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Imbiblog is published for general informational purposes only and is not intended as legal advice.

Category archives for “alcohol beverage license”

Brewing Beer in California

April 14th, 2014

With the explosive growth in craft beers and micro and nano and other really, really small breweries, we at Strike & Techel wanted to put together some helpful tips for anyone looking to brew beer in the state. If you want to make beer commercially, these guidelines will help you work out the best way to start your new business. You will find three ways to get going in the guidelines: small beer manufacturing, beer manufacturing (over 60,000 barrels of beer), and brewpub operations where you get to brew beer and sell it to people in a restaurant or pub setting.

Contact one of the attorneys at Strike & Techel if you have questions about brewing beer in California or other states.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2014 · All Rights Reserved ·

Tennessee House of Representatives Overwhelmingly Passes Wine in Grocery Stores Bill

February 24th, 2014

Last Thursday, the Tennessee House of Representatives passed House Bill 610 by a vote of 71-15, voting to allow the issue of the sale of wine in grocery stores to be submitted to voters in local referendums, and creating a permit for the sale of wine by grocery stores. On January 30, the Senate had approved Senate Bill 837 by a vote of 23-8. The Bill will now be returned to the Senate to review the remaining differences between the two bills, before it goes to the Governor for signature. If signed by the Governor, it is anticipated that the issue could be on local November ballots for consumers to weigh in on local approval of grocery store wine sales.

One of the key differences between the two bills was fixed by the House in its new version, with the reduction of minimum size for grocery and convenience stores from 2,000 to 1,200 square feet, allowing about 500 more convenience stores to qualify. The House also reduced the fee for a grocery store wine license to $1,250 from $2,000, bringing it closer to the $850 in the Senate Bill. Already, following the House vote, Sen. Bill Ketron, the Republican who sponsored the Senate Bill, indicated to reporters that he planned to accept the House version and could ask for a vote as soon as March 3.

Even if approved, wine sales won’t be possible in grocery locations until summer 2016 due to an agreement reached with lobbies for liquor stores and wholesalers that had opposed the proposals. In another concession to liquor stores, both bills open up opportunities for traditional liquor stores to sell items other than alcohol and to do so as soon as this summer, two years before any grocery store wine sales could begin. Liquor stores are currently allowed to sell only wine and distilled spirits and a few minor accessories like corkscrews. Additionally, grocery stores would be subject to a minimum 20% markup on wines sold, in an attempt to address volume discounting, and would be prevented from offering combined deals of wine and other grocery items. To encourage wholesaler support, the Senate Bill allows for wholesalers to be located outside the four major cities in the state which they are currently restricted to, and the House Bill would extend that even further to any county which currently permits bars or liquor stores to operate. Blue laws, preventing Sunday sales of alcohol, will not be affected by any new legislation, and such sales will continue to be prohibited.

The debate in Tennessee has been ongoing since 2006. It is not the only state which has been discussing this issue as we previously blogged here. Currently, thirty-five states do not restrict the sale of wine in grocery stores. No state has managed to pass legislation changing the status quo since Iowa permitted grocery store sales in 1985. Factions in New York, now the second largest wine-producing state by volume, have attempted to pass wine in grocery store bills on numerous occasions, including a significant push in 2011. The Kansas House Commerce, Labor and Economic Development Committee held a hearing Wednesday on House Bill 2556 which would allow the sale of full strength beer and wine in grocery stores, inducing vigorous debate. A bill introduced to the Oklahoma Legislature this month, which would permit wine to be sold in grocery stores and nonalcoholic beverages and refrigerated beer and wine to be sold in liquor stores, died in Committee. And last month, a federal appeals court in Kentucky ruled that the state’s ban on grocery store sales of wine and liquor was constitutional. The court said that the state had every right to ban such sales, “just as a parent can reduce a child’s access to liquor.” The grocers who filed the original challenge to the law are reviewing rehearing and appeal options now.

If you have any questions about where wine can be sold, contact one of the attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2014 · All Rights Reserved ·

Dan Kramer Featured in The San Francisco Examiner!

February 3rd, 2014

Strike & Techel’s own Dan Kramer was featured in an article in Sunday’s San Francisco Examiner. Dan was interviewed for the article “Want to be in the booze business in SF? Better know the law” in which he discusses his experience in the alcoholic beverage industry, including the complications and expenses of obtaining a retail license in San Francisco, California promotional issues, as well as distribution and direct shipping. As Dan pointed out, alcoholic beverage legal issues can not only be complicated, but they are often not on people’s radar as they venture into the industry. If you’re just getting started in the industry or have any questions about retail licensing, distribution, direct shipping, or just about anything else in the industry, call Dan or one of the other attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2014 · All Rights Reserved

Getting Started in the Business: Entity

January 15th, 2014

This blog entry is part of a continuing series discussing important steps to get started in the alcoholic beverage industry. In addition to choosing a location for your business (discussed in a previous post, here), and before you prepare the applications to obtain the license(s) required to operate your business (discussed in a previous post, here), you will also need to consider what type of business entity should be formed in order to operate your business.

We usually counsel clients to hold their alcoholic beverage license under an entity, rather than as an individual.  Formation of an entity that is separate and distinct from its owners offers protection against certain liabilities and may be advantageous from a tax perspective.

The type of entity (e.g., corporation, limited liability company, trust, etc.) and the domicile (state) of the entity can impact how the entity is taxed.  Your tax advisor may have an opinion on these issues.  If the entity is not domiciled in California and you intend to apply for a California ABC license, the entity will have to qualify to do business in California before you can file your applications. You may also need to register a fictitious business name in the county in which your business will operate and obtain a local business license(s).

In order to establish an entity in California, you will have to file Articles with the Secretary of State.  You will also need to prepare corporate bylaws or an LLC operating agreement, depending on which type of entity you form.  These documents are very important, as they set forth the specifics about ownership percentages, voting rights, profit distributions, etc.  Bear in mind that certain changes in ownership, such as added shareholders/LLC members can affect your alcohol licenses.  It is wise to consider carefully who will be an owner of the business entity and whether any ownership changes are likely to occur before submitting your license applications.

Contact one of the attorneys at Strike & Techel if you have questions relating to forming a business entity in order to get started in the alcohol beverage business.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2014 · All Rights Reserved

Getting Started in the Business: Licensing

December 12th, 2013

This blog entry is part of a continuing series discussing important steps to get started in the alcoholic beverage industry. Once you have pinpointed a location for your business (discussed in a previous post, here), you will need to obtain a license, or a combination of licenses, before you commence operations.  To determine what type(s) of license(s) you need, here are some answers to questions you may be asking:

*   Do the Tied-House Laws Permit Me to Hold the Licenses I Want?  Federally and across all states, “tied house” laws generally prohibit the same person or entity from having an ownership interest in alcohol beverage businesses in more than one of the 3 tiers -manufacturing/importing, distribution and retail.  (To learn more about tied house laws, review this post.)  However, that restriction is far from absolute.  Many statutory exceptions have been carved out of the 3-tier system to permit cross-tier licensing and the resulting patchwork of exceptions can be difficult to comprehend.  For example, in California, wineries can also own restaurants (subject to restrictions) and certain off-sale retail stores.  Small breweries (less than 60,000 barrels/year) can own on-sale retailers but large breweries cannot.  Beer and wine wholesalers cannot also be retailers, unless they sell only wine through the retail store.  Other states have their own set of hard-to-explain exceptions.

*   What Does My License Permit Me to Do?  The general rule is that manufacturers sell to wholesalers; wholesalers sell to retailers; and retailers sell to consumers.  But this, too, is riddled with exceptions.  California wineries and breweries can sell their products directly to retailers and consumers without using a distributor, but distilled spirits manufacturers can sell only to distributors and cannot themselves hold a distributor license.  Rectifiers, on the other hand, can act as their own distributor and sell their products – and spirits products made by anyone else – directly to retailers.  Moreover, you may need more than one license to operate your business.  For example, if you are going to be operating a distillery, you will need a Type 4 (Distilled Spirits Manufacturer’s license), and a Type 6 (Still) license.  If you are importing distilled spirits from outside of California and distributing them to retailers you’ll need a Type 12 (Distilled Spirits Importer), and a Type 18 (Distilled Spirits Wholesaler).  California issues dozens of different licenses so it is important to know exactly what you want to do, which licenses are needed to accomplish it, and whether you are eligible to hold them.

*   What are the Processing Times to Obtain a License?  In California, it takes about 90-120 days to process an application for a new license, and slightly less time to transfer an existing license at a premises that is already licensed. It will take longer to process an application that is incomplete, contested by neighboring residents or the local authorities, or filed incorrectly.  Also keep in mind that the ABC cannot issue a license until it has received confirmation from the City/County that all required use permits have been obtained.  Each applicant will be assigned a local ABC investigator to handle the application until the process is completed.  Currently, U.S. Alcohol Tobacco Tax Trade Bureau (“TTB”) licenses are processing in about 90 days, similar to California licenses.

*   May I Obtain a Temporary Permit?  Provided that you are transferring an existing license at an already licensed premises, the California ABC may grant a temporary permit so you may operate your business while the license transfer application is being processed. A temporary permit is not available in connection with applications for new licenses or applications to transfer existing licenses to a premises that has not been previously licensed.

*    What Are the Costs Involved?  Depending on what type(s) of license(s) applied for, the cost can vary considerably.  A schedule of license costs is available here.  Some retail licenses are limited in numbers and must be purchased on the open market.  Prices for these licenses vary greatly by type and location.  For instance, a Type-47 (On-sale general eating place) may sell for $200,000 in San Francisco, whereas the same type of license in Fresno County currently only costs $12,000.

In conjunction with your ABC application, you may also need to obtain other federal, state or local licenses/permits.   In California this may include, for example:  federal licenses through the TTB; a certification from the Secretary of State that you are qualified to do business in the state; and a sales tax permit from the State Board of Equalization.

Contact one of the attorneys at Strike & Techel if you have questions about applying for a license to get started in the alcohol beverage business.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Wine Growlers From a Keg

October 29th, 2013

Keg wine is a growing trend. Packaging and selling wine in kegs has a lot of advantages. Wine kegs are refillable and reusable. Wineries save on packaging costs, and restaurants enjoy the convenience of serving many customers without constantly uncorking bottles.

Alcohol laws dictating permissible containers and packaging for wine are expanding in concert with retailer and consumer interest in keg wine. For example:

- Effective July 1, 2013, Florida allows the sale of wine in 5.16 gallon canisters, which can be tapped like kegs, to restaurants and bars.

- Effective April 1, 2013, Oregon allows any wine shop, grocery store, wine bar or restaurant to buy wine by the keg and resell it to consumers by the glass, or in some establishments, consumers can fill their own containers in a size that is 2 gallons or less.

Most states continue to have restrictions on this “growler” type of service by a wine shop. Those restrictions comport with federal rules saying that packages cannot be filled with wine except at a winery or at a “tax paid bottling house.”

We expect to see more legislation in the coming months and years if this trend continues.

If you have any questions about keg wine, feel free to consult one of the attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Clarifications from the ABC on Sweepstakes and Contests in California

October 17th, 2013

On June 13, 2013, guests attending ShipCompliant’s “Direct 2013” conference heard from Matthew Botting, General Counsel to the California ABC, on supplier participation in sweepstakes and contests under California’s new law.  We’ve previously blogged about the new law here and here.

California Code of Regulations Title 4, Section 106 (“Rule 106”) has always allowed suppliers to “sponsor” a contest, meaning suppliers could give money or otherwise participate when the contest was organized by “bona fide amateur or professional organizations.”  Previously, the privilege was limited.  Now, the privileges are broader:  suppliers (including wineries) can now “conduct” a contest under recently enacted Business and Professions Code Section 25600.1, and conduct or sponsor a sweepstakes under 25600.2.  Mr. Botting discussed the different available privileges and their limitations:

*   “Conduct” means the promotion is managed and organized by the supplier.
*   “Sponsor” means it is someone else’s sweepstakes or contest and the supplier is providing a prize or other sponsorship of the promotion.
*    For the time being, suppliers can only sponsor a contest in accordance with the existing Rule 106, which means sponsorship is limited to a contest conducted by bona fide amateur or professional organizations.
*    Sponsoring a sweepstakes and conducting a sweepstakes or contest is now covered by Business and Professions Code Section 25600.1 and 25600.2.  Sweepstakes or contests cannot require a visit to a licensed premises of any kind, so there must be an alternate method of entry (“AMOE”) if entry forms are available at a licensee.
*     Sweepstakes and contests cannot be conducted on retail premises (e.g., a grocery store, liquor store, bar or restaurant).  A “retail premise” includes some locations you might not think of, such as: an unlicensed premises if a licensed caterer is present, or at an event held by a nonprofit under a one-day permit. The ABC considers events held with a caterer’s license or a nonprofit one-day permit to occur “at the premises of a retail licensee,” and therefore a supplier may only provide a means of entry at either of these types of events.
*     While suppliers may provide a means of entry for the contest or sweepstakes, the contest or sweepstakes may not be conducted at a winery or brewery’s duplicate tasting room.
*     A contest or sweepstakes can only be advertised at a retailer if it is advertised at a minimum of three different retailers, and winners shouldn’t be picked at a licensed retail event nor in a tasting room.

The full presentation by Mr. Botting can be seen here (starting at the 5:00 minute mark).

Before conducting or sponsoring any contest or sweepstakes, be sure to consult the relevant laws, Business & Professions Code Sections 25600.1, 25600.2, and, if applicable, Rule 106 (regarding contests), and pay particular attention to whether the supplier involved holds a license that allows it to participate.

Contact one of the attorneys at Strike & Techel if you have questions about contests and sweepstakes in California or other states.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Winery Direct Shipping Coming Soon to Montana

August 26th, 2013

Starting October 1, 2013, Montana will allow the direct shipment of wine to Montana residents by wineries that hold a Direct Shipment Endorsement. Holders of a Direct Shipment Endorsement may sell and directly ship up to 18 nine-liter cases of wine annually to an individual in Montana who is at least 21 years of age. Any in-state or out-of-state winery that is already registered with the Montana Department of Revenue must pay $50 and file associated paperwork to receive a Direct Shipment Endorsement, and wineries not already registered with the state will be able to simultaneously register with the state and apply for a Direct Shipper Endorsement. Applicants must submit a signed affidavit that they will contract only with common carriers that agree that wine will be delivered only to an individual in Montana who is at least 21 years old and who signs upon receipt of the wine. Records may be due every month and every quarter, and must be held for state inspection for up to three years. All taxes must be paid quarterly and tax records submitted monthly (by the 15th date of the following month) to the Department of Revenue. If a holder of a Direct Shipment Endorsement uses a bonded wine warehouse for fulfillment purposes, the endorsement holder must file a written notice that includes the name and address of the warehouse. The state also requires pre-approval of all wine labels to be shipped into the state. Stay tuned as Montana will likely issue regulations and step-by-step instructions in the coming months.

If you have any questions about shipping wine directly to Montana residents, or residents of any other state, contact one of the attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Kentucky Changes Alcohol Beverage Laws – Requires Out of State Shipper’s Licenses for Wine and Spirits

August 14th, 2013

With the passage of Senate Bill 13 (“SB 13”), effective June 25, 2013, Kentucky modernized its alcoholic beverage laws in an effort to make them more effective and efficient for manufacturers, distributors and retailers alike.  This modernization included consolidating licenses, simplifying the licensing process, and most importantly for out of state wine and spirits suppliers, it created an out of state shipper permit.  Prior to the revisions, beer suppliers were required to hold a license to ship to Kentucky distributors but suppliers of distilled spirits and wine were not.

The new Out-of-State Distilled Spirits/Wine Producers/Supplier license application is available here:  http://abc.ky.gov/License%20Applications%202013/outofstate.pdf

Three classes of the new Out-of-State Distilled Spirits/Wine Producers/Supplier license are available:

-  Out of State Producer/Supplier for 50,000 gallons or more ($1,550 a year/$3,100 for 2 years);
-  Limited Producer/Supplier for 2,001 to 49,999 gallons ($260 a year/$520 for 2 years); and
-  Micro-Producer/Supplier for 2,000 gallons or less ($10 a year/$20 for 2 years).

Below are some of the other key changes ushered in by the passage of SB 13:

-  Consolidates 88 different license types into 44, changing the names of the licenses and fees associated with each, but keeping unchanged the privileges afforded to the licensees.  A few examples:  A “Vintner” license is now a “Winery” license, a “Blender’s” license was eliminated and its privileges consolidated into the “Rectifier’s” license.
-  Allows a two-year license term renewal for manufacturers and wholesalers, in addition to a one-year license option.
-  Bundles together several non-quota retail-drink licenses.
-  Creates a Transporter license, consolidating six former transportation-related licenses into one.
-  Eliminates bond requirements for many license types
-  Changes the licensing structure for microbreweries.

For more information on the changes to Kentucky’s alcohol beverage laws, visit the Kentucky Liquor Control’s information page at http://www.klc.org/UserFiles/files/KACOinfosheet.pdf

And of course, you can always call one of the attorneys at Strike & Techel if you have any questions about any of the changes to Kentucky’s alcohol beverage laws, or if you have any general questions about shipping to distributors in any state.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

 

California ABC Announces New License Authorizations

August 8th, 2013

Looking for a California ABC retail license for a county in which none are available? You may be in luck!  Every year, the California ABC issues a list of the counties in which new licenses – called “Priority” licenses — will be made available based on population growth in those counties.  ABC Headquarters has just announced the authorization for the issuance of new on-sale general and off-sale general licenses for 2013 and new licenses are available in many California counties.

What is a Priority application?

California “General” retail licenses authorize the sale of beer, wine and distilled spirits. The number of General licenses that the ABC can issue in a county is restricted based on county population. If your county is already at its maximum, you can’t get a new General license from the ABC and instead must buy one from an existing licensee in your county, typically at a significant premium. However, in counties where growth has occurred, the ABC permits new General licenses within the county once per year during a ‘priority’ application period by allowing both new issuances of licenses in the county and intercounty transfers of licenses. An intercounty transfer means a business owner in the priority county can buy a General license on the open market anywhere in the state and transfer it in to the priority county.  A person can apply for one of the priority General license spots in the county, or for one of the priority intercounty General license transfer spots, or for both.

Anyone that anticipates the need for an Off-Sale General Package Store License (Type 21), an On-Sale General Eating Place Restaurant License (Type 47), or a Special On-Sale General Club License (Type 57) within the next year in a county with licenses available should apply.

Licenses Available by County:

For a complete listing of licenses available by county, click http://www.abc.ca.gov/press/PR2013/PR13-23.pdf

2013 Filing Period:

ABC District Offices will accept in-person or mail-in priority applications from September 9-20, 2013.  Mail-in applications must be postmarked September 20 or earlier in order to be accepted.  If the Department receives more applications than licenses available (which it typically does), a public drawing is held.  Applicants are typically notified two weeks later of their priority status. Once approved for priority, the applicant has 90 days to complete the full formal license application for the identified premises.

Fees:

Priority application fees are $13,800 for new general licenses and $6,000 for intercounty transfers. Only a certified check, cashier’s check or money order will be accepted, and it must be submitted with the priority application. Unsuccessful applicants’ fees will be refunded, less a $100 service charge, within 45 days of the drawing.

Residency requirements:

Every applicant must be a resident of California for at least 90 days prior to the drawing.  The 90 day clock starts ticking upon registration with the California Secretary of State for corporations, limited partnerships, and limited liability companies.  Individuals and partners must submit proof of California residency.

If you are interested in applying for a new on or off-sale general priority license, please feel free to contact the attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·