NABCA News March 18, 2019

NABCA 26th Legal Symposium SAVE THE DATE

Control State News March 17-19, 2019 th NC: Liquor changes: ABC boards skeptical as McGrady plans 26 Annual Symposium on Alcohol Beverage Law and Regulation slate of alcohol bills Registration is open for NABCA’s 2019 Legal MI: Sunday alcohol sales cause some Michigan stores to Symposium. For program details, travel move or shutter information and to register online at www.nabca.org\meetings. WV: Craft brewers hopeful new law will open second wave of growth NABCA HIGHLIGHTS The Public Health Considerations of Fetal License State News Alcohol Spectrum Disorders (White Paper) DE: State alcohol commissioner questions Newark's unruly Native American Nations & State Alcohol bars point system Policies: An Analysis (White Paper) Alcohol Technology in the World of Tomorrow CT: Package stores offer dime recycling fee in lieu of liquor - (White Paper) bottle deposits The Control State Agency Info Sheets. Please Industry News view website for more information. NABCA Survey Database (members only) SWA loses trademark battle over ‘tartan’ Upcoming NABCA Meetings Bad State Laws and Big Money Beer Wholesalers Are Still Statistical Data Reports Hurting Craft Brewers www.NABCA.org Daily News

Four Loko, , and Sparks: an abridged history of caffeinated alcohol

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NABCA NEWS NABCA 26th Legal Symposium March 18, 2019 Today is the inaugural day for NABCA’s 26th Annual Legal Symposium. About a dozen robust topics relating to beverage alcohol fill out the conference agenda for the next day and a half. Sessions include Direct Shipping, Product Liability and Tainted Product, Regulating Alcohol Tourism and Connecting with Craft. Beginning tomorrow, NABCA will share summaries of several topics presented in the Daily News Update.

CONTROL STATE NEWS NC: Liquor changes: ABC boards skeptical as McGrady plans slate of alcohol bills BlueRidge.com By Derek Lacey, Times-News Staff Writer March 16, 2019 Changes are in the works for how North Carolinians buy liquor, and local officials from government representatives to ABC board members are worried about what it might mean for local communities that receive money from sales. State Rep. Chuck McGrady has filed a bill seeking to make a number of changes to ABC systems across the state, and he’s warming up to file a handful of bills in the coming weeks, leading up to a bill that would privatize liquor sales. The shift from government-run stores could mean residents would be able to buy liquor at the grocery store, for instance, and perhaps on Sundays. Proposals also call for allowing in-store tastings. Local ABC board chairs are worried about what that might mean for local stores, and what could happen to hundreds of thousands in contributions made to local governments, education and more thanks to annual ABC sales. McGrady is one of four primary sponsors of the ABC Modernization Bill filed in February that makes several various changes to the ABC system. These changes include requiring the consolidation of ABC systems within counties with more than one. In Henderson County, Fletcher, Laurel Park and Hendersonville each have ABC stores and boards. Legislation The modernization bill passed its first reading in the House and is set to go before the House ABC Committee this Tuesday, according to McGrady. But this bill isn’t all that’s proposed. Thursday, McGrady filed a bill to allow craft brewers to increase their brewing capacity before having to hire a distributor. Several more bills will be rolled out over the coming weeks, he said, including one that would establish a modern licensure system for distilled liquors, otherwise known as privatization. Early this week, likely Monday or Tuesday, he plans to file a craft distiller’s bill. A week or so after that, he plans to file an ABC regulatory reform bill which he comparted to a broader version of his previous efforts with craft brewing. About 10 days after that, he said, he plans to file the modern licensure bill, all of the above being “significant proposals to modernize how we handle alcoholic (beverages).” The current modernization bill isn’t actually McGrady’s preference, he said. His preference would be for the licensure bill, though the modernization bill could be a way to incrementally move toward a licensure system. A report McGrady requested from the state Program Evaluation Division served as the impetus for the modernization bill. He said he wanted them to look at where the state had come from and where it ought to go, and pointed out that once PED gets started on the study, it works independently. The recommendations in that report essentially became the proposals in the modernization bill. NABCA Daily News Update (3/18/2019) 3

“We can do this better,” McGrady said. The sticking points First, the proposal mandates ABC boards within counties consolidate, the main sticking point with local ABC organizations. The bill would also remove the requirement that a permit be required for transporting more than eight liters of liquor, allow for special orders of less than a case, allow ABC boards to deliver to restaurants, bars or other establishments for a fee as opposed to the current pick-up only system, allow local jurisdictions to decide on allowing Sunday sales and allow in-store tastings. Charles Byrd, chair of the Hendersonville ABC Board, said there are pros and cons to that bill, but didn’t find the same duality to the potential privatization of liquor sales in the state. He feels consolidating ABC boards within the county will create a number of headaches, from managing a larger base of inventory to working out exactly how the larger system will work and how the revenues might get distributed to local schools, governments and more. If the county’s boards merged, they’d likely need to lease or build a new warehouse to hold inventory, as one truck makes deliveries to the local ABC system, he said. He feels that would end up being a cost savings to the state but more expenses for local boards. “Financially, there’s not going to be that much gain for anybody, and you lose control of it,” said Fletcher ABC Board Chair Larry Waldrop, noting the money Fletcher ABC distributes to local groups, as well as the uncertain future of its financial assets in land and inventory. On privatization, Byrd said “The issue is, ABC — the C in there is ‘control.’” He said it’s much harder for distilled spirits to get in the hands of underage residents with the ABC system, and other states have experienced less control after moving to a privatized system. That is one of the biggest issues for Byrd, alongside losing revenues that are distributed locally. He also expects customers to lose the availability of top-shelf liquor that can be found at an ABC store and pay up to 15 percent more for the liquor that is available. The state would retain control under a licensure system, McGrady said, adding that some states limit the number of licenses and that the new rules would be whatever the state establishes. But the majority of states have moved to a licensure method in regulating alcoholic beverages, he said, something North Carolina has already done for beer, wine and cider. Liquor would become a similar system, though there are still lots of details to work out. Laurel Park opposition The Laurel Park Town Council heard from the staff of its ABC store during a work session Thursday, directing ABC Assistant Manager and former Laurel Park Town Manager Jim Ball to write a letter voicing concerns and opposition to the current bill. The council plans to take up the letter and consider action at its 9:30 a.m. meeting Tuesday, with concerns about keeping contributions intact and that nothing in the bill details what will happen to those contributions once boards consolidate. “We don’t have any real guidelines as to how that board would operate,” Ball said, noting different pay scales for employees, different operational software at stores and concerns about Laurel Park’s one full-time and seven part- time employees. Ball also noted that about six years ago when the county voted in favor of liquor by the drink, a study was done on consolidating the boards and the county decided against it.

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Who gets the money? Each of the three local ABC Boards in Hendersonville, Fletcher and Laurel Park distribute their funds a little bit differently, splitting contributions up between local governments, education, law enforcement and other organizations. According to the state ABC Commission’s 2018 annual report, the three stores in Hendersonville did $7.16 million in gross sales in 2018, a 7.2-percent increase over 2017, with forecasts for another year of growth in 2019. Fletcher’s $2.28 million in gross sales was a 7.73-percent increase, and Laurel Park’s $1.3 million was a 2.81-percent increase over the previous year. The Hendersonville ABC Board gives 50 percent of its profits to the city of Hendersonville, 25 percent to Henderson County, 24 percent to the county school system and 1percent to the county library system, Byrd said. In the fiscal year that ended June 30, 2018, that was $175,000 to Hendersonville, $87,500 to Henderson County, $84,000 to Henderson County Public Schools and $3,500 to the library. The board also gives around $40,000 to other miscellaneous programs with schools and other organizations, like funding speakers who talk to students about alcohol for Project Graduation, for which the board gives $2,500 to each high school. In its annual reporting, the state lumps those amounts into three categories: local, alcohol education and law enforcement. On its website, the state commission designates Hendersonville’s totals as $350,000 for local, $47,218 to alcohol education and $40,000 to law enforcement. For Laurel Park, the state reports $60,965 to local, $2,724 for alcohol education and $3,891 for law enforcement. For Fletcher, it’s $75,000 to local, $6,095 to alcohol education and $4,354 to law enforcement. After paying off its building this year, Waldrop said Fletcher’s local distribution is set to more than double this coming year, up to about $170,000. Altogether, the three Henderson County systems generated a total $10,754,097 in revenue last fiscal year, according to state data. After $7,444,451 in expenses, state excise taxes took the lion’s share of $2,329,714, compared with $590,247 in local contributions. That local contribution breaks down according to state data as $485,965 to local governments, $56,037 to alcohol education and $48,245 to law enforcement. Local ABC boards operate stores without state funds, generating more than $1 billion in statewide revenue each year, the state reports, and during the last fiscal year, $430,635,861 was distributed, with the vast majority — $323,425,611 — going to the state general fund. The next highest amount, $80,345,396, went to counties and cities, $13,017,215 to local alcohol education, $8,844,597 to local law enforcement, $3,200,218 to county rehabilitation services and $1,802,824 to the state Department of Health and Human Services. Will governments, schools, police still get funds? Making up that money to local governments, schools and other organizations is the main obstacle for privatization. “Those are not just going to disappear,” McGrady said. It’s a complicated process, with something like eight different fees, taxes and levees on alcohol, all of which has to be untangled and sorted out, he said. To have a chance of passing, the bill will have to make sure local governments continue get revenue from the sale of distilled spirits, McGrady said. But rather than them having to rent or buy buildings or employ people, “what I’m proposing would be to get those revenues through the licensure or tax process,” getting those revenues back to local organizations that way. NABCA Daily News Update (3/18/2019) 5

There are a lot of different options on how to do that, and his bill will include a recommended method of making up those funds to local organizations, he said. Possibilities include a local option sales tax similar to the one Hendersonville is currently hoping to pass. “Getting the finance part right is the hardest part,” he said, which is why that bill is taking longer than the others he’s working on. Something that’s also going to have to be worked out, he said, is how contributions at the county level would be distributed under the single county ABC system if it were to be implemented, as currently towns within the county that don’t have ABC boards, like Mills River and Flat Rock, don’t get any revenues from liquor sales. McGrady added that he has met with the manager of the Fletcher store and with two of the town’s council members, and is having discussions with various other local officials. Public favors closing stores The Program Evaluation Division’s study that prompted the modernization bill itself cited public support for privatization, and detailed a number of ways its recommendations would benefit the state. The PED report cites two polls, one by Elon University and one from High Point University, and each poll found greater support for closing ABC stores. The Elon University poll found that 52 percent of respondents were in favor of closing stores, compared to 32- percent opposed. The High Point University poll found 47 percent of respondents in favor. The polls also found support for issuing permits to sell liquor at any store that sells beer and wine, by margins of 56 percent to 31 percent in the Elon poll and 49 percent to 32 percent in the High Point poll. The study also compares county boards to counties with multiple boards and finds that merged boards are more likely to outperform other ABC boards in profit and operating margins. By comparing three sets of two counties with similar outlet densities and location and populations, the PED study found that “overall, each of the three counties with multiple ABC boards had lower profits and higher operating margins than their comparison county with a single board.” Byrd disagrees that it would save money administratively. His opinion, as well as that of the North Carolina Association of ABC Boards, is that mergers should be voluntary. “It’s my opinion that it would not be a money saver in administration,” Byrd said, because costs would come up, such as for warehouse managers, store managers, general and assistant managers for all of them and more. “We think that we do a good job the way we’re doing it,” Byrd added. He noted that North Carolina ranks 44th in liquor consumption per capita, but seventh in revenue. Since 2008, only four merged ABC boards have formed, according to the PED study, bringing the total to 11 merged boards. The Triad Municipal ABC Board is the largest with 14 stores serving Winston-Salem and six other communities in Forsyth, Davie, Guildford and Yadkin Counties. Statewide, the study found that 19.6 percent of all local ABC boards have a profit margin of 10 percent or higher, while 40 percent of merged boards have a profit margin of 10 percent or higher. “Based on the experience of merged ABC boards, moving to a system with a single board would reduce operating costs and increase profitability with counties with multiple ABC boards,” the study says. State association weighs in According to an email shared by Ball, the state Association of ABC Boards doesn’t oppose all the measures. It favors most of the ones proposed in the bill, including orders of less than a full case and deliveries for a fee, which it says it has long advocated for. The association is opposed to the merger requirement and Sunday sales, but is neutral on the issue of liquor tastings.

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The bill also doesn’t address some issues that Waldrop said he would like to see considered, including the requirement that permittees like restaurants purchase their liquor from ABC stores in the same county. For Fletcher, he pointed out that many establishments very near to the ABC store are actually in Buncombe County and therefore can’t simply go across the street to the Fletcher store for their purchases. “They ought to be just like us,” he said. “They ought to have the right to buy from the closest store.”

MI: Sunday alcohol sales cause some Michigan stores to move or shutter South Bend Tribune By Ed Semmler March 18, 2019 For just over a year, Indiana has allowed Sunday alcohol sales at retail stores, and there already have been at least a couple of store closings on the Michigan side of the border. The J&B Party store at 3114 S. 11th St. in Niles is abandoned with little but shelves, boxes and beer posters remaining inside. The sale of the license is pending and will be transferred to a storefront at 4031 Michigan 139 near St. Joseph. Just over a year ago, a clerk at the store predicted that J&B would be severely hurt when Indiana finally began allowing the Sunday sale of alcoholic beverages. He said that nearly half of the store’s weekly sales came on Sunday. After years of political wrangling, the legislature took action early last year to repeal its Prohibition-era ban on the Sunday sale of alcohol, and Hoosiers marked the occasion by making alcoholic purchases throughout the state on March 4 last year — some to just mark the occasion on social media. But the story was considerably different in communities bordering Indiana. The Sunday sale of alcoholic beverages in Indiana was enough to force John and Sue Wetzel to close their family business — Union Market at 15940 U.S. 12 — after 36 years in business. A few years earlier, Union Market was hurt by the opening of a nearby Dollar General store, but it was able to recover nicely once it acquired a full liquor license, Wetzel said. The store attracted a lot of customers from Elkhart and Goshen because of its ease of access just up County Road 17 in Elkhart. “We had our best day ever on New Year’s Eve in 2017 because it fell on a Sunday that year,” said Wetzel. “And then just a short time later, the Indiana legislature announced it was going for Sunday sales again.” Because of repeated attempts to pass the enabling legislation, Wetzel had an ominous feeling. Pressure had been building in Indiana to allow Sunday sales. And then it began. With Sundays producing about 35 percent to 40 percent of the store’s revenues, Wetzel knew that the store’s days were numbered. “Sunday sales paid the bills,” said the 63-year-old Elkhart resident. “We needed it to stay afloat.” On Oct. 15 the store finally closed. Equipment was sold and a neighbor in Union decided to purchase the property as well as the liquor license, though the location remains closed. Wetzel said he and his wife were just planning to run the store a few more years to get to retirement age. He feels fortunate that he was able to land a full-time job at the Martin’s Super Markets location near his home. Some larger operators have been able to adjust to the change. Oak Dairy Party Store at 1129 Stateline Road in Niles, for example, installed a large walk-in beer cave and additional coolers to ensure there is an ample supply of cold beer available for residents of Indiana where cold beer sales are allowed only at liquor stores.

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Because Sunday alcohol sales in Indiana are allowed only from noon to 8 p.m., the Michigan stores have another advantage by being able to sell earlier in the day and later at night. The investment at the Oak Dairy location was necessary to give the store an edge with customers, said Bhola Singh, who owns that store and 36 others — often called Mega Liquor — on both sides of the border. While Sunday sales have made it more difficult for Michigan stores near the border, sales in Indiana have been a wash since the initial surge, Singh said, adding that what’s been gained on Sundays has been lost on Saturdays and Mondays. Singh’s biggest headache — especially at the beginning — was filling the additional shifts. Vinay Patel, who operates Blarney Stone stores in the area, agreed, and added that he doesn’t even open his location on Hickory Road in South Bend on Sundays because of labor and its proximity to another one of his stores on McKinley Avenue. Patel said he’s in the process of expanding a few of his locations with larger coolers and other amenities in order to make them more competitive with the large retailers who can sell beer and wine as long as it isn’t chilled. “We’re trying to stand out,” he said. Wetzel said he considered adding gas pumps or making some other changes to keep his store afloat. But in the end, he didn’t want to take on a bunch of debt as he’s nearing retirement. “I’ll bet the change hurt a lot of businesses,” he said. “With all of the small border stores in Illinois, Ohio and Kentucky, there had to be a lot of businesses that were hurt.”

WV: Craft brewers hopeful new law will open second wave of growth Charleston Gazette-Mail By Phil Kabler, Staff writer March 17, 2019 When legislation was passed in 2009 raising the state’s maximum permitted alcohol level for beer from 6 percent to 12 percent by volume, there were a total of three craft breweries in West Virginia. Currently, that number is approaching 30 statewide, and West Virginia Craft Brewers Guild president Aaron Rote is optimistic that newly passed legislation (Senate Bill 529) to further ease restrictions on the industry will lead to a second wave of growth. “For the industry, what a lot of the changes do is make us more competitive with our surrounding states, and bring us up to what most modern craft beer law is,” said Rote, who is co-founder and co-owner of Short Story Brewing Co. in Rivesville. Changes in the legislation, which is pending Gov. Jim Justice’s signature, include: • Raising the maximum ABV from 12 percent to 15 percent. • Eliminating a two-growler-per-customer limit, and raising the maximum permitted growler size from 64 to 128 ounces. • Creating a temporary floor plan extension license to allow craft brewers to hold outdoor events on brewpub or brewery grounds or parking areas. • Creating one-day special licenses to allow nonprofit organizations to have beer sales during events. (Rote said craft breweries frequently are asked to provide beer sales at events, but said the current licensing process is too onerous for most associations.) • Eliminating bond requirements for brewers, resident brewers, distributors and brew pubs. • Requiring the Alcohol Beverage Control Administration to act within 30 days on license applications, instead of acting within a “reasonable time” as stated in current law.

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Rote said he was somewhat surprised the legislation passed on its first try, but said he believes the industry has shown over the past decade that it is deserving of having more freedom and fewer regulations and restrictions. “There’s a lot of talk about how chaotic state politics are, but the experience for us was positive. Everyone listened to our concerns,” he said. “We’ve done a good job of being in compliance, advancing the industry and putting West Virginians to work,” he added. “We felt it was time to let us grow as much as possible.” While some legislators expressed concern that raising the alcohol level would result in increased problems with intoxicated individuals, Rote said beers in the 12-15 percent ABV range generally are higher priced, highly complex specialty brews. “Where you tend to have problems is with the very cheap products available in large quantities,” he said.

LICENSE STATE NEWS DE: State alcohol commissioner questions Newark's unruly bars point system KPVI By Brooke Schultz March 16, 2019 Newark’s law that penalizes unruly bars by suspending their special-use permits to sell alcohol is “completely illegal,” Delaware Alcoholic Beverage Control Commissioner John Cordrey alleged at a recent hearing. The statement came during a hearing for Caffé Gelato, which was required to appear before the commissioner after a third violation for serving an underage customer, an incident that occurred in September. Caffé Gelato was among five establishments that failed an inspection by the Newark Police Department and Delaware Alcohol and Tobacco Enforcement in September. NPD routinely sends underage cooperating witnesses into bars, accompanied by undercover officers. The witnesses cannot lie, and if asked for identification, they show their real driver’s license indicating they are under 21. Through Newark’s point system – which was rolled out in 2016 as a way to hold accountable unruly bars and restaurants – establishments that serve liquor can accrue different amounts of points for violations such as pedestrian issues, noise complaints and disorderly conduct, as well as more serious offenses like serving minors. If an establishment reaches 10 points, the Newark Police Department can make a recommendation to city council to suspend its special-use permit for 30 days, meaning the establishment can not serve alcohol during that time. Caffé Gelato was the first to go through a city council hearing, and council voted to suspend the restaurant’s special- use permit for 30 days in January. Caffé Gelato has since completed the suspension and resumed the sale of alcohol. Cordrey said that the city’s revocation of Caffé Gelato’s special-use permit triggered his office to suspend the restaurant’s liquor license for 30 days. “I had no choice but to suspend your alcohol license in that same period of time,” Cordrey told Caffé Gelato owner Ryan German at the hearing. “So essentially, I have suspended the license for 30 days. It’s not something related to this sale. It was something that was required by the City of Newark’s decision, which, as I say, in my mind, is completely illegal. They don’t have the ability to do it, but they’ve done it anyway. And until someone takes them to court, I guess they’ll continue to do it.” During the state hearing, which is separate from Newark’s proceedings, Cordrey declined to add more days to the restaurant’s suspension. In a separate interview, Cordrey said that under Delaware law, a city or county can’t charge a fee to sell alcohol. To get a special-use permit in Newark – for a zone other than residential – an applicant must pay a fee of $650. NABCA Daily News Update (3/18/2019) 9

“I think that the entire special-use permit procedure is inappropriate,” Cordrey said. “The General Assembly provides that the commissioner’s office is the entity that determines whether or not alcohol can be sold at the premises, not the city of Newark.” He continued that neither Newark nor any other city would be able to ban the sale of alcohol. “That would be unconstitutional,” he said. “If they are charging fees, even small fees for the privilege of selling alcohol, that is contrary to the constitution and contrary to that statute. So if they can’t charge a fee for the permit, then revoking the permit is somewhat meaningless.” Newark officials, however, believe they are on solid legal ground. “Essentially, alcohol sales are not allowed in certain zonings, absent a special-use permit. So it’s not a permit to serve alcohol, it’s a permit to allow alcohol to be served in the zoning district,” City Manager Tom Coleman said. Newark’s zoning code requires special-use permits for a number of different uses, besides alcohol sales. For example, in the central business district, businesses such as fast-food restaurants, motels, apartments and grocery stores larger than 5,000 square feet all require special-use permits. Coleman added that, under Title Four, Section 561-F in Delaware code, the city can justify the permit process. Under that section, it indicates exactly what happened in the case of Caffé Gelato: should a city indicate that an entity’s permit has been suspended, then the alcohol commissioner will suspend the license until the commissioner receives notice from the city that the permit has been reinstated. “So it sounds like it worked. It worked how it was intended. It worked relatively quickly and in accordance with state law,” Coleman said. Coleman also cited another section of state law, which indicates that the alcohol commissioner won’t grant a new liquor license of any type unless a city approves “that the premises where the license is to be used is properly zoned for the applicant’s intended use, that all necessary permits have been approved and that the applicant has complied with all other applicable licensing requirements” of a city. “So it’s pretty clear in there that municipalities have the ability to put licensing requirements on properties, and properties have to be properly zoned to get a license to serve alcohol,” Coleman said.

CT: Package stores offer dime recycling fee in lieu of liquor bottle deposits CT Mirror By Keith M. Phaneuf March 18, 2019 Will there be a recycling fee? The package store association suggested a 10-cent fee as an alternative to Gov. Ned Lamont’s call for new deposits on liquor bottles. Connecticut’s package stores have proposed a 10-cent “recycling fee” as a compromise alternative to the 25-cent deposit Gov. Ned Lamont recommended last month. The Connecticut Package Stores Association also is asking Lamont and the legislature’s Environment Committee to consider a 10-cent fee on 50 milliliter “nip” bottles, though consumers could return that to reclaim a nickel deposit. The association argued against expanding the state’s bottle recycling program to include large and medium-sized liquor bottles as Lamont suggested in his Feb. 20 budget proposal. These bottles “are already recycled and recovered by homeowners using existing collection programs through private haulers, municipalities, or taken to transfer stations by homeowners,” Carroll Hughes, the association’s executive director, wrote in a memo sent Friday to the Lamont administration and to the Environment Committee. The state’s recycling program does not extend to all glass containers used to hold food or beverages and “singling out wine and liquor bottles instead of all glass containers used in the home is inappropriate,” Hughes wrote. NABCA Daily News Update (3/18/2019) 10

Connecticut’s package stores also lack the space to collect and store returned bottles, the association wrote, adding that one-third of these outlets are smaller than 600 square feet in size and another third are smaller than 900 square feet. The Lamont administration estimated that a 25-cent deposit on full-sized liquor bottles effective Oct. 1 would raise $4.4 million for the state next fiscal year and $6 million in 2020-21. The state would keep the unclaimed deposits. The administration projected a 5-cent deposit on nips would raise $500,000 next fiscal year and $600,000 in 2020- 21. The association did not offer a specific revenue projection from its counter-proposals, but wrote in its memo that they would generate “millions of dollars beyond the revenue set by the governor.” The legislature and governor could then dedicate these funds, the association added, to support recycling or any other environmental protection programs. The Lamont administration neither endorsed nor dismissed the alternative Friday. Chris McClure, spokesman for the governor’s budget office, said “Governor Lamont has been clear since taking office, he is willing to have substantive and meaningful discussions with anyone who brings forth a good idea. We will review this proposal and engage with CPSA to determine if it offers a viable path forward from an environmental and revenue perspective.” Leaders of the legislature’s Environment Committee could not be reached for comment Friday. The administration also says that expanding the state’s deposit program to include liquor bottles would have a significant, positive impact on the environment. The introduction to the governor’s budget proposal states that broken glass from liquor and other bottles collected from households through residential recycling programs “contaminates the state’s recycling waste stream and very little broken glass actually gets recycled. By comparison, “nearly 80 percent of glass is recycled through the current bottle deposit program,” which already covers beer and soda bottles. But Hughes challenged this assertion. “If those who suggest that bottles collected under a bottle bill would be unbroken or of better quality, they may be correct,” he wrote. “This issue is not a fault of the homeowner who recycles their bottles, but rather it is a flaw in the collection process. This should be corrected where the problem exists, not by adding a new process for collection.”

INDUSTRY NEWS SWA loses trademark battle over ‘tartan’ The Spirits Business By Nicola Carruthers March 18, 2019 The Scotch Whisky Association (SWA) said it was “disappointed” over a recent ruling that allows a Japanese retailer to register the trademark ‘tartan’, arguing that the term can serve as a geographical indication for Scotch whisky. In March 2016, Japanese retailer Isetan Mitsukoshi filed for the term ‘Isetan Tartan’ at the Intellectual Property Office of Singapore (IPOS) to be used for 18 classes of goods and services. SWA filed a notice of opposition to the application in January 2017, citing that the word ‘tartan’ cannot be trademarked as it is an “iconic symbol of Scotland” and can function as a geographical indication (GI) for Scotch whisky. NABCA Daily News Update (3/18/2019) 11

The case marks the first time the Geographical Indications Act was considered at IPOs since it came into force in 1999. In addition to providing extensive evidence to show the long association between tartan and Scotland, the SWA also argued that Scotch whisky producers frequently incorporate the tartan pattern on their labels or the word ‘tartan’ in their brand names However, Tan Mei Lin, IPOS’s principal assistant registrar of trademarks, said that the tartan on the labels was used for the “purpose of identifying the whisky distillery and not for the purpose of identifying the product”. To function as a GI, the sign must identify a product, she said. Mei Lin added that “there is no evidence” to show that ‘tartan’ is used to identify goods from Scotland and said that the relevant issue is whether ‘tartan’ is a GI in the first place. GIs are used to identify goods with a given quality, reputation or other characteristic attributable to their origin. She said: “Neither is there evidence from the opponent as to what characteristics ‘tartan’ whiskies possess. In fact, the opponent focused on the qualities of a different geographical indication, namely, Scotch whisky.” The SWA also further claimed that the mark should not be registered as the use of the mark is prohibited in Singapore by the GI Act. However, the GI Act only protects GIs that are protected in their country of origin. However, Mei Lin said that ‘tartan’ is not a GI that is protected in the UK and that there “is no evidence before me to suggest that ‘tartan’ is protected as such in the UK”. As such, the opposition fails on all grounds, Mei Lin concluded. SWA legal deputy director Lindesay Low said: “We are obviously disappointed with this decision. We now need to consider its contents carefully and decide upon our next steps.”

Bad State Laws and Big Money Beer Wholesalers Are Still Hurting Craft Brewers The craft beer industry can only go as far as lawmakers will allow. Reason By Baylen Linneken March 16, 2019 Brewery in Portland, Ore., a craft beer pioneer that brewed one of the best tap beers I've ever had the pleasure to drink, shut its doors for good this week. The owners blamed competition and profitability issues for the closure of the brewery, founded 35 years ago. While the market for craft beer is still growing, the rate of growth has slowed considerably in recent years. Brewers Association chief economist Bart Watson last year said the craft beer industry his group represents is showing signs of "deceleration." I'm confident the industry's growth can continue. But here's a caveat: craft brewers also continue to face their share of outside obstacles, chiefly in the form of state laws that hinder growth and profitability. In Colorado, for example, a new booze-delivery law was intended to benefit local beer sellers and "to stop Amazon from taking over the local liquor-delivery market," reports the Denver Channel. But the new law has actually hurt local sellers such as Denver's Craft Alley, a craft beer delivery service, because it requires sellers to get at least half their revenue from a brick-and-mortar location. The unintended consequences mean that, as a delivery service, Craft Alley could be out of luck if lawmakers don't amend the law. In neighboring Utah, a bill that would raise the state's embarrassing cap on alcohol content (currently 3.2% by weight, the lowest in the country) is opposed by the state's craft brewers, who argue correctly that the proposed new cap of 4.8% is still far too low.

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In Montana, efforts to overturn a state law that requires breweries to close their taprooms by 8 p.m. died earlier this legislative session. A recent Flathead Beacon column lamented the fact that "opponents, including the Montana Tavern Association, argued that the legislation would allow breweries to further circumvent a quota system that has been in place since Prohibition." Worse still, the piece also notes that Montana lawmakers are considering a proposal that could raise the price of alcohol licenses. And then there's Texas, the only state in the nation that prohibits most breweries from selling not just growlers but all to-go beer to consumers. (Would you, could you, with some eggs? "[N]ot in cans, not in growlers, not in crowlers or bottles or kegs.") Efforts are underway to change the law. But those efforts face powerful opposition from powerful beer wholesalers. "The argument that craft beer is stifled by Texas regulations is simply not supported by fact," says Larry Del Papa, president of Wholesale Beer Distributors of Texas, in a recent op-ed. If Del Papa wanted facts, he might have spoken with Glen Harrod. The former owner of Grapevine Craft Brewery in Grapevine, Tex. said this week that he was forced to sell his brewery last year because the state law, coupled with competition over shelf space in groceries—which wholesalers often control—made it impossible for him to continue. As bad as many state beer laws are, they aren't the only policy obstacles brewers face. Pres. Trump's indefensible steel and aluminum tariffs, for example, have rocked all sizes and types of U.S. brewers, who rely on the former for canning and the latter for kegging. Both the Brewers Association and the Beer Institute, which represents larger breweries, have come out against Trump's tariffs. Chad Melis of craft brewer Oskar Blues, which helped re-popularize canned beer with the success of its tasty Dale's Pale Ale, told CNN last year that the tariffs could cost the brewer $400,000 per year. (Trade wars, it turns out, are neither good nor easy to win.) Back in the states, there are some potential bright spots to report. In West Virginia, for example, lawmakers voted this month to ease restrictions on some alcohol sales. And in Oxford, Mississippi, lawmakers are considering a proposal that would allow craft beer stores to serve craft beer. Fostering better state and federal beer laws is a topic I've written about many times (including here, here, and here). I'm generally optimistic about both the industry and trends in state laws in the decade or so I've been writing about the industry. But I'm also frustrated by the slow pace of change and by seeing the same tired arguments—such as those uttered by Del Papa of the Texas wholesalers' group. Craft beer is a highly competitive, innovative, and important industry with boundless potential. In the end, though, the industry can only go as far as lawmakers will allow.

DAILY NEWS , Joose, and Sparks: an abridged history of caffeinated alcohol Why is everyone so nostalgic for messing up their bodies? VOX By Kaitlyn Tiffany March 15, 2019 Remembrances of Four Loko - the super-caffeinated, alcoholic available in every convenience store for a narrow window of time before intervention by the Food and Drug Administration at the end of the aughts - are their own genre of internet content.

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It is, if there is such a thing, the internet's beverage, even years after the demise of its original formula. "If you can remember your Four Loko experiences, it wasn't a Four Loko experience," comedian Kady Ruth recently tweeted, in response to a question from comedian Akilah Hughes asking for stories about the drink's golden age. "Why tell, when you can show a photo series?" dancer and YouTuber Ava Gordy replied, attaching an image of herself surrounded by Four Loko cans and wearing a gas mask. Photos from Four Loko's golden days are scattered around on Tumblr and Imgur, captured with the high-flash, red-eyed weirdness of disposable cameras and early iPhones. In an oral history of Four Loko, published on Grub Street last summer, the team of Ohio State buddies who created it explained how the product went from a small production run in 2005 to a splashy New York City debut in 2009 to more than $100 million in revenue in 2010. In short: They made the cans tall and they gave them a neon camouflage print to make them stand out. Plus, they raised the alcohol level as high as they legally could for a malt beverage. 2010 sounds like such a long time ago that I was honestly surprised when one of the Gawker pieces about the moment mentioned the fact that Obama was president. I wasn't old enough to drink or permitted to have more than one other person in my car at the time, but even I feel a bubbly sort of weakness in my chest reading a blog post about the founder of Ron Jon Surf Shops getting arrested for driving under the influence of Four Loko or a blog post about Chuck Schumer comparing Four Loko to "a plague" devastating the country. Four Loko was beloved, and it is beloved in death. But why? What's so great about caffeinated sugar-water full of booze, in a can, retailing for $2.50, other than the obvious? The drink is infamous, and maybe an important cultural moment, but it's not unique. There were also micro-eras for the nearly identical drinks Sparks and Joose, and the vodka got almost two decades. In fact, there's a long history of people trying to showily ruin their nights or their lives with disgusting combinations of chemicals dreamed up for some business purpose that doesn't especially concern them. and alcohol shouldn't mix, but they have always mixed. "People are always looking for a way to get high," William Rorabaug, a historian at the University of Washington, tells me. "Throughout history. It seems to be part of the human condition." The last super-boozy generation was the baby boomers, he explains, but their children got into a health kick - yoga, meditation, bicycles, running - mostly because they saw a lot of bad stuff happen to their parents and older siblings as a result of alcohol, and because they preferred marijuana. Mothers Against Drunk Driving got big in the 1980s, and heavy alcohol consumption dipped throughout the 1990s. It didn't rise again until about 2003, he says, when "very sweet mixed drinks" that went down easy and would mess you up with sugar and alcohol at the time became more popular. Philip Dobard, vice president of the National Food and Beverage Foundation, explains to me that the drinking age was lower when he was a teenager, which was in the 1970s, and that he really liked drinking Long Island iced teas. Though they've been rebranded as premium cocktails in recent years, Long Island iced teas used to be Diet Coke and the leftover dregs of various well spirits. "It was the vodka Red Bull of its day," he reminisces. "It was high alcohol, not particularly high caffeine, but caffeine. It was a test of one's humanity. A test of one's mortality. You're young and healthy and you're not familiar with loss. Injuries, when they occur, quickly heal." "IT WAS A TEST OF ONE'S HUMANITY. A TEST OF ONE'S MORTALITY. YOU'RE YOUNG AND HEALTHY AND YOU'RE NOT FAMILIAR WITH LOSS. INJURIES, WHEN THEY OCCUR, QUICKLY HEAL." A current fact sheet from the Centers for Disease Control and Prevention about mixing caffeine and alcohol states that it makes drinkers feel too alert (when they should feel sleepy and want to stop drinking or at least sit down and not risk "alcohol-attributable harms"). It also points out that "caffeine has no effect on the metabolism of alcohol by the liver ... (it does not 'sober you up') or reduce impairment due to alcohol consumption," and some studies have found people who mix caffeine and alcohol are three times more likely to leave a bar while still heavily intoxicated and four time more likely to attempt to drive home. But caffeinated alcohol and the type of high it provides is communal, Dobard notes. It's almost charming, to want to strip yourself of inhibitions in the presence of people you like. "I don't think that impulse is new," Dobard adds. "I think the commercial forces are new." He's right. The vodka Red Bull was invented in the late '90s by none other than . Red Bull, which chased athletes in ski towns and the rave scene on the West Coast by giving cases of free energy drinks to bartenders, even paying NABCA Daily News Update (3/18/2019) 14 them thousands of dollars to put it on the menu. The first mainstream alcohol and fortified caffeine beverage was an industry plant. As Haley Hamilton noted in MEL's recent oral history of the vodka Red Bull, combining alcohol with caffeine has a two-part effect: "The alcohol can dull the effects of the caffeine (boring), or more problematically, the caffeine can dull the effects of the alcohol, meaning you can drink way more than you normally would without feeling super- hammered." Dobard is not personally familiar with Four Loko, but sympathizes with the plight of a generation that just wants to get as drunk as everyone else got to. "There's nothing inherently illicit about combining caffeine and alcohol," he points out, adding that coffee liqueurs and coffee-based cocktails have been around for hundreds of years, commonly used as post-dinner digestifs. "The problem occurs when there's so much of one or the other and it's so available that it becomes easily and widely abused as a substance. That's typically when government agencies step in and recognize it as a public health risk." (In 2010, the New York Times offered the following very funny, very ahistoric thought on the demand for Four Loko: "It has long vexed club-hoppers and partygoers: how do you stay awake while drinking alcohol late into the night? For years, alcohol and soda sufficed." Imagine if we'd just cool-mom-blind-eyed everyone for choosing to drink gas station cocktails instead of doing cocaine!) Gawker's Hamilton Nolan commented on the persecution of Four Loko in 2010, writing that it was part of a "full- blown scapegoating operation," and pointing out the obvious: "Isn't the real issue here that kids are stupid?" CAFFEINATED ALCOHOL IS A DISTINCTLY AMERICAN FLAVOR OF STUPID. WE DO IT OVER AND OVER. That's a fair question. Budweiser's alcohol-and-caffeine drink BE was a hit in the United States in the early to mid- aughts but flopped immediately when tested overseas in 2006. Caffeinated alcohol is a distinctly American flavor of stupid. We do it over and over. A can of Joose, which is 23.5 ounces, contains approximately 380 calories. (Compared to modern Four Loko, which is 660.) While both had 12 percent alcohol by volume and were fortified with caffeine, Joose had a few differentiating features, beyond the fact it was 40 cents cheaper and covered in skulls. Sparks actually preceded both, and MillerCoors voluntarily removed the caffeine in 2008, before Four Loko even hit its stride. In the two years between its $215 million acquisition from the McKenzie River Corporation and this quiet surrender, Sparks had a 90 percent share of the "alcopop" market, which meant that with its death, Four Loko was primed to become an easy hit. Today, even in the midst of the "wellness" boom, young people still post exuberantly about knocking back cans of Four Loko and making bad decisions, even though the caffeine has been removed and the current drink is no more dangerous than a wine cooler. In June 2016, long after Four Loko had been rereleased sans caffeine, the strange college journalism platform Odyssey Online published a guide to matching Four Loko flavors with your personality. "Gold Loko is a VERY IMPORTANT new flavor," the possibly underage author wrote. "The people who drink these LOVE to live on the edge. They aren't afraid of the challenge (of the added 2 percent alcohol volume)." But it's not special. None of it is special. I was a straitlaced high school soccer player during the Four Loko years, but I do remember, with a warm sort of disgust, the acrid taste of college ingenuity - tequila and blue Gatorade, whiskey and strawberry-kiwi Snapple, etc. There was no reason we couldn't have chosen slightly less revolting combinations, except for the fact that it was kind of romantic not to. In 20 years, are you going to post throwback pics of a rum and Coke? It's not shorthand for anything, and you would probably drink one now. In November 2010, one of Four Loko's creators, Chris Hunter, defended the drink vehemently to Fast Company, arguing that it had the same amount of caffeine as a Starbucks coffee, less alcohol than most craft beers, and less seductive packaging than a Bud Light Lime, and that dozens of other alcoholic beverages were available in the same 24-ounce cans. Asked about a widely publicized incident at Washington State University in which nine college students ended up hospitalized, with Four Loko cited throughout the police report, Hunter got even more defensive, telling reporter Austin Carr:

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The police report showed there was supposedly illegal drugs at the party. That was mentioned about 14 times in the police report. There were multiple mentions of hard liquor, but there were only a few, maybe 2 to 3, mentions of Four Loko. It's really unfair to say our drink was the cause of this. The same month, his company reached a voluntary agreement with the New York State Liquor Authority to stop shipping Four Loko into the state, and the FDA issued a public warning about caffeine as an "unsafe additive" to alcoholic beverages, as well as private letters to four manufacturers - including Four Loko's Phusion Projects - that stated, "[The] FDA is not aware of any publicly available data to establish affirmatively safe conditions of use for caffeine added directly to alcoholic beverages and packaged in a combined form." The FDA's letter was sent to Charge Beverages Corporation (which made drinks called Core High Gravity HG Green and Core High Gravity HG Orange), New Century Brewing Company (which made the fortified beer Moonshot), and United Brands, which made Joose. Jonathan Howland, a community health researcher at Boston University, told Science Daily just after the ban on Four Loko, "Although several manufacturers of caffeinated beer have withdrawn their products from the market, there is no sign that young people have decreased the practice of combining alcohol and energy drinks." There have been other gross party beverages meant to recapture the thrill of alcoholic energy drinks without drawing the same unwanted attention. Whipped Lightning, a combination of sugar, heavy cream, grain alcohol, and artificial flavoring had a brief heyday. Forty-proof chocolate milk did not quite. The super-cheap bottled sangria brand Capriccio had a moment, which the company leaned into, saying, "Believe the hype!" MEL's Miles Klee recently sampled every flavor of a Mark Cuban-endorsed juice-box wine cooler called BeatBox, which has hideous, brightly colored marketing materials and a low price point, but concluded that its 11.1 percent alcohol content wasn't really enough for anything other than an "unremarkable, if quietly pleasant weekend." In fact, even the FDA seems to be over the whole incident. When asked whether it would involve itself in the rise of alcohol-infused cold brew - such as those offered by the California-based Cafe Agave or the forthcoming offering from Skyy Vodka, announced March 15 - a spokesperson said the agency only considers products on a case-by-case basis, when action seems called for, and would have to get back to me.

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