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At long last, as of May 1, 2012, applications for Out-of-State Winery licenses are being accepted in New Jersey, which will permit out-of-state wineries to ship wine directly to New Jersey consumers.  As discussed in earlier posts, including here, New Jersey’s law was passed early in 2012, and makes New Jersey the 39^th state to allow winery direct shipping.  The law permits wineries producing no more than 250,000 gallons of wine per year to ship wine directly to consumers in the state.  License holders may ship no more than 12 cases of wine each year per consumer for personal use.  The license also includes limited privileges for holders to sell wine directly to retailers, and for tasting room privileges within New Jersey.

No regulations were promulgated to go along with the direct shipping statute, but earlier this week, the New Jersey Division of Alcoholic Beverage Control released instructions and application forms for Out-of-State Winery licenses that provide more information about direct shipping, and which can be found here.  First, the Out-of-State Winery license will be the most expensive direct shipping license in the county, with tiered pricing depending on the amount of wine produced, but costing $938 annually for wineries producing between 50,000 and 250,000 each year.   Additionally, the instructions clarify that wine shipped must be manufactured by the Out-of-State Winery license holder.  Other details of interest to potential applicants include: a) all applicants must register with the Secretary of state; b) a bond is required; c) all applicants must register with the Division of Taxation; and d) all brands must be registered before they can be shipped into the state. Each of these requirements comes with additional fees, so wineries should make sure the anticipated sales volumes warrant the costs of getting set-up.

Please feel free to contact one of our attorneys if you are interested in more information about direct winery shipping in New Jersey.

We’ve been getting lots of inquiries about the privileges and limitations of the new limited off-sale license offered by the ABC.  Though we’ve already commented on the basics of the permit here, we’re following up with answers to the clarification questions we’ve been getting:

Where can I find the privileges for the new off-sale wine license?

Read the ABC Advisory and the enabling statute CAL. BUS. & PROF. CODE §23393.5.

Can I sell tequila and beer with the Type 85?

No, the privilege is limited to wine.

Can I get the Type 85 license if I have an upper-tier California license?

No.  The Type 85 is a retail-tier license, and there are no special exceptions permitting it to be held with an upper-tier license.  On the flip side, you can get it if you are an employee of an on-sale retailer.  This is a key distinction between the Type 85 and the Type 17/20 combination that remains popular in California.

Can I deliver product stored out-of-state directly to consumers in California with the Type 85?

No.  You must have possession and title to the wine in California. It must be delivered to the consumer from your licensed premises in California or the premises of a licensed public warehouse (Type 14 License).

Can I deliver wine to consumers outside of California with the Type 85?

Yes, but only to about 13 states.  2/3 of those states require additional licensing. You can’t reach New York, Texas, Illinois or Florida.

Do I have to have a location to obtain the Type 85?

Yes.  You have to choose an address where the license will be active and your records will be kept.  It may not be open to the public. You will have to post notice at the premises and mail notice to nearby neighbors.

Who can I buy wine from with the Type 85?

Licensed California wholesalers and wineries.  Not retailers.

How do I apply for the Type 85?

If you are interested in obtaining the license, you need to fill out the forms for an original retail license (e.g.  ABC 211-SIG, 217, 208-A/B, 253, 257, 255, 247, 251, 140, entity forms).  You can obtain them from the ABC website, or can hire an attorney or licensing specialist to complete them and assist you with the process.  The filing fee is $342 ($100 application fee plus $242 annual fee).

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

As readers of this blog may recall, at the end of 2011 interesting new precedent came out of Texas when the United States District Court for the Western District of Texas granted partial summary judgment for plaintiffs in Authentic Beverages Co., Inc. v. Tex. Alcoholic Beverage Comm’n, No. A-10-CA-710-SS (D. W.D. Tex., December 19, 2011), and consequently struck down some Texas’ laws regarding beer labeling, advertising alcoholic content and suppliers telling consumers where their products can be found for purchase. (See our prior coverage of the case here.) About a month later the Texas Alcoholic Beverage Commission (“TABC”) issued Marketing Practices Bulletin 49 regarding the case (available here) and today they’ve just released Marketing Practices Bulletin 50 (available here). The new bulletin stresses that Texas’ stance on suppliers pre-arranging and pre-announcing promotional activities has not changed.

Texas allows liquor manufacturers and wholesalers to pre-arrange and pre-announce promotional activities, for example bar spending or sampling events, novelty item giveaways, and promotional appearances, but they do not allow beer manufacturers and distributors to do the same. While the Authentic Beverages decision resulted in the allowance for beer manufacturers and distributors to advertise retail locations where their products can be purchased (provided the advertising is not cooperative), it has not changed anything regarding pre-arrangement and pre-announcement of promotions. Those promotional activities by beer suppliers must be spontaneous, meaning they are not pre-arranged with retailers or pre-announced to consumers. The TABC is still in the process of formal rulemaking to deal with the effects of the Authentic Beverages decision, at which time Marketing Practices Bulletins 49 and 50 will be superseded by the new rules, but we do not expect that their position will change on this matter and violations are likely an enforcement priority for the TABC.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

Currently, distilled spirits plants (DSPs) are required to complete and file operational report forms, which can number up to seven per month. The TTB has proposed eliminating the current forms and replacing them with two new report forms (TTB F 5110.77 and TTB F 5110.78) in order to streamline the reporting process and reduce costs. According to the TTB’s research, DSPs currently submit an average of 28.4 operational reports per year. The TTB notes that certain data within the required reports is not analyzed or used. Moreover, the increased use of alcohol as a fuel and the growth in artisanal distillers has resulted in many new DSPs and the corresponding burden on TTB to process the paperwork from these DSP has grown tremendously. If the proposal is approved, one report would be used for operations involving spirits for beverage use, while the other would handle reporting on industrial use spirits. Additionally, DSPs that submit quarterly tax returns could switch to quarterly operational reporting, as opposed to the current monthly reporting requirement. The comment period for this proposed revision runs through February 3, 2012, which is right around the corner. The full text of the proposal can be found here.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

The Fourth Circuit of the United States Court of Appeals recently decided that North Carolina’s former Wine Distribution Act did not require that a wholesaler used by an importer of foreign wine must be used by a new importer of that wine. Country Vintner of N.C., LLC v. E & J Gallo Winery, Inc., No. 10-2289 (4th Cir., January 6, 2012). Wine from Bodegas Esmeralda, an Argentinean winery, was being imported into the United States by Billington Imports, which in turn used Country Vintner of North Carolina as its exclusive North Carolina wholesaler for the wine. Bodegas Esmeralda then switched its importer to E & J Gallo. After the switch Gallo began using its own wholesaler network, as opposed to Country Vintner. The Fourth Circuit upheld the district court’s conclusion that there had never been a commercial relationship between Gallo and Country Vintner and therefore, Country Vintner had no protections from North Carolina’s Wine Distribution Act. The protections Country Vintner had under the act with Billington Imports were no longer relevant due to the fact that Billington ceased to import the wine.

In 2010, North Carolina amended its Wine Distribution Act to provide a continuation of wholesaler rights upon a succession to importer rights; however, that amendment only applies prospectively. N.C. Gen. Stat. § 18B-1213. Thus, in importer-wholesaler relationships entered into after the 2010 amendment in North Carolina, the holding of this case will not apply. For relationships entered into prior to the change, however, the case provides instructive insight into wholesaler continuation rights in a change of importer situation.

If you’d like to discuss specific distribution issues, please feel free to contact any of the attorneys at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

The New Jersey Senate will vote on a direct shipping bill this Thursday, December 15, 2011, called S-3172 in its current form.  If passed into law, New Jersey Farm Wineries, New Jersey Plenary Wineries that produce 250,000 gallons or less of wine a year, and out-of-state wineries that produce 250,000 gallons of wine or less each year and that obtain an out-of-state shipping license would be able to ship up to 12 cases of wine per year to any New Jersey consumer.   With passage of the bill, New Jersey would join the 38 states that currently allow direct wine shipping to consumers in some form, including Maryland and New Mexico as of earlier this year.  However, the “capacity cap” for out-of-state wineries of 250,000 gallons per year remains a point of contention, as that limit would preclude the majority of California wineries from shipping to New Jersey consumers.  Stay tuned to find out how the New Jersey Senate votes!

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

In February we posted about The Alcohol and Tobacco Tax and Trade Bureau’s proposed rule to add new names to the approved list of grape variety names that can be used to designate United States wines. The original post is available here. The TTB has completed its rulemaking process and the revised rule will go into effect November 28, 2011, the Monday after Thanksgiving. More than 50 new names were added to the list, including some popular well known varietals like Grenache Blanc and Grüner Veltliner. To aid in locating information within the new and lengthy list, the TTB also included synonyms for a number of entries. Full details on the revised rule are available here.

The California Department of Alcoholic Beverage has clarified in a recent industry advisory that alcoholic beverages do not have to be bagged prior to handing the beverages to consumers, unless a local ordinance requiring bagging exists. Thus, Californians can opt to “save a bag” and use their own tote bag or other carrying device when shopping for alcoholic beverages in most jurisdictions.

Beginning January 1, 2012, a new license will be available for direct-to-consumer wine sales. The new license is the result of approval of Assembly Bill No. 623, which revises California’s Business and Professions code to add Section 23393.5 authorizing the license. Sales may only be made to consumers. All sales must occur through direct mail, telephone or Internet; they may not be conducted from a location that is open to the public. The licensee must take possession and title to all wine sold. All wine must be delivered to the consumer from the licensee’s premises or a licensed public warehouse. The application and annual fee are the same as those applicable to a Type 20 off-sale beer and wine license. The key differences between the new limited off-sale retail license and a type 20 license are that the type 20 requires a brick and mortar store that is open to the public and a type 20 license also allows the sale of beer for consumption away from the licensed premises. If you would like more information about the license, please feel free to contact any of the attorneys at Strike & Techel.

The Distilled Spirits Council of the United States (DISCUS), the self-regulatory group for the U.S. distilled spirits industry, just released new guidelines for advertising distilled spirits online.  The guidelines were drafted in cooperation with the European Forum for Responsible Drinking, which is the European counterpart to DISCUS.

The full guidelines are available here, and include lots of common sense strategies for responsible online marketing, e.g. identify marketing as such, provide and honor a privacy policy for user data, age gate, market only to adults, and include social responsibility statements.  The guidelines also get specific, instructing advertisers to only place ads in media where 71.6% of the audience is the legal drinking age.  Recent Nielsen data shows Facebook at 82% 21+, Twitter at 87% 21+ and YouTube at 81% 21+.

Digital marketing communications that are intended to be forwarded by users, such as with a share, download or email “button click”, should include instructions to individuals downloading the content that they should not forward these materials to individuals below the legal purchase age.  On a related note, if users provide content on the advertiser’s site or a site controlled by the advertiser, the advertiser should be monitoring and moderating the content every day, or at a minimum once every five business days, to remove inappropriate content.

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