Pardon the interruption last week, and I’ll now resume my posting on the alcoholic beverage industry. Just to set expectations, you’ll see this post then one more, then we’ll take a break while everyone is on vacation and resume around Labor Day sometime.
This newly alcoholic blog will be called the Saturday Side Bar. Look for a continuation of the Saturday Side Hustle in the form of podcast interviews I’ll conduct with local business owners I know and love where we tackle legal issues they have run into.
Now to refocus on alcoholic beverages. Let’s start by considering generally the roles of the various levels of government: federal, state and local.
The big daddy, of course, is the federal government, and the law at its highest level comes from the U.S. Constitution. When it comes to the alcoholic beverage industry, we have to start with the 21st Amendment, which repealed prohibition.
IIn addition to the repeal of prohibition, the 21st Amendment prohibits the transportation or importation of intoxicating liquors into any State “for delivery or use therein” in violation of State law. In other words, the States get to regulate the industry. By the way, I don’t know why anyone would receive these products into a State for something other than “delivery or use”, but Congress changed that to “use, consumption, sale or storage” within a State with the enactment of the Wilson Act. Maybe consumption and use are different. I don’t know. Anyway, these developments created a different landscape than what existed before prohibition, and as you might imagine that led to some litigation after the 21st Amendment was ratified in 1933.
The federal government still tells us all what alcoholic beverages are (any beverage containing more than 0.5% alcohol) and uses its tax and spending power to induce the States to adopt certain broad policies related to alcoholic beverage regulation, for example, the Federal Uniform Drinking Age Act of 1984, which led us to the drinking age of 21 years that we all know to be the law now. There are others, including, as you may have suspected, a subtitle of the Internal Revenue Code imposing taxes on alcoholic beverages produced in or imported into the United States, among other things. Permitting requirements on the same are covered under the Federal Alcohol Administration Act. Importers, domestic manufacturers, and interstate shippers should all be familiar with these laws.
Back to the States, which now all have laws governing alcoholic beverages – which of course are all different. Really different in some cases. And guess what else? Within each State, there are counties and municipalities that have varying local regulations. The industry has become very complex that way, and when you get into the business of interstate distribution, you need to become versed in a large body of information (or hire somebody to do it for you) in order to stay compliant with regulations of multiple jurisdictions.
Next week we will begin to explore the complexity of these regulations.
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Scott Lloyd is a registered patent attorney who specializes in intellectual property counseling and commercialization work. He has served as a technology commercialization specialist and advisor to companies in a diverse array of markets, including biotechnology, pharmaceuticals, medical devices, food and beverage, specialty chemicals, technology, and engineering. In addition, Mr. Lloyd spent ten years as in-house general counsel to small and mid-sized companies, where he managed corporate matters and resolved commercial disputes in addition to intellectual property strategy, and now serves in the same capacity for entrepreneurial clients. He serves as counsel to small and mid-sized business owners seeking to implement growth strategies and succession plans.
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