Who’s Got the White Lightning?

by Greenberg Glusker Fields Claman & Machtinger LLP
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[author: Sofia Aguilar]

If you’ve ever had the opportunity to travel through the great southern states of America, you will learn two things.  First, southern hospitality is real — no, the nice man asking “how is your day, miss?” is not going to ask for money or steal your purse. And second, people really do make moonshine in their backyards.  If you had any doubt about that, then you haven’t seen Discovery Channel’s Moonshiners, a can’t-make-this-stuff-up series in its second season that “tells the story of those who brew their shine — often in the woods near their homes using camouflaged equipment — and the local authorities who try to keep them honest.”  There’s a ton more to learn about the South, but as I learned as a first-year law student in Nashville, Tennessee, nothing is as romantic as the tradition of moonshining (except, perhaps, the barbecue — maybe another post).

While an old classmate and I were reconnecting recently — reminiscing about the potency of the good ol’ Tennessee and whisky and wondering exactly what “keeping a moonshiner honest” actually entails — it hit us:  why not sell legal moonshine from Tennessee over the internet?  Just imagine the market boom, as trendy Angelino hipster homebrewers would throw mixology parties showcasing the wonder brew.  But how easy would it be to legally sell moonshine to Yankees and Angelinos?  Well, as I soon discovered, aside from the fact that making unauthorized moonshine in your backyard is highly illegal and dangerous (and in no way endorsed by the author), there is a serious patchwork of state and federal laws that any moonshiner who wants to go straight must contend with.

Learning the Old Ways

First, some valuable context.  As a Californian, when I first arrived in Nashville moonshine was something as foreign to me as Mexican food is to Tennessee, where the only thing that taste authentic is the Dos Equis.  But for a few of my Nashvillian pals and their families, moonshine was tradition.

In fact, moonshining is arguably one of America’s original forms of legal Traditioooooooooooooooooon, tradition!activism (or perhaps, depending on your political persuasion, tax evasion).  The first moonshiners were those who, after fighting an entire revolutionary war against Britain’s oppressive tax system (among other gripes), refused to comply with the new United States’ federal tax on liquors and spirits.  As is the revolutionary way, they instead decided to make their own whisky at home, from corn.  And since the “white lightning” was being made outside of the view of traditional regulations, it was (and is) often distilled to an alcohol proof of over 190 (that is, 95% or more alcohol), thoroughly kicking the butt of those pansy, potato-loving vodka drinkers (whose spirit usually comes in at a mere 80 proof).

It should come as no surprise, then, that a booze that is more than double the usual potency of standard liquor has proven to be a catalyst for major battles (ever heard of the Whisky Rebellion of 1794?), the source of self-made fortunes (oh, the glories of the [actual, non-hipster, non-faux] speakeasy), and yes, unfortunately, sometimes the cause of untimely death due to exploding distilleries or toxic batches.

But despite its checkered history, moonshining rolls on, even in these modern times.  From the 1920s to today, many a fine American singer has paid tribute to the splendor of moonshine.   And moonshining is estimated to be a booming multi-million dollar industry — even though the vast majority of moonshine business is done locally between homemade distilleries and locals.

The Web of ABCs

So why is life so tough for the would-be moonshiner who wants to play it straight?  Moonshining is illegal because federal law prohibits unlicensed brewing of spirits for private consumption — mainly so that the U.S. government can more easily collect on its valuable excise taxes on spirits.  (Home-brewing beer and wine wasn’t legalized until 1978, and even now there are limits on volume.)  Of course, people do go into the liquor business, and you can certainly get the necessary permits, pay the required excise taxes, and go legiti-moonshining.

The main problem with turning it into a national business, though, is that selling alcohol over the Internet is subject to a patchwork of federal, state, and local laws.  Therefore, trying to figure out the proper requirements to sell and ship liquor to a customer in just one state requires expertise as to three layers of laws.  Adding to the complexity is that fact that each state has the right to (and does) impose its own specific requirements, which differ from state to state.  This means that a vendor has to know the law of every state it ships liquor to.  The amount of time and expertise required to comply with the differing laws of 50 states is not only burdensome, but also costly.  Even big vendors, like Bevmo have chosen to only ship to certain states (mostly into California and Arizona — reason #4,209 why California rocks, if you’re counting).  And with growing concerns about underage consumers accessing liquor through online vendors, the regulations are only getting more stringent.  To illustrate:

If you were a vendor that wanted to sell and ship some good ol’ fashioned (legally distilled, of course) Tennessee moonshine to a customer in California, you would first need to comply with the regulations set forth by the Alcohol and Tobacco Tax and Trade Bureau (TTB) of the U.S. Department of Treasury, which can include daily record keeping, paying the appropriate federal taxes, and submitting monthly reports to the TTB.  Then, you’d have to comply with regulations promulgated by the California Department of Alcoholic Beverage Control (the deceptively simply-named ABC), which includes requiring the vendor to obtain an alcoholic beverage license.  Obtaining a license in California can be difficult and time-consuming given the high demand for such licenses.  But even if you can negate those minefields, you’ll need to secure a seller’s permit from the California Sales Tax Division of the Board of Equalization, and register for the Alcoholic Beverage Tax Program, since selling without either the license or tax permit could subject you to penalties, fines, and even criminal liability.  Finally, once you tackle all that, you’ll still need to comply with the local laws of the specific county and cities in which you plan to ship your booze alcohol into.  And all of that is just for selling in one state!  Now imagine trying to sell to all 50.

All of which is why my pal and I quickly realized that our dream of legally selling moonshine online would have to remain on the shelf of “what if” and “if only”s, right next to me winning the lottery and Vanderbilt winning an SEC championship.  As has been the case over the last several centuries, it looks like the southern mountains get to keep their white lightening to themselves — and even for us would-be entrepreneurs, it’s probably just cheaper and easier to fly to Nashville for a swig.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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