ENTITY FORMATION The protection an entity provides is not always clear to founders.

Also, if the entity changes at some point then the mountain of licensing paperwork has to begin again. So it important to go through the process of choosing the correct entity type at the start. SECURITIES LAW

Breweries tend to not realize securities laws exist, let alone apply to them.

But the need for cash frequently leads them into investor territory when raising capital.

Consequently, be prepared to back track on these issues and get the appropriate paperwork cooking quickly. ENTERING AGREEMENTS WITHOUT COUNSEL Craft brewing is a contract heavy industry (think malt, hops, yeast, equipment, CO2, etc.).

Many such agreements are very one-sided and, sometimes by law, almost impossible to escape after the fact (i.e. Distribution agreements)

Lease review also requires brewery specific knowledge to be effective.

You sign an agreement, you are married to the other party! REGISTRATION & UPDATES

Breweries need to register and update with federal, state, and local agencies.

The alphabet soup is real:

• ABC • TTB • BOE • IRS • FTB • FDA • SOS • SEC • EDD INTELLECTUAL PROPERTY

Many craft breweries fail to establish their intellectual property rights early on.

If a mark has become integral to the business identity, then changing that mark may be very difficult later on. But these considerations have to be balanced by a risk assessment in terms of possible infringement liability.

Lastly, many craft breweries do not entirely understand what exactly gives them IP rights in the first place. EMPLOYMENT & LABOR LAW

Employees? Or independent contractors?

Hourly? Or salary?

Do you know the current minimum wage?

Safety compliance.

Record Keeping: Which ones? Consistency is key! FRANCHISE LAW Every state has its own franchise laws.

Most of these laws are pro-distributor.

Many state’s franchise laws cannot be waived.

“Precious Nectar” - Photo by Justin Kern https://creativecommons.org/licenses/by-nc-nd/2.0/legalcode

WHO REGULATES ALCOHOL? • ALCOHOL IS REGULATED BY THE STATE GOVERNMENT AND FEDERAL GOVERNMENT AND IS ONE OF THE MOST REGULATED INDUSTRIES IN AMERICA AFTER PROHIBITION • THE ALCOHOL TAX AND TRADE BUREAU ALSO KNOWN AS THE TTB IS FEDERAL PART OF REGULATION • IN CALIFORNIA, THE ALCOHOLIC BEVERAGE CONTROL ALSO KNOWN AS THE ABC REGULATES ALCOHOL. • BOTH OF THESE AGENCIES CONTROL THE LICENSING AND ENFORCEMENT OF ALL ALCOHOL RELATED BUSINESS. WHO IS THE TTB • THE TTB IS PART OF THE UNITED STATES TREASURY DEPARTMENT AND WAS CREATED IN 2003 WHEN THE ATF WAS SPLIT INTO TWO DEPARTMENTS WITH THE SIGNING OF THE HOMELAND SECURITY ACT • THE ATF (NOW RENAMED THE ALCOHOL, TOBACCO, FIREARMS AND EXPLOSIVES) STILL HANDLES SOME ENFORCEMENT ASPECTS • HISTORICALLY THE ATF WAS PART OF PROHIBITION ENFORCEMENT (ELIOT NESS AND THE UNTOUCHABLES) AND THEN ON TO REGULATING ALCOHOL AFTER THE REPEAL OF PROHIBITION. • THE TTB NOW HANDLES ALL TAX REVENUE, PERMITS, LICENSES, TAX AUDITS, TRADE INVESTIGATIONS, LABELS, AND ALSO HAS A TOBACCO ENFORCEMENT DIVISION. • HTTP://WWW.TTB.GOV/ABOUT/STORY.SHTML WHO IS THE ABC?

• THE CALIFORNIA ALCOHOL BEVERAGE CONTROL REGULATES LICENSING, ENFORCEMENT AND REGULATORY MANDATES ON ALCOHOL IN CALIFORNIA • HISTORICAL ASPECT: AFTER THE REPEAL OF PROHIBITION THE STATE BOARD OF EQUALIZATION REGULATED TAXES, REGULATORY MATTERS AND ENFORCEMENT IN ALCOHOL. IN 1955 THE ABC WAS CREATED AND HAS SINCE BEEN THE DEPARTMENT OVERSEEING THE ALCOHOL INDUSTRY. • THE ABC HAS THREE DIVISIONS: • ADMINISTRATIVE • LICENSING • COMPLIANCE LICENSING

•IF YOU INTEND TO BREW BEER FOR SALE YOU MUST HAVE A LICENSE FROM THE ABC (IN CALIFORNIA) AND THE TTB •TO BEGIN THIS PROCESS YOU WILL WANT TO IDENTIFY THE TYPE OF OPERATION YOU WANT TO START AND FIGURE OUT WHAT LICENSE YOU WILL APPLY FOR. TYPES OF LICENSES – TYPE 01

• BEER MANUFACTURER - (LARGE BREWERY) Authorizes the sale of beer to any person holding a license authorizing the sale of beer, and to consumers for consumption on or off the manufacturer’s licensed premises. Without any additional licenses, may sell beer and wine, regardless of source, to consumers for consumption at a bona fide public eating place on the manufacturer’s licensed premises or at a bona fide eating place contiguous to the manufacturer’s licensed premises. May conduct beer tastings under specified conditions (section 23357.3). Minors are allowed on the premises. Allows for the manufacturing of cider. *As of 1/1/2016, may have ownership in up to 6 retail licenses (includes duplicates). TYPES OF LICENSES – TYPE 23

• SMALL BEER MANUFACTURER - (BREW PUB OR MICRO-BREWERY) Authorizes the same privileges and restrictions as a type 01 (except for manufacturing cider). A brewpub is typically a very small brewery with a restaurant. A micro-brewery is a small-scale brewery operation that typically is dedicated solely to the production of specialty beers, although some do have a restaurant or pub on the same premises as their manufacturing plant. TYPES OF LICENSES – TYPE 23

• ALLOWS FOR SELF-DISTRIBUTION • CAN REFILL GROWLERS • CAN DONATE BEER TO 501(C) ENTITIES WITH A SPECIAL ABC PERMIT • ALLOWS AN OWNER OR SHAREHOLDER TO HOLD OWNERSHIP INTEREST IN UP TO 6 RETAIL LICENSES (AS OF 1/1/2016, INCLUDES DUPLICATES). • IF YOU HAVE A BONAFIDE RESTAURANT ON THE PREMISES, YOU ARE ALLOWED TO SELL OTHER PEOPLE’S BEER AND WINE, AS WELL AS YOUR OWN. TYPES OF LICENSES – DUPLICATE

•ALLOWS THE LICENSED BEER MANUFACTURER TO HAVE “BRANCH OFFICES” WHERE THEY CAN EXERCISE ALL OF THE LICENSING PRIVILEGES, OTHER THAN MANUFACTURING TYPES OF LICENSES – TYPE 75

• “BREWPUB” - THIS LICENSE IS TECHNICALLY A RETAIL LICENSE (SUCH AS A RESTAURANT) WITH THE ADDITIONAL PRIVILEGES OF BREWING BEER. THE LICENSE PROVIDES A MINIMUM AND A MAXIMUM FOR AMOUNT OF BEER THAT MUST BE BREWED. • CONS • NO GROWLERS • NO SELF-DISTRIBUTION • NO DONATING TO FESTIVALS • PRO • INCLUDES THE RIGHT TO SELL SPIRITS TYPES OF LICENSES – TYPE 17

• IF YOU CHOOSE TO CONTRACT BREW, YOU WOULD GET A TYPE 17 WHOLESALER’S LICENSE. THIS WOULD ALLOW YOU TO PURCHASE THE BEER FROM THE TYPE 23 (OR 01) THAT IS MAKING YOUR BEER, AND THEN SELL IT TO RETAILERS. • NO GROWLERS • NO FESTIVAL DONATIONS LICENSE PROCESS •CANNOT START EITHER THE STATE OR FEDERAL LICENSING PROCESS UNTIL YOU HAVE A SIGNED LEASE OR PROPERTY OWNERSHIP. •BOTH PROCESSES CAN TAKE ANYWHERE FROM 100 – 180 DAYS ON AVERAGE (*AS OF TODAY, TTB IS SHOWING 147 DAYS TO PROCESS A BREWERY APPLICATION) •TIP – SUBMIT BOTH APPLICATIONS CONCURRENTLY LICENSE PROCESS - TTB

• TTB LICENSE CAN (AND SHOULD) BE PERFORMED ONLINE AT TTB.GOV. THE ONLINE PERMIT PROCESS CAN BE LENGTHY (135 DAYS AVERAGE). YOU WILL GO THROUGH THE QUALIFICATION PROCESS AND THEN ON TO THE SCREENING PROCESS. • COST – NO COST FOR THE LICENSE (“BREWER’S NOTICE); HOWEVER, YOU MUST SUBMIT EITHER A BOND OR A CHECK FOR $1,000 TO SERVE AS A BOND. LICENSE PROCESS - TTB

• TO REQUEST A PACKET WITH ALL REQUIRED FORMS AND INSTRUCTIONS: • TTB NATIONAL REVENUE CENTER, 8002 FEDERAL OFFICE BUILDING, 550 MAIN STREET, CINCINNATI, OH 45202-3263 (513) 684-2238 TOLL FREE: 800- 398-2282 FAX: 513-684-2241 • E-MAIL TO: [email protected] LICENSE PROCESS - ABC

• FORMS CAN BE ACCESSED AT: HTTP://WWW.ABC.CA.GOV/FORMS/PDFLIST.HTML • FORM INTENSIVE PROCESS • ZONING AFFIDAVIT – MAKE SURE YOU CHECK WHETHER OR NOT YOUR MUNICIPALITY WILL CHARGE FOR THIS (EX. SAN DIEGO - $217, SAN FRANCISCO - $0) • PERSONAL AND FINANCIAL AFFIDAVITS • INCLUDES OFFICERS AND DIRECTORS • INCLUDES ALL OWNERS WHO HOLD 10% OR MORE INTEREST • INCLUDES SPOUSES OF THE ABOVE • INCLUDES FINGERPRINTING OF ALL OF THE ABOVE LICENSE PROCESS – ABC FORMS

• FORM INTENSIVE PROCESS • BUSINESS ENTITY INFORMATION, IN DETAIL, INCLUDING CORPORATE/LLC DOCUMENTS • DIAGRAM OF PLANNED OPERATION • DIAGRAM OF SURROUNDING AREAS • RESIDENCES WITHIN 100 FEET • CHURCHES, SCHOOLS, ETC WITHIN 600 FEET • YOU MAY HAVE TO PROVIDE PROOF OF THE FINANCIAL INFO YOU DISCLOSE • MUST DISCLOSE PRIOR CONVICTIONS, ETC. • DUIS NOT AN ISSUE • LOOKING FOR FRAUD, SELLING TO MINORS, ETC. LICENSE PROCESS – FDA

• FDA REGISTRATION REQUIRED. • ALCOHOL BEVERAGE PRODUCERS, BOTTLERS AND THOSE OPERATING WAREHOUSE FACILITIES, BOTH IN THE UNITED STATES AND IN FOREIGN COUNTRIES, ARE REQUIRED TO REGISTER THEIR FACILITIES UNDER THE BIOTERRORISM ACT AND, THUS, ARE RESPONSIBLE PARTIES SUBJECT TO THE REQUIREMENTS OF THE RFR (REPORTABLE FOOD REGISTRY). • HTTP://WWW.FDA.GOV/FOOD/GUIDANCEREGULATION/FOODFACILITYREGISTRATION/DE FAULT.HTM BUSINESS LICENSE/BUSINESS TAX

• THE STATE OF CALIFORNIA REQUIRES A BUSINESS CERTIFICATE FROM YOUR LOCAL CITY. THE CITY OF SAN DIEGO REQUIRES A BUSINESS TO HAVE A BUSINESS TAX CERTIFICATE TO OPERATE A BUSINESS IN SAN DIEGO. THIS CAN BE OBTAINED IN SAN DIEGO THROUGH THE OFFICE OF THE CITY TREASURER AND WILL HAVE TO RENEWED EACH YEAR. • FEES: $34 FOR A BUSINESS WITH 12 EMPLOYEES OR LESS. $125 FOR A BUSINESS WITH 13 EMPLOYEES OR MORE PLUS $5 PER EMPLOYEE. FEDERAL TAX ID

•THE IRS WILL PROVIDE A FEDERAL TAX IDENTIFICATION NUMBER IN ORDER TO IDENTIFY BUSINESSES. THIS CAN BE OBTAINED AT WWW.IRS.GOV •YOU WILL NEED THIS NUMBER TO BE ABLE TO OPEN A BANK ACCOUNT IN YOUR BUSINESS NAME. STATE BOARD OF EQUALIZATION

• THE CALIFORNIA STATE BOARD OF EQUALIZATION COLLECTS STATE SALES TAX, USE TAX, AND EXCISE TAXES FOR ALCOHOL. • TO ENGAGE IN BUSINESS WHERE YOU ARE SELLING PRODUCT YOU MUST OBTAIN A SELLER’S PERMIT FROM THE STATE BOARD OF EQUALIZATION AND PAY SALES TAX TO THE STATE ON ITEMS YOU SELL. • BEER IS SUBJECT TO SALES TAX. YOU WILL SOMETIMES SEE SALES TAX ADDED INTO THE PRICE OF A BEER AT A BREWERY. • THE STATE BOARD OF EQUALIZATION ADMINISTERS THE ALCOHOLIC BEVERAGE TAX LAW THAT COLLECTS EXCISE TAX ON BEER. CALRECYCLES • HTTP://WWW.CALRECYCLE.CA.GOV/BEVCONTAINER/BEVDISTMAN/ • BEVERAGE CONTAINERS COVERED BY THE ACT INCLUDE THOSE FILLED WITH CARBONATED MINERAL AND SODA WATER AND OTHER SIMILAR CARBONATED SOFT DRINKS, NONCARBONATED SOFT DRINKS, WINE COOLERS AND DISTILLED SPIRIT COOLERS, BEER AND MALT BEVERAGES, AS WELL AS NONCARBONATED WATER INCLUDING NONCARBONATED MINERAL WATER, SPORT DRINKS, COFFEE AND TEA DRINKS, VEGETABLE JUICE IN BEVERAGE CONTAINERS 16OZ. OR LESS, CARBONATED AND NONCARBONATED FRUIT DRINKS THAT CONTAIN ANY PERCENTAGE OF FRUIT JUICE AND 100 PERCENT FRUIT JUICES THAT ARE PACKAGED IN CONTAINERS LESS THAN 46 OZ. IN VOLUME. THE PROGRAM DOES NOT COVER ANY BEVERAGE CONTAINER PRODUCT TYPE THAT IS NOT SPECIFICALLY INCLUDED BY THE ACT. CALRECYCLES • A BEVERAGE MANUFACTURER IS ANY PERSON WHO BOTTLES, CANS, OR OTHERWISE FILLS BEVERAGE CONTAINERS, OR IMPORTS FILLED BEVERAGE CONTAINERS, FOR SALE TO DISTRIBUTORS, DEALERS, OR CONSUMERS. (PRC 14506; SECTION 2000 (A) (3.2)) • BEVERAGE MANUFACTURER REQUIREMENTS INCLUDE: • MONTHLY SUBMISSION OF BEVERAGE MANUFACTURER REPORTS (DR-4) AND CORRESPONDING PAYMENTS FOR PROCESSING FEES TO THE DIVISION OF RECYCLING. THE CURRENT PROCESSING FEE CAN BE FOUND ON THE OFFICIAL NOTICES PAGE. • MAINTAIN PROPER RECORD KEEPING AND RECORD RETENTION. • PROPER FILING AND PAYMENT OF ANNUAL REPORT IF DESIGNATED AS HAVI NG ANNUAL REPORTER STATUS. • NOTIFICATION TO THE DIVISION IN WRITING IF CLOSING BUSINESS, CHA NGE IN OWNERSHIP OR CHANGE OF ADDRESS. FEDERAL EXCISE TAXES

• AN EXCISE TAX IS A SPECIFIC TAX PLACED ON CERTAIN GOODS SUCH AS GAS, TOBACCO, AND ALCOHOL. • THE FEDERAL EXCISE TAX IS $18 PER BARREL FOR THOSE MAKING MORE THAN 2 MILLION BARRELS. • FOR THOSE MAKING UNDER 2 MILLION BARRELS THE RATE IS $7 PER BARREL FOR THE FIRST 60,000 BARRELS AND THEN $18 PER BARREL AFTER 60,000. • THIS RETURN IS DUE BI-WEEKLY UNLESS YOUR TAX LIABILITY IS UNDER $50,000 AND THEN IT WILL BE DUE QUARTERLY. • THE FORM TO FILE CAN BE FOUND AT HTTP://WWW.TTB.GOV/TAX_AUDIT/TAXES.SHTML STATE EXCISE TAXES • THE STATE BOARD OF EQUALIZATION COLLECTS THE CALIFORNIA STATE EXCISE TAX • THE CALIFORNIA STATE RATE IS 20 CENTS PER GALLON. • DEPENDING ON THE TAX LIABILITIES THESE WILL BE PAID YEARLY, QUARTERLY OR MONTHLY. • THIS RETURN CAN BE FOUND AT HTTP://BOE.CA.GOV/PDF/BOE501BM.PDF TTB RECORDS • THE TTB REQUIRES CERTAIN RECORDS TO BE KEPT DAILY • DAILY OPERATIONS THAT NEED TO BE RECORDED INCLUDE: • EACH KIND OF MATERIAL RECEIVED AND USED IN THE PRODUCTION OF BEER AND CEREAL BEVERAGE; • THE AMOUNT OF BEER AND CEREAL BEVERAGE PRODUCED; • BEER AND CEREAL BEVERAGE TRANSFERRED FOR, AND RETURNED FROM, BOTTLING AND RACKING, OR BOTTLED, RACKED, OR REMOVED FROM THE BREWERY; • BEER REMOVED FOR CONSUMPTION OR SALE -- FOR EACH REMOVAL, THE RECORD SHOWS THE DATE OF REMOVAL, THE PERSON TO WHOM THE BREWER SHIPPED OR DELIVERED THE BEER, AND THE QUANTITIES OF BEER REMOVED CALCULATED IN KEGS AND IN BOTTLES; • BEER REMOVED WITHOUT PAYMENT OF TAX -- FOR EACH REMOVAL, THE RECORD SHOWS THE DATE OF REMOVAL, THE PERSON TO WHOM THE BREWER SHIPPED OR DELIVERED THE BEER, AND THE QUANTITIES OF BEER REMOVED IN KEGS, BOTTLES, TANKS, TANK CARS, TANK TRUCKS, TANK SHIPS, BARGES, OR DEEP TANKS OF VESSELS; • BEER CONSUMED AT THE BREWERY; TTB RECORDS CONTINUED • THE TTB REQUIRES CERTAIN RECORDS TO BE KEPT DAILY • BEER RETURNED TO THE BREWERY FROM WHICH IT WAS ORIGINALLY REMOVED OR FROM ANOTHER BREWERY THAT THE BREWER OWNS; • BEER RECONDITIONED, USED AS MATERIAL, OR DESTROYED; • BEER RECEIVED FROM OTHER BREWERIES OR RECEIVED FROM PILOT BREWING PLANTS; • BEER AND CEREAL BEVERAGE LOST DUE TO BREAKAGE, THEFT, CASUALTY, OR OTHER UNUSUAL CAUSE; • BREWING MATERIALS SOLD OR TRANSFERRED TO PILOT BREWING PLANTS (INCLUDING THE NAME AND ADDRESS OF THE PERSON TO WHOM IT WAS SHIPPED OR DELIVERED), AND BREWING MATERIALS USED IN THE MANUFACTURE OF WORT, WORT CONCENTRATE, MALT SYRUP, AND MALT EXTRACT FOR SALE OR REMOVAL; • RECORD OF TESTS OF MEASURING DEVICES; AND • BEER PURCHASED FROM OTHER BREWERS IN THE PURCHASING BREWER'S BARRELS AND KEGS AND SUCH BEER SOLD TO OTHER BREWERS. TTB RECORDS CONTINUED • BREWERS MUST TAKE A PHYSICAL INVENTORY OF BEER AND CEREAL BEVERAGE AT LEAST ONCE PER CALENDAR MONTH. THE BREWER MUST RETAIN INVENTORY RECORDS AND MAKE THEM AVAILABLE FOR INSPECTION • THE RECORD OF INVENTORY MUST INCLUDE THE FOLLOWING: • DATE TAKEN • QUANTITY OF BEER AND CEREAL BEVERAGE ON HAND • LOSSES, GAINS, AND SHORTAGES • SIGNATURE–UNDER PENALTIES OF PERJURY–OF THE BREWER OR PERSON TAKING THE INVENTORY. TTB RECORDS CONTINUED

• BREWERS MUST COMPLETE THE BREWER’S REPORT OF OPERATIONS QUARTERLY. • THIS CAN BE FOUND ON TTB ONLINE HTTP://WWW.TTB.GOV/FORMS/F51309.PDF • IT WILL HAVE ALL THE SAME CATEGORIES AS THE DAILY REPORTS BUT NOW IT WILL BE PUT TOGETHER QUARTERLY • ALL INVOICES, BILL OF LADINGS FOR OUTSIDE SALES MUST BE FILED • ALL RECORDS REQUIRED BY THE TTB MUST BE RETAINED FOR 3-YEARS TTB EXCISE TAX RETURNS • TTB REQUIRES EVERY BREWER TO FILE A FEDERAL EXCISE TAX RETURN WITH TTB, REGARDLESS OF WHETHER A TAX LIABILITY EXISTS, AND PAYMENT OF THE FULL AMOUNT OF TAX REQUIRED FOR BEER REMOVED FOR CONSUMPTION OR SALE DURING THE PERIOD COVERED BY THE RETURN • EXCEPT IN THE CASE OF A TAXPAYER WHO QUALIFIES FOR QUARTERLY RETURN PERIODS, ALL TAXPAYERS MUST FILE SEMIMONTHLY RETURNS FOR DEFERRED PAYMENT OF TAX. • BREWERS WHO PRODUCE MORE THAN 2,000,000 BARRELS OF BEER PER YEAR MUST PAY THE TAX RATE OF $18 FOR EVERY BARREL CONTAINING NOT MORE THAN 31 GALLONS • BREWERS WHO PRODUCE LESS THAN 2,000,000 BARRELS PER YEAR MAY PAY A REDUCED TAX RATE OF $7 PER BARREL ON THE FIRST 60,000 BARRELS OF BEER REMOVED FOR CONSUMPTION OR SALE WITHIN A CALENDAR YEAR. GROWLERS • GROWLERS ARE A TAKE HOME CONTAINER THAT BREWERIES USE • ACCORDING TO THE TTB A GROWLER IS A GLASS, NOT A BOTTLE, WHEN IT IS FILLED AT THE TIME OF SALE. THUS AS A GLASS THE TTB DOES NOT REGULATE GROWLER LABELS. • IN CALIFORNIA THE ABC DOES REGULATE GROWLER LABELS. • THE ABC ALLOWS A BEER MANUFACTURER (TYPE 01 OR TYPE 23) TO FILL FOR SALE ANY SEALABLE CONTAINER AS LONG AS SPECIFIC GUIDELINES ARE MET. A GROWLER IS CONSIDERED A BOTTLE TO THE ABC AND ALL BOTTLING LABEL REQUIREMENTS ARE APPLIED LABELS • THE ABC NO LONGER REQUIRES APPROVED LABELS FOR ANY CONTAINER OF ALCOHOL SOLD IN CALIFORNIA (INCLUDES KEGS) – THEY NOW REQUIRE “BRAND REGISTRATION” – HOWEVER, ALL LABELS MUST CONTAIN: • NAME AND LOCATION OF THE MANUFACTURER (CITY AND STATE) AND BOTTLER (IF DIFFERENT). • NAME OF THE BEER IN THE CONTAINER. • ALCOHOL CONTENT IS MANDATORY IF 5.7% ABV OR GREATER. IT IS OPTIONAL IF BELOW. • NET CONTENTS OF THE CONTAINER (ALTHOUGH THIS MAY BE ON THE CONTAINER, RATHER THAN THE ACTUAL LABEL). • AS WELL AS MEET THE TTB LABEL REQUIREMENTS LABELS • THE TTB REQUIRES LABEL APPROVAL FOR ANY CONTAINER SOLD ACROSS STATE LINES. • THE TTB REQUIRES A CERTIFICATE OF LABEL APPROVAL (COLA) FOR ALL BEER SOLD OUT OF SEALED CONTAINERS TO THE PUBLIC FOR SALE. THIS INCLUDES KEGS, BOTTLES, AND SERVING TANKS. THIS DOES NOT APPLY TO GLASSES USED TO SERVE ON PREMISE. • THE LABEL MUST BE APPROVED THROUGH THE TTB AND CAN BE STREAMLINED AT TTBONLINE.COM THROUGH THE COLA ONLINE PROCESS. LABELS •THE LABEL MUST HAVE: • THE BREWER NAME OR TRADE NAME • GOVERNMENT WARNING • PLACE OF PRODUCTION • NET CONTENTS •THERE ARE MANY OTHER REGULATIONS IN REGARDS TO LABELS THAT CAN BE FOUND ON THE TTB WEBSITE LABELS

• EXAMPLES OF LABELS • KEG COLLARS LABELS

• EXAMPLES OF LABELS • BOTTLES LABELS

• EXAMPLES OF LABELS • GROWLERS PRICE POSTING - ABC

• TYPE 23, TYPE 01, AND TYPE 75 (AS WELL AS TYPE 17) LICENSES ARE REQUIRED TO POST MALT BEVERAGE PRICE SCHEDULES WITH THE ABC. • THE GOAL OF PRICE POSTING IS TO HELP MAINTAIN AN “ORDERLY MARKET” BY PREVENTING WHOLESALE LICENSEES FROM CONSTANTLY CHANGING THEIR PRICES AND UNDERCUTTING EACH OTHER. • THE PRICE SCHEDULE FROM ABC-701 CAN BE FOUND ON THE ABC WEBSITE. SELF-DISTRIBUTION - ABC

• DELIVERIES - BEER MAY ONLY BE DELIVERED MONDAY – SATURDAY BETWEEN THE HOURS OF 3AM AND 8PM • RETURNS - YOU CAN ONLY EXCHANGE PRODUCT FOR THAT IDENTICAL BRAND AND QUANTITY; FOR SEASONALS OR DISCONTINUED PRODUCT, YOU MUST EXCHANGE SIMILAR PRODUCT AT THE SAME PRICE • STORING BEER – TAX-PAID BEER MAY BE STORED ANYWHERE WITHOUT A LICENSE; ALL OTHER BEER MUST BE STORED AT A LICENSED FACILITY LICENSE SPECIFIC CONDITIONS - ABC

TO GO ALONG WITH THE STATE SPECIFIC CONDITIONS, AN INDIVIDUAL LICENSE CAN HAVE SPECIFIC CONDITIONS BASED ON OWNER HISTORY, LOCATION, NEIGHBOR PROTESTS, ETC. LICENSE SPECIFIC CONDITIONS - ABC

EXAMPLES OF A SPECIFIC LICENSE CONDITION FOR A SAN DIEGO BREWERY: • SALES, SERVICE AND CONSUMPTION OF ALCOHOL SHALL BE PERMITTED ONLY BETWEEN THE HOURS OF 10AM-10PM • THERE SHALL BE NO LIVE ENTERTAINMENT OF ANY TYPE • THERE SHALL BE NO DANCING ON THE PREMISES. • THERE SHALL BE NO POOL TABLES, VIDEO GAMES OR ANY OTHER AMUSEMENT DEVICES • BEER IN CONTAINERS LESS THAN 22 OUNCES CANNOT BE SOLD FOR OFF SALE CONSUMPTION BY SINGLE CONTAINERS BUT MUST BE SOLD IN PRE PACKAGED MULTI-QUANTITIES TTB – FORMULA APPROVAL

• THE TTB REQUIRES FORMULA APPROVAL FOR BEER WITH ADDED FLAVORINGSOR COLORING MATERIALS • THERE IS A LONG LIST OF EXEMPTED INGREDIENTS • FRUITS • SPICES • OTHER • SEE WWW.TTB.GOV/BEER/EXEMPT-INGR.SHTML • USE FORMULAS ONLINE TO CREATE A PROFILE AND SUBMIT APPLICATION TTB REGULATIONS • THE TTB REGULATIONS ARE EXTENSIVE, BUT HERE ARE SOME COMMON OVERVIEWS OF REGULATIONS • BEER MUST BE BREWED FROM MALT OR FROM SUBSTITUTES FOR MALT. ONLYRICE, GRAIN OF ANY KIND, BRAN, GLUCOSE, SUGAR, AND MOLASSES ARE SUBSTITUTES FOR MALT. IN ADDITION, YOU MAY ALSO USE THE FOLLOWING MATERIALS AS ADJUNCTS IN FERMENTING BEER: HONEY, FRUIT, FRUIT JUICE, FRUIT CONCENTRATE, HERBS, SPICES, AND OTHER FOOD MATERIALS. • YOU MAY USE FLAVORS AND OTHER NON-BEVERAGE INGREDIENTS CONTAINING ALCOHOL IN PRODUCING BEER. FLAVORS AND OTHER NON-BEVERAGE INGREDIENTS CONTAINING ALCOHOL MAY CONTRIBUTE NO MORE THAN 49% OF THE OVERALL ALCOHOL CONTENT OF THE FINISHED BEER TTB REGULATIONS CONTINUED

• A BREWERY MAY BE USED ONLY FOR THE FOLLOWING PURPOSES INVOLVING THE PRODUCTION OF BEER OR CEREAL BEVERAGES UNLESS OTHERWISE APPROVED BY THE TTB • EACH STATIONARY TANK, VAT, CASK OR OTHER CONTAINER USED, OR INTENDED FOR USE, AS A RECEPTACLE FOR WORT, BEER OR CONCENTRATE PRODUCED FROM BEER SHALL BE DURABLY MARKED WITH A SERIAL NUMBER AND CAPACITY; AND BE EQUIPPED WITH A SUITABLE MEASURING DEVICE • EMPTY BARRELS, KEGS, BOTTLES, OTHER CONTAINERS, OR OTHER SUPPLIES STORED IN THE BREWERY MUST BE SEGREGATED FROM FILLED CONTAINERS. TTB REGULATIONS CONTINUED

• AN APPROPRIATE TTB OFFICER MAY ENTER, DURING NORMAL BUSINESS HOURS, A BREWERY OR OTHER PLACE WHERE BEER IS STORED AND MAY, WHEN THE PREMISES ARE OPEN AT OTHER TIMES, ENTER THOSE PREMISES IN THE PERFORMANCE OF OFFICIAL DUTIES. • THE BREWER'S NAME OR TRADE NAME AND THE PLACE OF PRODUCTION SHALL BE PERMANENTLY MARKED ON EACH BARREL OR KEG. IF THE PLACE OF PRODUCTION IS CLEARLY SHOWN ON THE BUNG OR ON THE TAP COVER, OR ON A LABEL SECURELY AFFIXED TO EACH BARREL OR KEG, THE PLACE OF PRODUCTION NEED NOT BE PERMANENTLY MARKED ON EACH BARREL OR KEG. ABC REGULATIONS

• THE ABC EMPLOYS AGENTS THAT CAN AND WILL INSPECT AT ANY TIME, INCLUDING UNDERCOVER AGENTS BUYING DRINKS AT THE BAR. • ANY LAW ENFORCEMENT OFFICER MAY SEARCH THE PREMISES AT ANY TIME WITHOUT A WARRANT. THIS IS A RIGHT GIVEN UP BY HAVING AN ALCOHOL LICENSE. ABC REGULATIONS • THE ABC EMPLOYS STATEWIDE PROVISIONS FOR ANY ESTABLISHMENT SELLING ALCOHOL: • DISTURBING THE PEACE, DRINKING IN PUBLIC • LOITERING, URINATING IN PUBLIC • HARASSING PASSERBY, DRUG ACTIVITY • LOUD MUSIC, PROSTITUTION • LEWD CONDUCT, GAMBLING MINORS • THE LEGAL DRINKING AGE IS 21 YEARS OLD • IF CAUGHT SERVING TO MINORS THERE IS A MINIMUM $1,000 FINE, 24 HOURS OF COMMUNITY SERVICE. IF BODILY DAMAGE OCCURS THERE CAN BE 6 MONTHS IN JAIL. • ANY PERSON WHO LOOKS UNDER 35 SHOULD BE ASKED FOR I.D. • YOU ARE NEVER REQUIRED TO SELL OR SERVE ALCOHOL TO ANYONE AND HAVE A LEGAL RIGHT TO REFUSE SERVICE MINOR DECOY PROGRAM

• THE ABC DOES USE A MINOR DECOY PROGRAM WHERE THEY SEND MINORS INTO ESTABLISHMENTS IN ORDER TO PURCHASE ALCOHOL • THERE ARE CERTAIN RULES THIS PROGRAM MUST FOLLOW: • DECOY MUST BE UNDER 20 YEARS OLD • DECOY MUST APPEAR UNDER 20 YEARS OLD • DECOY MUST CARRY REAL I.D, OR NO I.D AT ALL • IF ASKED, DECOY MUST PRESENT I.D • DECOY MUST ANSWER QUESTIONS REGARDING AGE TRUTHFULLY INTOXICATED PERSONS • THE LAW SAYS THAT NO PERSON MAY SELL OR GIVE ALCOHOL TO ANYONE WHO IS OBVIOUSLY INTOXICATED. • ANY PERSON WHO SELLS, FURNISHES, GIVES OR CAUSES TO BE SOLD TO ANY OBVIOUSLY INTOXICATED PERSON IS GUILTY OF A MISDEMEANOR • A PERSON IS OBVIOUSLY INTOXICATED WHEN THE AVERAGE PERSON CAN PLAINLY SEE THE PERSON IS INTOXICATED • IN OTHER WORDS, THE PERSON LOOKS OR IS ACTING OBVIOUSLY DRUNK INCIDENT LOG • THE INCIDENT LOG IS VERY IMPORTANT IN DEMONSTRATING POLICIES OF RESPONSIBLE SERVICE • INCIDENTS THAT SHOULD BE LOGGED ARE: • REFUSING SERVICE TO AN INTOXICATED CUSTOMER • ARRANGE TRANSPORTATION TO AN INTOXICATED CUSTOMER • A MINOR PRESENTS A FAKE I.D • THE ABC VISITS THE ESTABLISHMENT • A CUSTOMER BECOMES ILL OR IS INVOLVED IN AN ACCIDENT • POLICE ARE CALLED TO THE LOCATION ABC REGULATIONS CONTINUED

• ALCOHOL MAY NEVER BE GIVEN AWAY FOR FREE OR BE GIVEN AWAY WITH THE PURCHASE OF ANY ITEM. THIS INCLUDES GIVING FREE BEER TO RETAILERS • SAMPLES: IF THE RETAILER HAS NOT PURCHASED THE PRODUCT BEFORE AND IF THE SAMPLES DO NOT EXCEED ONE LITER WHEN BOTTLED; CAN OPENED ON THE PREMISES OF THE LICENSEE. ABC REGULATIONS CONTINUED

IT IS THE LAW FOR A RETAILER TO PAY A BEER WHOLESALER WITHIN 30 DAYS OF DELIVERY. IF INVOICES ARE OVER 30 DAYS ANY DELIVERIES MUST BE DELIVERED AS COD; ADDITIONALLY, YOU MUST CHARGE INTEREST ON UNPAID INVOICES. ABC REGULATIONS CONTINUED

• NOTHING OF VALUE CAN EVER BE GIVEN TO A RETAILER EXCEPT: • SOME SIGNAGE • SOME PROMOTIONAL ITEMS THAT COST LESS THAN .25 PER ITEM UP TO $15 • PINT NIGHT: GLASSES CAN NOT BE GIVEN AWAY FREE WITH THE PURCHASE OF A BEER. PINT NIGHT CAN ONLY BE ADVERTISED AS PRICE OF BEER INCLUDES THE PRICE OF THE PINT GLASS ABC REGULATIONS CONTINUED

•THE ABC CONSIDERS SOCIAL MEDIA TO BE A THING OF VALUE •YOU (BEER MANUFACTURERS ONLY) MAY DONATE BEER TO APPROVED NON-PROFIT ORGANIZATIONS WITH A VALID PERMIT COMMON LAW DUTIES

• UNDER COMMON LAW, A LICENSEE HAS A DUTY TO EXERCISE REASONABLE CARE FOR THE SAFETY OF THEIR PATRONS. • IF A LICENSEE SHOWS NEGLIGENCE, COMMON LAW LIABILITY MAY RESULT IN A CIVIL LAWSUIT • RECKLESS CONDUCT CAN ALSO RISE TO A CIVIL LAWSUIT • RECKLESS CONDUCT GOES BEYOND NEGLIGENCE WHEN A PERSON HAS INTENTIONALLY DONE AN ACT OF UNREASONABLE CHARACTER; HAS DISREGARDED A RISK THAT THAT THEY KNEW; AND IT WAS HIGHLY PROBABLE THAT HARM WOULD FOLLOW REDUCING LIABILITY

• RECOMMENDATIONS FOR REDUCING RISK OF LIABILITY • PROVIDE TRAINING FOR STAFF • MAINTAIN ADEQUATE STAFFING • HIRE QUALIFIED EMPLOYEES • PROMOTE NON-ALCOHOLIC DRINKS • PROMOTE SAFE RIDES HOME • SUPPORT EMPLOYEES DECISIONS RECOMMENDED TRAINING

• THE ABC PROVIDES A FREE LEAD TRAINING CLASS THAT IS RECOMMENDED FOR ANYONE WILL BE SERVING ALCOHOL TO CUSTOMERS. • MORE INFORMATION CAN BE FOUND HERE: • HTTP://WWW.ABC.CA.GOV/PROGRAMS/LEAD.HTML QUESTIONS? CANDACE L MOON, ESQ.

THE CRAFT BEER ATTORNEY [email protected] 619-749-4115 WWW.CRAFTBEERATTORNEY.COM WWW.BREWLAW101.COM