Round-up of New Industry Legislation

In recent years, we’ve seen the highest volume of legislative changes in the beverage alcohol industry. The COVID-19 pandemic opened the door to a plethora of modifications, such as the legalization of to-go cocktails from restaurants and bars and the consideration of direct-to-consumer shipping. The legalization of cannabis has also brought about the question of how sales will be controlled across different states and who will be the responsible governmental bodies.


1. Biden signs the Ocean Shipping Reform Act

In June, President Joe Biden signed the Ocean Shipping Reform Act which is an attempt to end disagreements between large international shippers and exporters. Shipping has proved more difficult in recent years, with increased port activity and high prices, amongst other issues. Some changes now in place after the approval of this bill include increased FMC monitoring of the number of empty containers on international carriers to improve movement of U.S. exports as well as efforts to reduce tension between shippers and exporters and importers. Most objectives of this bill stem from the FMC, as it gives them more resources to take control during a time where significant improvements are needed.

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2. California looking into direct shipping of spirits

A bill has been proposed in California that could potentially allow small craft distilleries (producing less that 150,000 gallons per year) to permanently ship direct-to-consumer, like they were temporarily allowed to do during the pandemic. The bill has some controversy around it, however, because it still prohibits larger distilleries from shipping direct-to-consumer. Proponents for the bill site the current wine direct shipping approvals. It was passed by the California Senate Committee on Government Organizations in January and has since been amended while awaiting further approval.

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3.  Proposal threatens beverage alcohol direct shipping

The Uniform Law Commission has drafted a DTC shipping act that’s in its final writing stages. The Alcohol Direct Shipping Compliance Act was drafted to help states gain more control over DTC shipping. It centers on what should happen when there is a violation of a state’s existing law. The Uniform Law Commission’s purpose is to create laws for states to contemplate in order to protect stability in commerce and other fields within the states. The organization formulates these laws with intense review systems including representatives from every U.S. state and territory and from a variety of business backgrounds.

Over the past 3 years, they’ve been working on this DTC shipping act proposal, while being observed by over 70 individuals who sat in on meetings and weighed in with their opinions, including Wine Institute and the National Wine Retailers Association. The act includes topics like shipping reports, registration of fulfillment providers, and delivery from fulfillment providers and carriers. It is important to note that it does not require states to change their current direct to consumer shipping laws at all, but it does have the potential to affect direct shipping of all beverage alcohol categories. Opponents of the bill include WSWA and other wine-related organizations, who believe that direct shipping of wine has been working successfully for some time now. The proposed act needs to be picked up by a state lawmaker and adopted by legislatures to actually become law.

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4. Senators introduce the Cannabis Administration and Opportunity Act

After a year of editing based on draft reviews, Senator Cory Booker, Senate Majority Leader Chuck Schumer, and Senate Finance Committee Chair Ron Wyden reintroduced the Cannabis Administration and Opportunity Act on July 21st. The Act aims to put an end to federal cannabis prohibition by removing it from the Controlled Substance Act and giving the states the power to create their own laws. With so many states making moves on their own to make some forms of cannabis legal, this purpose of this bill is also to protect public health and safety and expunge the records of those with low-level cannabis offenses. More specifically, upon adoption, this act would transfer federal jurisdiction over cannabis from the Drug Enforcement Agency to the Food and Drug Administration as well as the Alcohol and Tobacco Tax and Trade Bureau. This could bring about interesting changes in regulation for companies in associated industries.

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5. New York extending the legalization of to-go cocktails

The idea of to-go cocktails came from restaurants and bars struggling to make ends meet during the pandemic. States such as Ohio and North Carolina have approved this legislation permanently. Now, in New York, legislation was extended for 3 more years, with multiple other states making similar extensions. New York Governor Hochul spoke of her dedication to this extension, citing the struggles of small businesses as they recover from the effects of COVID-19.

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6. Tennessee considers removal of Secretary of State registration requirement for winery direct shippers

Tennessee is currently working on changes to the requirements for obtaining a direct shipper license for wine. Up until now, wineries have had to register with the Secretary or State as a second step in obtaining their direct shipper license. This entails fees sometimes as high as $3,000 and additional tax obligations. The elimination of this requirement would lower costs for wineries, but it also presents them with the decision of what to do if their license expires before the change.

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7. Alaska changing regulation of alcohol-serving businesses

The House recently approved some big changes in legislation for alcohol in Alaska, paving the way for modernization of the alcohol industry there. There has been conflict regarding the regulation of alcohol in Alaska for years, and this recent House approval gives hope for a new, more positive environment for breweries, distilleries, liquor stores, and those who regulate them. The legislation modifications in this bill include requiring companies shipping alcohol by mail to get licensed and be taxed, requiring beer kegs to be registered, allowing local governments like native tribes to buy alcohol licenses, changing low-level alcohol crimes to be citations instead of misdemeanors, and making most types of licenses more expensive, but giving licensees more privileges.

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8. Vermont moves to lower taxes and make alcohol more available throughout the state

The Governor of Vermont, Phil Scott, just recently signed HB 730, bringing an influx of changes to alcohol regulation in the state. This bill lowered taxes from $7.68 per gallon to $1.10 per gallon. It also expanded distribution, making alcohol products available in more than 1,000 retail outlets on top of their state-run stores (Mark Brown Newsletter, 2022).