
Who is Eligible for the DTC Shipping License and What Can Be Shipped?
The law is applicable to producers of beer, wine or spirits with federal basic permits and state production licenses in their home state – it is not applicable to retailers. Producer licensees can ship up to 10 liters of distilled spirits, and up to 10 cases of wine or beer per month per Kentucky resident. The products must be produced by
the licensed shipper or produced or bottled by another producer exclusively for them under a brand name owned by, or licensed to, the direct shipper. Brands and labels must be registered with the Kentucky ABC.
What is Required to Obtain a License to Ship DTC?
In order to qualify to ship DTC, the out of state producer must obtain a direct shipper license from the Kentucky ABC, which currently costs $100/year. The applicant must first register to do business in Kentucky with the Secretary of State, and register with the Department of Revenue to collect and remit sales and alcohol taxes. Licensees can only ship product from their licensed premises and they must provide a copy of the deed or lease showing their right to occupy the licensed premises they will ship from. This is a significant limitation for licensees that typically operate their DTC program from fulfillment houses or third-party warehouses off their licensed premises.
Shippers must collect and pay a 6% sales tax, plus an alcohol wholesale tax and an alcohol excise tax. The wholesale tax is 11% of the wholesale price for spirits and 10% of the wholesale price for beer and wine. If there is no actual wholesale price for the products in Kentucky, it is deemed to be 70% of the invoiced retail price. The excise tax is currently $1.92/gallon for spirits, $0.50/gallon for wine, and ~$0.08/gallon for beer. Alcohol taxes are reported and paid quarterly.
If you have questions about the new law or about direct shipping generally, please reach out to one of the attorneys at Strike Kerr & Johns.
January 06, 2021
TTB issued a final rule, effective December 29, 2020, amending the existing labeling regulations for wine and distilled spirits. The revised regulations add seven new allowable container sizes (called “standards of fill”). For wine, TTB added 200, 250, and 355 milliliter sizes, and for distilled spirits, TTB added 700, 720, 900 milliliters and 1.8 liter sizes. The allowable sizes are now:
Wine – 27 CFR 4.72:·
The final rule also made two other revisions:
TTB had initially proposed to eliminate the standards of fill for wine except for the minimum 50ml size (to accommodate the required labeling info) and eliminate all but the minimum and maximum standards of fill for spirits. The thought behind the proposed changes was that it would expand manufacturing options and consumer purchasing options, and would promote commerce, without impacting tax revenue calculations or collection. TTB received comments in support of the elimination from commenters who felt it would provide them greater flexibility and enable them to grow their businesses.
However, TTB received many more comments in opposition to the proposed elimination, including from some industry members and their trade groups. The concerns raised by these commenters included potential consumer confusion caused by a myriad of available sizes, making it more difficult to price compare, and a more “chaotic consumer marketplace” generally. Some wholesalers and retailers also submitted comments in opposition, asserting that the proliferation of sizes would increase their costs. In the alternative, TTB had proposed not eliminating the existing standards of fill but adding new sizes based on those it had received petitions to approve. Taking into consideration the comments it received, the majority of which opposed elimination of the standards of fill, TTB opted to add certain of the proposed new sizes, as reflected in the final rule.
If you have questions about the new TTB ruling or about alcohol labeling and advertising generally, please reach out to one of the attorneys at Strike Kerr & Johns.
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