August 2017 Legal & Legislative Update

A. FEDERAL / NATIONAL / INTERNATIONAL

Craft Beverage Modernization and Tax Reform Act The Craft Beverage Modernization and Tax Reform Act (S.236/H.R.747) was reintroduced in both chambers of the 115th Congress. Sponsors total 47 in the U.S. Senate and 253 in the U.S. House of Representatives. Specific tax provisions of the bill include: reducing the federal excise tax to $3.50 per barrel on the first 60,000 barrels for domestic brewers producing fewer than 2 million barrels annually; reducing the federal excise tax to $16 per barrel on the first 6 million barrels for all other brewers and all beer importers; keeping the excise tax at the current $18 per barrel rate for barrelage over 6 million.

The Craft Modernization and Tax Reform Act would also ease a number of burdens for brewers, including simplifying label approvals and repealing unnecessary inventory restrictions.

Brewers Association Submits Further Comments on Menu Labeling The Brewers Association submitted comments to the Food and Drug Administration focused on non-menu options for making calorie and nutrient data available, emphasizing the widespread availability of smart phones since the time the requirement was promulgated and the benefits for retailers in being able to provide current information in a timely manner.

B. THE COURTS

AB-InBev and Molson Coors Sued for Restraint of Trade Plaintiff Mountain Crest SRL, LLC, owners of Minhas Craft Brewery in Monroe, WI, has brought suit in U.S. District Court against Anheuser-Busch InBev and Molson Coors Brewing Co. alleging those companies conspired to restrain plaintiff’s and others export trade to the Province of Ontario, Canada. The most egregious of these restraints is claimed to be a secret anticompetitive market allocation agreement designed to monopolize beer sales for the two defendants.

C. THE STATES

Sales, Distribution and Franchise:

California Amended in committee and advanced to the Senate floor for a vote, A.B. 997 allows a licensed winegrower and a licensed beer manufacturer that holds a small beer manufacturer’s license, whose licensed premises of production are immediately adjacent to each other and which are not branch offices, to, with the approval of the department, share a common licensed area in which the consumption of alcoholic beverages is permitted under specified circumstances.

Massachusetts Voted out of committee, House Bill 212 concerns allowable malt beverage sales by pub breweries.

New York Signed by the Governor, S.B. 2481 adds on premise consumption sales to that of off premise sales and the conducting of tastings of New York state labelled beer manufactured by a licensed brewer or licensed farm brewery.

Wisconsin A legislative proposal has been unveiled that its lead sponsor believes will start the discussion on how to improve the three-tier system. Among a variety of provisions, the proposal, dubbed Cheers Wisconsin!, would increase the production cap for brewpubs from 10,000 to 20,000 barrels annually and double the number of locations from which they can operate (up to 12); raise the cap on permits that brewers can hold to sell wine and distilled spirits on their premises; allow brewpubs to sell liquor on site; and eliminate the requirement that beer and liquor wholesalers have a minimum number of customers.

Taxation:

Louisiana Signed into law, House Bill 315 provides that charitable donations of both high and low alcohol content beverages are liable for the payment of excise taxes.

New Hampshire Signed by the Governor, H.B. 161 requires beverage manufacturer licensees to pay the beer tax on beverages sold at farmers' markets.

Trade Practice & Other:

California Amended in Senate committee and sent to the floor for a vote, A.B. 711 authorizes a beer manufacturer to provide consumers free or discounted rides through taxicabs, transportation network companies, or any other ride service, and clarifies that a beer or wine wholesaler will not be liable for the cost of providing these services to a customer.

Michigan Signed by the Governor, House Bill 4559 allows a licensed wholesaler or manufacturer of alcoholic liquor to give samples of beer or wine to an employee of the wholesaler under certain conditions, and would clarify the situations under which a tasting or sampling would not violate the Michigan Liquor Control Code's prohibition on a vendor giving away any alcoholic liquor in connection with the vendor's business.

New Hampshire Signed into law by the Governor, House Bill 99 provides that federal label approval shall not be required for beverages sold exclusively in the state by a beverage vendor, beverage manufacturer, nano brewery, or brew pub.

New York U.S. Senator Charles Schumer (D-NY) has called on the U.S. Department of Agriculture to begin the process of giving New York State the Malting Barley Endorsement (M.B.E.), a federal insurance option available only to a specific group of states that grow malt barley. In his press release, Schumer stated “malt barley needs very specific conditions to grow and is susceptible to severe weather and disease, making the M.B.E. insurance option an essential ingredient to further nurturing the growth of this new industry,” also stating that “this will become more important over the next decade, when New York State will require farm craft brewers and distillers to source 90 percent of their ingredients from local farms and malt houses, and the supply of malt barley will need to increase to meet this demand.”

Texas Signed by the Governor, H.B. 2299 adds a laboratory certified by the federal Alcohol and Tobacco Tax and trade Bureau (TTB) to the list of approved labs for ABV testing of samples of alcohol beverages.