Craft Beer Makers Face Uncertainty and Delay amidst Government Shutdown and TTB Closure - Food, Beverage and Hospitality Alert

Bradley Arant Boult Cummings LLP

Bradley Arant Boult Cummings LLP

“TTB IS CLOSED” is the message currently displayed for the Alcohol and Tobacco Tax and Trade Bureau (TTB) website. Although the website is available, a message window informs visitors that certain TTB functions will be limited during the current partial government shutdown. The TTB is responsible for overseeing alcohol production, labeling and advertising, as well as providing approval to operate an alcohol-related business. The TTB’s closure means that applications for new formulas, labels and permits for new industry startups will not be processed during the shutdown.

Although the TTB closure affects distillers, winemakers and brewers alike, The Wall Street Journal reports that craft beer breweries, whose revenue often depends on the release of new seasonal formulas, may be most heavily impacted by the current government shutdown and the TTB’s closure. Breweries nationwide are reporting problems as a result of the approval standstill.  For example, a brewery in Oklahoma is reported to be is sitting on approximately $500,000 worth of a new chocolate stout that it cannot sell without TTB approval. Colorado-based New Belgium Brewing reportedly has halted production of its new hemp-inspired brew until the new formula can be approved by the TTB. 

While the end of the partial shutdown would certainly provide a measure of relief for breweries, the effects may be felt for some period after. Although the TTB normally takes only about a week to 10 days to process label applications for malt beverages, processing times as of January 16, 2019, indicate an average of 43 days for malt beverage labels.

So what are other breweries doing to try and stay ahead of the shutdown? Larger breweries, such as Sierra Nevada Brewing Co., are repurposing already-approved labels by making small changes that do not require the TTB’s approval. Breweries located in states where in-state sales do not require the TTB’s approval, such as Jester King Brewery in Austin, Texas, are diverting sales of new brews to in-state purchasers. Perhaps maybe others will make the best of a skunky situation and release their own “Shutdown Stout” once the TTB is open for business.

Bradley’s Food, Beverage and Hospitality team understands the unique challenges and needs of this dynamic and competitive industry. Our multidisciplinary team counsels food, beverage and hospitality industry clients, from entrepreneurs and startups to multinational corporations.

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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