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The California ABC released an Advisory earlier this month that outlines a compliant path for California alcoholic beverage licensees to engage unlicensed service providers. In our practice, this issue comes up often in reference to websites that look like wine shops, but hold no alcoholic beverage licenses of their own. The Advisory is available here.

We were active on the working group that made suggestions on this issue to the ABC, and were pleased that the ABC was willing to listen to industry feedback before deciding on a course of action. We’ve been getting lots of questions on the provision regarding control of funds, which (is long!) and states:

“The control of funds from a transaction involving the sale of alcoholic beverages constitutes a significant degree of control over a licensed business. As such, while a Third Party provider may act as an agent for the collection of funds (such as receiving credit card information and securing payment authorization), the full amount collected must be handled in a manner that gives the licensee control over the ultimate distribution of funds. This means that the Third Party Provider cannot independently collect the funds, retain its fee, and pass the balance on to the licensee. The Third Party Provider should pass all funds collected from the consumer to the licensee conducting the sale, and that licensee should thereafter pay the Third Party Provider for services rendered. Alternatively, the parties may utilize an escrow account, or similar instrument, that disburses the funds upon the instructions of the licensee. So, for example, a Third Party Provider may accept consumer credit card information, debit the card, deposit the funds in an account under the licensee’s ultimate control, and, upon the licensee’s acceptance of the order and direction to the account holder, receive a fee from the account. Given the nature of Internet transactions, the Department recognizes that such collection, acceptance, and disbursement of funds will often times be accomplished solely through computer-generated means.”

We’re looking forward to seeing how the industry adapts to this provision, which seems to require that all funds for an alcoholic beverage sale settle to the account of a licensee before they are disbursed. Will new “alcohol escrow” businesses pop-up to service the need? Will each unlicensed website create its own special accounting to comply? Will fee collection be adversely affected for the unlicensed websites, such that the business model becomes less viable? We’re watching this issue unfold with great anticipation.

Earlier this month, Tennessee became the 35th state to allow spirits tastings, with the passage of Senate Bill 1224, which will permit restaurants, bars, and liquor stores to offer limited alcohol sampling.  The bill, which was signed into law on June 10th and is codified at Tennessee Code Annotated Section 57-3-404(h)(2), will allow spirits retailers to conduct tastings for “sales, education, and promotional purposes.”  Similar to tasting laws in most other states, spirits wholesalers may not take part in the events, and are specifically precluded from directly or indirectly providing any “products, funding, labor, support or reimbursements to a retailer.”  The Tennessee Alcoholic Beverage Commission will be establishing rules specifying how tastings must be conducted.

Tennessee is among a growing list of states that have authorized limited tastings since 2009, joining California, Maine, Michigan, New Jersey, Vermont, Virginia, and Washington.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

The United States is home base for pop culture and advertising. According to a 2007 New York Times article, people living in cities see up to 5,000 advertising messages a day, over twice as many as those living in cities 30 years ago saw. And that figure is four years old. Ever since Andy Warhol’s famous Campbell’s Soup Cans, the lines between art, advertising, entertainment, and social commentary have been continuously blurring. But, as the TTB recently reminded people, nowhere are those lines more defined and regulated than in the alcoholic beverage industry. On March 26^th and April 7^th, the TTB released industry circulars on the application of alcoholic beverage advertising regulations to media personality sponsorships and television advertising. The Code of Federal Regulations requires, among other things, that a responsible advertiser statement containing the name and address of the responsible party, appear in all advertisements for wines, malt beverages, and distilled spirits (See 27 CFR §§ 4.62, 5.63, 7.52). 

The TTB’s Industry Circular 2011-01 cautioned against the practice of media personalities who are compensated by alcoholic beverage companies, such as radio hosts, covering certain advertising talking points within a free form story told by the radio host (referred to as unscripted advertisements) without including the mandatory advertising language. The Circular also reminded the industry that such hosts should not make statements about alcoholic beverage products that are prohibited by the Federal Alcohol Administration Act (FAA Act) or TTB regulations. TTB Industry Circular 2011-02 addressed advertisements that are run by television stations more often than contractually required and in such instances often do not include the mandatory information required by the FAA Act and TTB regulations. On top of all that, there is the Federal Trade Commission, which prohibits deceptive and unfair advertising. Thus, if one is paying someone to say something nice about ones products that must be disclosed.

Which leads us to the question: What is an advertisement? The Code of Federal Regulations defines an advertisement as “any written or verbal statement, illustration, or depiction which is in, or is calculated to induce sales in, interstate or foreign commerce” (See 27 CFR §§ 4.61, 5.62, 7.51). The only exceptions from the definition are labels and things like press releases (“editorial or other reading material … in any periodical or publication or newspaper for the publication of which no money or valuable consideration is paid or promised, directly or indirectly, by any permittee, and which is not written by or at the direction of the permittee.”) That’s a pretty broad definition and it’s hard to see where the line exists in modern society. If Kim Kardashian (who reportedly earns $10,000 per tweet) mentions an alcoholic beverage company, does she need to fit the mandatory advertising language into 144 characters? Was Jay-Z’s “Show Me What You Got” music video an advertisement for Armand de Brignac? Whatever these projects are—Advertainment? Entertisement? (you heard the terms here first, unless you heard them somewhere else first)—marketers should remember they are still subject to the standard alcoholic beverages advertising regulations.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

In just a few weeks, Kristen Techel, Partner at Strike & Techel, will be speaking at the Wine Law conference in Denver, Colorado. The two-day conference, presented by Law Seminars International, runs April 11^th-12^th and covers rules, regulations, challenges, and practical advice for the wine industry. Kristen Techel will be part of a panel discussion on social networking platforms entitled “The Brave New World of Internet Marketing: Establishing a Web Presence Utilizing Social Media” at 3 p.m. on April 12^th. Co-panelists include Benjamin Weinberg, Esq., Editor-in-Chief at Unfiltered, Unfined and Michael Lazlo, Esq., with Laszlo & Associates. The conference will be held at the Grand Hyatt Denver Hotel. If you will be attending the conference, please feel free to stop by and say hello to Kristen!

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

Today the Alcohol and Tobacco Tax and Trade Bureau (TTB) launched their Permits Online system, which is available here. The system is a counterpart to the Formulas Online and COLAs Online systems. The Permits Online system allows the application procedure for federal alcohol and tobacco business permits to be completed entirely online. The system allows one to prepare, submit and track applications through the TTB’s online portal, available 24 hours a day, 7 days a week. But as with many technology innovations and advances, there is often a corresponding down side. A few weeks ago, the TTB announced that they are no longer accepting “Expedite Requests” or “Informal Reviews” for certificate of label approvals (COLAs) and formula approvals. The former expedite option allowed for rapid turnaround of approvals that was especially helpful for the industry at large.

With a dramatic increase in approval requests over the years, coupled with shrinking governmental budgets, the TTB decided that all applications will be reviewed on a first-come, first-served basis, without any expedite availability. Further, the TTB stated that applicants should plan for a full 90-day review period, which does not include any additional time that could be necessary if label or formula changes are requested. The TTB did note that online applications are processed about twice as fast as paper applications, so there is a real incentive to using the online portals. If you have an upcoming formula approval or COLA, be sure to factor in enough time for the TTB’s review given that the expedite option is no longer available. If you have questions about formula or label approvals, please feel free to call any of the attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

Last week, partners Barry Strike and Kristen Techel attended the California ABC’s annual Stakeholder Meeting in Sacramento. The meeting covered everything from furlough status and budget to planned action items for 2011 and 2012. Stakeholder working groups were established to further investigate and provide recommendations to the new ABC Director, Jacob Appelsmith. The four groups will cover issues related to Third Party Providers, Brands and Trademarks and other Things of Value, Licensing Process and Industry Training, and Public Convenience or Necessity.

Interestingly, during the meeting Matt Botting, General Counsel to the ABC, indicated they had not seen many applications for the new tasting permit for off-sale retailers, which we originally discussed here and here. If you’re interested in learning more about or applying for the new instructional tasting license, please feel free to contact any of the attorneys here at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

The deadline has been extended for comments on the Alcohol Tax and Trade Bureau’s (“TTB”) proposed amendment to regulations regarding common winemaking terms used on wine labels and advertisements.  Written comments are now due by March 4, 2011.  The TTB set out their proposed new regulations in Notice 109, “Use of Various Winemaking Terms on Wine Labels and in Advertisements”, published November 3, 2010 in the Federal Register.  The comment period was extended at the request of Napa Valley Vintners (“NVV”).  NVV has formed a subcommittee to research and survey members on the proposed new regulations. 

There are four main proposals set forth by the TTB in Notice 109.  First, the TTB proposes requiring the use of the terms “estate grown,” “estate,” and “estates” to meet the higher threshold definition it currently ascribes to “estate bottled.”  Second, the TTB proposes codifying its policy of only allowing the terms “proprietor grown” and “vintner grown” if 100% of the grapes used in a wine are grown on vineyards owned or controlled by the bottling winery.  Third, the TTB proposes to codify its current position that “single vineyard” may only be used when 100% of the grapes used in the wine come from one vineyard.  Further, it would extend that reasoning to the terms “single orchard,” “single farm,” and “single ranch.”  Fourth, the TTB is considering codifying definitions for the following terms: “Proprietors Blend,” “Old Vine,” “Barrel Fermented,” “Old Clone,” “Reserve,” “Select Harvest,” “Bottle Aged,” and “Barrel Select.”  The TTB made the proposals in an effort to ensure that consumers are not misled by wine labels and advertising.  Should these changes occur the TTB could revoke its approval of previously approved labels.

The Federal Alcohol Administration Act (“FAA Act”) sets forth the regulations for alcohol labeling and advertisements, including wine.  The TTB is responsible for the administration of the FAA Act and the promulgation of regulations thereunder.  The specific wine labeling and advertising regulations can be found in Title 27 of the Code of Federal Regulations.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

Welcome to IMBIBLOG, the blog of Strike & Techel. We are attorneys specializing in the laws and regulations governing alcoholic beverages, also known as liquor law or alcohol law.  Liquor law is a specialized area of legal practice.  Compared to other areas of legal specialization, there are relatively few lawyers specializing in alcoholic beverage law. If you are considering starting a business related to alcohol, you will benefit from working with a competent liquor lawyer.

The team at Strike & Techel is experienced and can serve as your TTB lawyer, ABC lawyer, beer lawyer, wine lawyer or distilled spirits lawyer.  We are familiar with TTB law as well as state ABC law in California and across the country.  Preparing and applying for the necessary alcohol beverage licenses is a big part of the alcohol beverage practice and Strike & Techel is highly experienced with ABC license applications and TTB license applications.  

We are based in San Francisco and are particularly familiar with the alcohol laws and regulations of our city. The attorneys at our firm practice alcoholic beverage law exclusively. This blog is our place to tell you about current issues of interest for those in the business of making, promoting, and selling alcoholic beverages.