Key Takeaways | Alcohol Regulations: A Mid-Year Review

Alcoholic beverage companies face mounting pressure to adapt to shifting consumer demands and stay informed about regulatory changes. As we step into the second half of 2024, our alcohol regulatory and distribution team reviewed the year so far and explored what beverage companies can anticipate in the coming months.

Top takeaways included:

1. Crossover beverage guidance and regulation are taking shape. New guidance is emerging to shape how crossover products are regulated among alcohol industry members. The driving considerations echoed from both regulators and industry members concern (1) preventing consumer confusion by clearly distinguishing between alcohol and non-alcohol products and (2) preventing sales to minors. For suppliers, this means compliance with industry codes on responsible advertising, distinct and distinguishable product labeling, and prominent notices that the product contains alcohol. For wholesalers and retailers, this means appropriate product placement, providing additional signage/displays and employee training on responsible sales. While these protocols are presented as guidance, state and federal agencies do look to whether or not industry members are in compliance with trade association guides as indicators of their overall adherence to compliance within the industry.
2. As hemp-based beverages continue to grow, states are taking action. Many states exempt hemp from the regulations that govern the sale of other cannabis products, but some are taking strident steps to regulate the emerging intoxicating hemp beverage category. Not only have legislatures in states like California, Connecticut, Georgia, Iowa, Missouri and North Carolina taken a proactive approach to regulating intoxicating hemp products, there has been an uptick in enforcement at the state level as well. While these products are continuing to gain traction, their legality needs to be considered on a state-by-state basis.
3. Direct-to-consumer (DTC) continues to advance, but scrutiny remains high. States are continuing to make progress with DTC shipping laws. However, increased enforcement focusing on both retail DTC and inquiries targeted at suppliers and e-commerce platforms that facilitate DTC remain high. As industry members look to get products to consumers, it imperative to have robust compliance policies related to DTC and other e-commerce sales.
4. There is potential for enhanced scrutiny of Alcohol and Tobacco Tax and Trade Bureau (TTB) enforcement and rulemaking post-Chevron. The alcohol industry is regulated at the federal level by TTB via rules passed by TTB’s rulemaking process. Many may expect the Loper Bright decision, which overruled the Chevron doctrine of deferring to an agency’s interpretation of ambiguous statutory language, to represent a major shift away from deference to agency interpretation. While it certainly could shake up TTB enforcement and rulemaking, the extent to which is unclear. One thing it will not do is alter TTB’s existing interpretations that have been approved by courts (likely by way of Chevron). While Loper Bright certainly limits agency deference, it does not necessarily end the idea of deference to agencies so long as such interpretation is consistent with a reasonable reading of the applicable statute and is within the confines of the agency’s specifically delegated authority.