As we look forward to 2022, we have summarized key alcoholic beverage legal changes in California from the past year that may affect your business.

The below list of alcoholic beverage laws either went into effect immediately late in 2021 or went into effect on January 1, 2022. The legal changes span from extending pandemic relief to permitting licensed wineries to open an additional off-site tasting room, to legalization of to-go cocktails, to eased restrictions on charitable giving, among many others. If your business involves the manufacture or sale of alcoholic beverages, odds are good these changes affect you. As always if you have any questions regarding these new laws or the potential effect of these changes to your business, facility, or products, please contact our California alcoholic beverage attorneys.

Assembly Bill 61 – Business Pandemic Relief

Bus. & Prof. Code § 25750.5: On October 8, 2021, effective immediately, and for up to 365 days from the date the COVID-19 pandemic state of emergency proclaimed by the Governor is lifted, the Department of Alcoholic Beverage Control (ABC) may permit licensees to exercise license privileges in an expanded licensed area.

Previously, it was unlawful for a licensee of the ABC to sell or serve alcoholic beverages outside of the licensed establishment’s approved footprint, with few exceptions. The ABC, pursuant to emergency orders of the Governor relating to COVID-19, has established temporary relief measures to suspend certain legal restrictions relating to expansion of licensed footprint, sales of to-go alcoholic beverages, and delivery privileges. A.B. 61 specifically authorizes the ABC to permit licensees to exercise their license privileges in an expanded area for up to 365 days after the end of the state of emergency proclaimed by the Governor. This expanded area includes on-sale consumption of alcohol on property controlled by the licensee adjacent to licensed premises.
Continue Reading Cheers to a New Year: California’s New Alcoholic Beverage Laws for 2022

On December 8, 2021, the Washington State Liquor and Cannabis Board (“LCB”) approved New Rules to extend temporary pandemic-related licensee privileges for to-go orders and permanently amend the food service requirement for liquor licensees. The New Rules are clearly a step towards providing licensees additional flexibility to sell alcohol products in light of the ongoing pandemic.

The New Rules extend and amend endorsements for certain “to-go” products permitting licensees additional flexibility for selling to-go alcoholic beverages. First, the New Rules permit delivery by a third-party instead of only employees of the licensee. Second, the New Rules remove the obligation that breweries, wineries, and distilleries label to-go alcohol products and, for breweries and wineries, permit the sale of prefilled growlers in certain circumstances. Third, the New Rules clarify that payment for to-go wine and cocktails must be processed by a licensee’s direct employee. There are no fees for these endorsements, and they will now expire on July 1, 2023.
Continue Reading Washington State Liquor Control Board Extends Pandemic-Related Privileges for Licensees

Late last year, the President signed the Taxpayer Certainty and Disaster Tax Act of 2020, which made most of the Craft Beverage Modernization and Tax Reform Act (“CBMTRA”) provisions permanent starting January 1, 2021.  The CBMTRA makes extensive changes to the federal excise taxes on wine, distilled spirits, and beer.
Continue Reading Significant Tax Credits for the Alcoholic Beverage Industry

The American Rescue Plan Act of 2021 (the “Act”), signed by President Biden on March 11, 2021, includes within Section 5003 a $28.6 billion appropriation to establish a Restaurant Revitalization Fund (the “RRF”) to provide tax-free federal grants to food and beverage businesses hard hit by the pandemic. These grants may be applied to eligible expenses already incurred and for additional expenses over the remainder of the year (or longer if the covered period is extended by the Small Business Administration (the “SBA”)), and are available to entities ranging from food carts to full-service restaurants and tasting rooms. While RRF applications are not yet available and further guidance is likely forthcoming, we would encourage any entity that hopes to qualify for an RRF grant to take certain steps in preparation, as described further below.

Summary of the RRF and Eligibility

A total of $5 billion of the RRF is set aside for businesses with less than $500,000 in 2019 annual gross receipts, with the remainder to be available for grants in an “equitable manner to eligible entities of different sizes,” with authority granted to the Administrator of the SBA to make adjustments to the distribution of funds based on demand and local market conditions affecting eligible entities.

An eligible grant recipient may be a “restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink.” Entities that are not eligible for RRF grants include entities that (i) are operated by state or local government, (ii) as of March 13, 2020, owned or operated, together with any affiliated business, more than 20 locations (regardless of whether the entities share a common name), (iii) have a pending application for or have received a Shuttered Venue Operators Grant, or (iv) are a “publicly-traded company” (here meaning any entity that is majority owned or controlled by an entity that is an issuer, the securities of which are listed on a national securities exchange under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. § 78f)).

The term “affiliated business” means a business in which an eligible entity has an equity or right to profit distributions of not less than 50 percent, or in which an eligible entity has the contractual authority to control the direction of the business, provided that such affiliation shall be determined as of any arrangements or agreements in existence as of March 13, 2020.
Continue Reading The Restaurant Revitalization Fund Eligibility and Next Steps

After a lengthy and contentious rulemaking process, the Department of Labor (“DOL”) published its final rule revising its tipped-employee regulations under the Fair Labor Standards Act (“FLSA”) last week. The new rules take effect 60 days from their publication in the Federal Register, which will occur shortly.  Here is a summary of the new rules’ most critical provisions:

Tip Credit Provisions. Several provisions of the new rules address the FLSA’s tip credit provision, which allows employers to pay employees a base wage that is less than the federal minimum so long as the sum of employees’ cash wages and retained tips exceed the required threshold.  For example, the rules state that employers that take the FLSA tip credit may not include back-of-the-house employees in their tip pools and address the common scenario in which an employee works in dual jobs (one tip-qualifying, the other non-tip-qualifying) for the same employer.  Oregon and Washington do not allow a tip credit against employers’ minimum wage obligations, so these aspects of the new rules are of limited use for Oregon and Washington employers.
Continue Reading Department of Labor Publishes Final Rule Regarding Tip Pools and Tip Credits

Beginning in mid-2019, many Washington wineries will need a permit from the state Department of Ecology (“Ecology”) to discharge wastewater. Ecology issued the state’s first five-year Winery General Permit (the “permit”) on May 17, 2018, but delayed its effective date until July 1, 2019. The new permit will regulate discharges of process wastewater from wineries to land, groundwater, and wastewater treatment plants. No surface water discharges will be allowed under the permit. Ecology has not determined how much a permit will cost, but the new rules in the permit will add financial burden to businesses and may hinder the growth of small wineries.

Ecology decided to develop the general permit due to the rapid increase of wine production in Washington. However, according to Ecology’s Fact Sheet, wineries have not been a “major source” of pollution in Washington. Although Ecology stated in one of the agency’s Responses to Public Comments that “it was unable to find documented evidence of a Washington winery polluting groundwater,” it maintained that “a lack of evidence does not mean groundwater is not being impacted.”

The new permit will apply to wineries that discharge at least 53,505 gallons of wastewater or produce at least 7,500 cases (17,835 gallons) of wine or juice per calendar year. More specifically, wineries that meet the above threshold numbers will need the permit if they discharge wastewater according to one or more of the following methods: (1) to a wastewater treatment plant that is not listed; (2) as irrigation to managed vegetation; (3) to a lagoon or other liquid storage structure; (4) as road dust abatement; (5) to a subsurface infiltration system; or (6) to an infiltration basin.
Continue Reading Ecology Rolls Out Washington’s First Winery General Permit to Regulate Discharges of Wastewater

As we wrote about earlier this month, the Tax Cuts and Jobs Act (H.R. 1) passed late last year included significant, temporary federal excise tax relief for wine, beer and spirits businesses for 2018 and 2019.  Unfortunately, in an apparent oversight of legislative drafting, the wine excise tax relief (provided in the form of

Included in the Tax Cuts and Jobs Act (H.R. 1) passed in late December were “Craft Beverage Modernization and Tax Reform” provisions that, among other things, reduced federal excise taxes for wine, beer and spirits businesses. These reductions expire at the end of 2019 unless extended by future legislation. While these changes may not have

This post was co-authored by Stoel Rives summer associate Chad Punch.

Earlier this summer, the Ninth Circuit Court of Appeals revisited an issue that it had examined thirty years prior: whether a California Prohibition-era tied house law is unconstitutional under the First Amendment because it impermissibly restricts commercial speech. Specifically, in Retail Digital Network, LLC v. Prieto (No. 13-56069), the plaintiff, Retail Digital Network, LLC (“RDN”) sued Ramona Prieto (“Prieto”) in her official capacity as Acting Director of the California Department of Alcoholic Beverage Control (“CABC”) seeking a declaration that California Business and Professions Code § 25503(f)–(h), which prohibits alcohol manufacturers and wholesalers from providing anything of value to retailers in exchange for advertising their alcohol products, violates the First Amendment of the Constitution. Hearkening back to its earlier decision in Actmedia, Inc. v. Stroh (830 F.2d 957 (9th Cir. 1986)), the court here ultimately disagreed with RDN’s arguments and left California’s longstanding tied house laws intact.
Continue Reading Ninth Circuit Rejects Retail Digital Network’s Challenge to the Constitutionality of California Tied House Law

This post was guest authored by Stoel Rives summer associate Alex Pearson.

With the Washington State Legislature’s third special session at a close, now is a good time for alcoholic beverage producers and distributors to take a moment to look at five bills that passed the Legislature and were signed into law by Governor Inslee this past session. All are effective as of July 23, 2017, and create new opportunities for producers and distributors. What follows is a summary of the more notable additions and modifications made by these new laws. Please note that these laws affect a variety of licensees, so we encourage all producers and distributors to evaluate these changes with their attorney.

Legal Definition of Mead

One of the world’s oldest alcoholic beverages—mead—finally has a legal definition in Washington. S.H.B. 1176 amends RCW 66.24.215 and RCW 66.28.360 to define mead as a wine or malt beverage sold as “mead” and which is fermented primarily from honey, but may contain other agricultural products such as fruit, hops, or spices. Those licensed to sell beer or cider in growlers will also be allowed to similarly sell mead to customers, so long as the mead sold has an alcohol content equal to or less than 14 percent alcohol by volume. Additionally, starting January 1, 2018, mead will be exempt from the assessment on wine production that funds the Washington Wine Commission.
Continue Reading 2017 Changes to Washington Liquor Laws Affecting Producers and Distributors