In March 2019, the Massachusetts Supreme Judicial Court (the Court) affirmed a $2.6 million dollar fine against Craft Brewers Guild (CBG), a wholesaler. The reason, alleged violation of anti-price discrimination statutes and other commercial bribery regulations. Allegations CBG allegedly paid companies money as a rebate in exchange for an agreement to sell CBG product at bars and restaurants. To hide the payments, these companies allegedly billed CBG for services like marketing support and promotional services that never happened. The Court held that CBG violated commercial bribery regulations and participated in a commercial bribery scheme to encourage retailers to supply CBG distributed products. The Court held that this type of commercial bribery falls with the purpose of the Massachusetts Liquor Control […]
Petition for a Writ Far-fetched? Nope!
If a state regulatory agency with jurisdiction over the craft brew industry makes a decision that appears to be arbitrary and capricious, having a direct effect on your business, then, you have the right to petition a court for relief using a Writ of Administrative Mandamus. An unnecessarily fancy phrase meaning that a court of law reviews the administrative decision and decides if, under applicable law, the decision is not rational. Most times a writ is requested by an association or group of companies that are affected by the agency decision so that a positive result will affect many companies in the association or group. STATE ADMINISTRATIVE AGENCIES State administrative agencies with jurisdiction over the craft brew industry create […]
Lots, Codes, and Life: Dating in the Beer Industry
As the number of active breweries in the country exceeds 7000 and roars toward 8000, it’s more important than ever to consider one of the crucial facets of your packaged product: shelf life, and how to communicate it to your customer. It’s not just marketing; date lot coding and traceability is required by the U.S. Food and Drug Administration under the Bioterrorism Act of 2002. However, the exact method of recording date lot codes is ultimately up to each individual brewer, and there is a vast array of practices in the industry that can ensure that your customer knows how fresh your beer is, and that you’re in compliance with federal code at the same time. Why Is Date […]
Crafting Marijuana Policies? Managing Employees in the Wake of Legalized Marijuana
Marijuana legalization is on the rise and quickly expanding to all corners of the United States. Nearly 2/3 of the states have legalized marijuana for either recreational or medicinal use. Currently, 11 states and the District of Columbia allow recreational marijuana, and an additional 22 states allow medical marijuana. These numbers are expected to grow over the next few years as the societal and political perspectives on cannabis continue to shift in favor of legalization. Despite this shift, marijuana still remains an illegal Schedule I drug under the federal Controlled Substances Act – in direct contrast with legalized marijuana at the state level. Although federal law is superior to state law, businesses must comply with both – even if federal […]
Craft Brew Industry Investigations
Have you ever been on the wrong side of a US Government civil or criminal investigation or audit; or served by a Federal Marshal with a US Government subpoena, inquiry, or Civil Investigative Demand? To quote an articulate CEO of a large corporate client in the midst of such an investigation, “This ain’t no fun”. Large clients and small, once served, size doesn’t matter! BE PREPARED Handling US Government investigations are tricky because the slope becomes slippery fast if you do not properly prepare in advance of the investigation by getting issues established, targets identified, and protocols for the investigation understood. Once these components are established, the investigation can be managed to the benefit of the company or person being […]
Battle at the US Supreme Court
Battle at the US Supreme Court—No, I’m not writing about the recent US Judiciary Committee battle to confirm Judge Kavanaugh to the US Supreme Court but, for the craft brew industry, the upcoming Supreme Court battle regarding residency requirements resulting in business discrimination might be just as important, at the very least to your pocketbook. You may recall, a few months ago, I wrote about Tennessee residency requirements applicable to receiving licenses/permits to sell alcoholic beverages in Tennessee. This residency-based license restriction/requirement is used to benefit local companies, including sellers of craft beer among other alcoholic beverages, by excluding non-resident companies from selling alcoholic beverages in Tennessee. I mentioned in my earlier article that this residency requirement seemed to violate […]
YOU’VE COME A LONG WAY
Less than 15 years ago, states in the South US had laws in place making it illegal to sell craft beer to consumers with alcohol content above a certain limit. This restriction radically limited the number of small craft brewers willing to do business in these states and prohibited certain sales of high alcohol content craft beer. As this article will show, the craft brew industry has come a long way in the South US during the past 15 years. In addition to the changes in the above mentioned alcohol content rules applied to craft beers, other rules have changed in the South US to enhance craft brew sales and to transformed breweries from simple warehouses to elaborate tourist attractions […]
As Easy as A, B, C: Does California’s New Independent Contractor Test Impact Your Brewery?
This spring, the California Supreme Court issued a landmark decision in Dynamex Operations West, Inc. v. Superior Court that has far-reaching consequences for nearly all industries in California. The Dynamex ruling established a new test to determine if a worker is an independent contractor or an employee in California. Because the law treats employees and contractors differently, misclassifying an employee as an independent contractor can result in steep penalties and even criminal charges in certain circumstances. It is therefore extremely important that breweries throughout the state closely review any independent contractor relationships to be sure they meet the new test. Put It to the Test Before Dynamex, California employers applied a flexible, multi-factor common law test for nearly three decades […]
Does the 21st Amendment to the US Constitution Continue to Affect the Craft Beverage Industry?
Yes, the 21st Amendment to the US Constitution passed by congress in 1933 continues to affect the craft beverage industry. Every beer and wine drinker knows that the 21st Amendment to the US Constitution appealed prohibition thereby allowing the sale of alcoholic beverages in the US. Little known is another “prohibition” advanced by the 21st Amendment, that is, the prohibition against state discrimination regarding commerce. Aside from appealing prohibition, the 21st Amendment still significantly affects the craft beverage industry through what is called the “Dormant” Commerce Clause. The Dormant Commerce Clause The “Dormant” Commerce clause prohibits discrimination against out of state companies selling goods and services in a different state. This prohibition against discrimination includes all related state directives and […]
Liquor Law is Hard
Liquor law is hard. I will attempt to explain why, in this article. If you are making mead in a far-off corner of a small state, you can probably get by without much use of or interference from lawyers. But if your ambitions are any grander, most readers of this publication will probably need help from various lawyers, and protection from various legal complexities, at some point in your near future. The upshot is that you probably should not complain, if you can find a good adviser, for any particular legal difficulty, even if it costs a lot per hour. The right person, with the right expertise, may be able to save you a lot of time and frustration. I […]