Beverage wholesalers face a slew of regulations and taxes. Many differ from state to state, while others are federally mandated. For a take on how the U.S. government sees its role in this, I recently spoke with Tom Hogue, the Congressional liaison and public and media affairs for the Alcohol and Tobacco Tax and Trade Bureau (TTB).
Beverage Wholesaler: How does the TTB regulate alcohol beverage labeling laws?
Tom Hogue: Usually it comes down to the question of whether a product’s label is misleading to a consumer. For instance, alcohol beverage labels need to show where that product was bottled.
There’s stretching the truth and then there’s being purposely misleading. We do have to remain cognizant of the First Amendment, but we also have to make sure, to the best of our abilities, that a label is not misleading. We make those decisions when we get the labels.
BW: Has the craft movement made this more difficult?
TH: I don’t believe that misleading labels have become a bigger problem with the growth of the craft movement. It just means that there are many more labels we now need to look at.
BW: How are you handling that?
TH: The growing number of small producers does present us with challenges in getting permits and applications turned around in a timely fashion. And the industry is coming out with all new kinds of products all the time, which is another challenge.
But I’m happy to say that we have recently brought down those turnaround times significantly. Congress wanted us to focus on that area and directed funds towards us to accomplish that goal. They have done so for the past two years now. The permitting and application process is no longer taking quite as long. We’ve gotten much of it under a ten-day turnaround time.
BW: How does the TTB look out for the smaller producers?
TH: The TTB wants to promote a level playing field, which is a responsibility we take very seriously. The vast majority of what’s made is not from small producers, so that concept of a level of playing field is very important to them. The last thing they need to worry about is ‘pay to play’, or the bigger companies not playing by the same rules.
BW: How serious of an issue is ‘pay to play’ today?
TH: We have a lot of information available about this on our website. We recently had two large-scale operations in Florida and Illinois that addressed ‘pay to play’. Overall we are currently ramping up that area of our focus. We have reason to believe that that ramp up is necessary.
BW: What forthcoming legislation might affect wholesalers?
TH: I don’t want to comment on any pending legislation. But I would point people towards The Craft Beverage Modernization and Tax Reform Act of 2017.
BW: Is the TTB concerned with Amazon’s recent purchase of Wholefoods?
TH: With Amazon as with anyone we would have to look and see whether they were in violation of any laws, and if so, we would enforce those laws. We look at these things on a case-by-case basis. I can’t really comment in advance.
BW: How does the TTB see the three-tier system?
TH: While federal law provides for the three-tier system, how it exists is largely a state matter. Obviously in some cases you have the state operating a part of the tiered system. They can be a producer or a wholesaler. The 21st amendment gives a lot of ground for state laws to fill in. How the tiered system works in their state is not necessarily what the TTB cares about. The TTB is primarily responsible for collecting taxes and protecting the consumer. Though of course we believe that the three-tier system represents an important part of the regulatory system in the United States. It’s just not a federal requirement.