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Category archives for “Beer”

What Can I Do With the Type 85 ABC License?

April 20th, 2012

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).

Texas Alcoholic Beverage Commission Releases New Advisory in Connection with Authentic Beverages Company Decision

March 1st, 2012

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.

New Law on California Beer Tasting Rooms

August 11th, 2011

California beer fans are sure to toast the passage of AB1014, which Governor Jerry Brown signed into law on August 1^st. The bill, presented by Assemblymen Fletcher (R) and Chesbro (D), amends California’s Health and Safety Code to exempt beer manufacturers’ beer tasting areas from the strict health and sanitation codes applied to food service locations. Beer manufacturers include those holding a beer manufacturer’s license, an out-of-state beer manufacturer’s certificate, or a beer and wine importer’s general license. Wine tasting rooms have been exempt from such provisions for years. The health and sanitation codes are lengthy and expensive to comply with; thus, compliance costs typically outweighed the benefit of a beer tasting room for many brewers, especially small craft operations. Compliance with the new exemption requires that the only foods served on the premises are crackers and pretzels. Additionally, only beer and “prepackaged nonpotentially hazardous beverages” may be offered. A copy of the revised Section 113789 of California’s Health and Safety code is available here.

Barry Strike Quoted in ABA Journal on Trademark Issues

August 9th, 2011

Partner Barry Strike, who handles numerous trademark issues for clients in the alcoholic beverage industry, was quoted in the ABA Journal’s article on the popular beer Collaboration Not Litigation. Click here to read the full article. If you have alcoholic beverage trademark questions, please feel free to contact Barry Strike at barry@strikeandtechel.com.

No More Alcopops in California

August 3rd, 2011

On Monday Governor Jerry Brown signed Senate Bill 39 banning the production, importation, and sale of beer to which caffeine as a separate ingredient has been directly added. Senator Alex Padilla, a Democrat from the San Fernando Valley, introduced the Bill last December. In order to enforce the prohibition, licensees may be required by the California Department of Alcoholic Beverage Control to provide product formulas. All formulas provided will be considered confidential trade secrets and not subject to disclosure under the California Public Records Act. The new law can be found in Section 25622 of California’s Business and Professions Code. The law does not prohibit beers where caffeine is a part of the brewing process itself, such as a coffee porter. It is aimed instead at the Progressive Adult Beverages (PABs) (also commonly referred to as Ready to Drinks (RTDs) and Flavored Alcoholic Beverages (FABs)) that have been in the news since last fall. See our prior coverage here, here, here, and here. This puts California in line with states like New York, Massachusetts, Washington, Michigan, Kansas, and Utah, which have also banned such beverages.

Federal Legislative Update

March 22nd, 2011

In the past few weeks there has been a significant amount of new legislation relating to the alcoholic beverage industry introduced on both the state and federal level. The increased legislative efforts are interesting in light of the fact that in March 1933, 78-years ago, the end of Prohibition was kicked off when Franklin Roosevelt asked Congress to pass “The Beer Act,” which was eventually passed on April 7, 1933. The Twenty-First Amendment was ratified nearly eight months later on December 5, 1933. A re-cap of the two most high-profile pieces of federal proposed legislation is below. Later this week we’ll take a look at key pieces of state proposed legislation.

S. 534 – The Brewer’s Employment and Excise Tax Relief Act of 2011, or BEER Act as it is popular referred to, was introduced by Senator John Kerry (D-Mass.) on March 9, 2011. As of today, the Bill has twenty-three cosponsors. The bipartisan bill would reduce the excise tax paid by small brewers from $7.00 to $3.50 per barrel on the first 60,000 barrels produced each year. Small breweries would then pay $16 per barrel for production above 60,000 and up to two million barrels. Currently, all brewers regardless of size pay $18 per barrel for all production above 60,000 barrels. The Bill would also revise the current definition of “small breweries” from those that produce less than two million barrels per year to those that produce less than six million.

H.R. 1161– Just over a week after S. 534 was introduced, the Community Alcohol Regulatory Effectiveness Act of 2011 was introduced by Representative Jason Chaffetz (R-UT) on March 17, 2011. As of today, the Bill has eight cosponsors. The Bill is a re-introduction of H.R. 5034, which was hotly contested last year and eventually abandoned. The Bill, depending on which of the three-tiers one is standing in or closest to, is either about protecting states’ rights to regulate alcohol or about allowing Commerce Clause violations to protect alcohol distributor’s interests. As 2011 progresses we are sure to see the heated debate unfold once again.

Fanciful Names and the TTB

February 23rd, 2011

We get lots of questions on the topic of “fanciful names” in the context of certificate of label approvals (COLAs) through the Alcohol & Tobacco Tax & Trade Bureau (TTB). The TTB recently posted a helpful clarification, which we wanted to pass along:

Fanciful Name. Have you ever wondered what information should be entered into the “fanciful name” field on the COLA application? A fanciful name is a term used in addition to the brand name for the purposes of further identifying a product. A fanciful name is mandatory for any malt beverage product that is not known to the trade under a particular designation (27 CFR 7.24(a)) or distilled spirits products that do not meet the standards of identity or does not conform to trade and consumer understanding (27 CFR 5.34(a)). The use of a fanciful name on a flavored wine product or any wine product that meets a standard of identity is not required. Please note that if a fanciful name is used on a flavored wine product, it must appear in direct conjunction with a truthful and adequate statement of composition. (27 CFR 4.34(a))

In other words, if your distilled spirits or beer product does not fall within one of the specifically defined classifications, e.g., whiskey, gin, rum, tequila, beer, lager, ale, porter, stout, etc., then it must be labeled with a “truthful and adequate statement of composition” and a fanciful name in addition to the brand name. This generally occurs when a product starts as a distilled spirit or malt beverage product, but then additional flavorings or ingredients are added and those additional items are not permitted within the standard defined classifications. In the case of wine, the fanciful name is optional. Brand names and fanciful names cannot contain the name of a class or type of alcohol, so “vodka” or “whiskey” cannot serve as a fanciful name.

When a fanciful name is mandatory, it is important to plan ahead when creating a new product name and label. We have seen products identified by a single brand name that could not obtain a label approval because they were required to also have a fanciful name. Applicants in that situation are required to add a new name to be used as a fanciful name and revise their labels so that it is included. An example of a properly identified distilled spirits product is “ABC Brand, Peachy Passion, neutral spirits with added fruit juice and natural flavorings.” It uses a brand name, a fanciful name, and a statement of composition, as required under the labeling regulations. For most products, fanciful names are not required but it’s important to consider how TTB will classify your product before you create your labels and brand identity.

Vertical Integration in California (“Tied-House” Laws)

February 17th, 2011

The general rule with alcoholic beverage licensing is that you cannot be involved in more than one “tier” of the industry, meaning that suppliers and importers can’t be wholesalers, wholesalers can’t be retailers, retailers can’t be suppliers, and vice versa. The objective, which came about following the repeal of prohibition, was to promote the organized and responsible distribution of alcohol. It was thought that by keeping the three tiers separate, suppliers would not exert undue influence over retailers, consumers would not be encouraged to over consume, and the societal ills that led to prohibition in the first place would not be repeated. In the 75+ years since the creation of the three-tier system, dozens of exceptions have found their way into the California ABC Act. The tiers are no longer entirely separate and some licensees are permitted to hold licenses in other tiers. For example:

12/18 (Distilled Spirits Importer)/(Distilled Spirits Wholesaler)

17/20 (Wine and Beer Wholesaler)/(Wine and Beer Retailer)

9/17/20 (Wine and Beer Importer)/ (Wine and Beer Wholesaler)/(Wine and Beer Retailer)

There are restrictions on operating under each of these combinations, but the ability to hold them in combination remains a privilege available in California that is not available in many other states. The “tied-house” rules have implications that extend well beyond the licensing structure. If you are interested in learning more about tied-house issues, feel free to contact any of the attorneys here at Strike & Techel.

Small Craft Brewers Get Bigger as the Brewers Association Changes Their Bylaws

January 12th, 2011

As the formidable Harry Schuhmacher, editor and publisher of BeerNet, reported last week, the Brewers Association Board recently approved a change to the definition of “small” in their bylaws as it applies to craft brewers.

The Brewers Association was formed in 2005, after a merger of two longstanding organizations, The Association of Brewers and Brewers’ Association of America. Its mission is to, “promote and protect small and independent American brewers, their craft beers and the community of brewing enthusiasts.” Currently, their membership includes over 1,000 U.S. brewers. The definition of “small” was changed in their bylaws from those brewing a maximum of 2 million barrels to those brewing a maximum of 6 million barrels. The definition is relevant for both classes of the Brewers Association’s membership, Professional Packaging Brewers and Associates. The change allows brewers that were nearing the 2 million barrel mark to remain a part of the Brewers Association. Boston Beer Co., makers of Samuel Adams and a public company with a current market cap of $1.21 billion, was poised to pass the 2 million barrel mark, but the recent change allows them to remain a member.

Regarding the change, Nick Matt, chairman of the Board of Directors, stated, “A lot has changed since 1976. The largest brewer in the U.S. has grown from 45 million barrels to 300 million barrels of global beer production. The craft brewer definition and bylaws now more accurately reflect and align with our governmental affairs efforts.”

In 2010, the Brewers Association supported H.R. 4278/S. 3339, which aims to expand a reduced excise tax for certain small brewers. The excise tax for small brewers was established in 1976 and currently applies to those producing 2 million barrels per year or less. The proposed bills would both increase the production allowances for “small brewers” to 6 million barrels per year, and decrease the excise tax for such brewers. In the House, the bill was last referred to the House Committee on Ways and Means, while in the Senate, an identical bill remains in the Committee on Finance.

Update on New Sampling Rules at Retail Stores in California

December 7th, 2010

A few weeks ago, we wrote about the new permit available to California off-premise consumption retailers that will allow suppliers to come to their premises and conduct instructional consumer tastings. The ABC just released an industry advisory with additional helpful information. The industry advisory is available here.

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Category archives for “Beer”