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Out of State Alcohol Sales

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So you think you want to sell your beer, wine or distilled spirit to consumers in another State?  Here are some important things to know.

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Expanding the geographical reach of your alcohol production makes perfect sense from a business perspective.  As you might have guessed, nothing in the alcohol production business is terribly easy and the same holds true for your desire to expand.  The federal government will issue a permit that effectively allows you to sell your product wherever you wish.  That being said, there are federal laws that require you to abide by state law, and thus the state requirements for registration must be carefully observed or your operation could be subjected to enforcement action by both the federal and state government. There is no guarantee that you will be able to sell your product across state lines, or ship to retailers in far off states.  The only thing that is certain is that the rules will vary from state to state. Nevertheless, the benefits of expanding your geographical reach are well worth the time and effort to obtain proper permission to operate in a new state.

Before getting to the regulatory issues of interest to alcohol producers, don’t forget the basics.  You have very likely organized a business in your home state.  Forming a business organization provides you with some general liability protections.  In order to maintain those liability protections, you must make sure you registered your business with the state in which you want to expand.  This notion of registering a “foreign” business entity will help to ensure that you are in a position to defend lawsuits and operate legally for qualification by the state alcohol regulatory body.

Now that you have reviewed the registration process for out of state businesses in your target expansion state just like all other businesses, you will next want to have a detailed conversation with the target state’s alcohol regulatory authority.  After Prohibition ended, each state created its own version of a regulatory body that would regulate the alcohol industry in its borders, generally known as “alcohol beverage control.”

These regulatory bodies fall into two general categories: Control and License.  In Control states, the actual state may act as a wholesaler and possibly even a retailer in a variety of ways.  In License states, the state will issue a license to an alcohol producer to operate within state boundaries. Even within the states there are variations.  For example, there is a single county in Maryland that is Control, while the remainder are License.  Additionally, some states have delegated their regulation to the various counties within the state.  This is true in Nevada and Hawaii, for example.

As you get closer to full licensing in your new territory, you should be looking at other requirements. A plan should be in place to report operations to the alcohol regulatory authority, if required.  Excise taxes or sales taxes may need to be paid.  Sometimes these are paid to the alcohol regulatory board and sometimes these are paid to the revenue collecting body of the state.  Sometimes forms are readily available on the internet and sometimes they must be requested in paper form. Likewise, it should not be assumed that an electronic payment of tax is always possible.  It is prudent to know all of these procedures ahead of time so that your reporting and tax payment requirements are met without penalty, fee or risk of loss of your license.

Should you have further questions about these issues, feel free to give us a call.

We're Here to Help

Dear friends in the alcoholic beverage industry,

As we as an industry, nation and planet collectively try to navigate this unprecedented period the coronavirus has brought us, We’d like you to know that we at Craft Beverage Consultants (the other CBC!) are here to answer any question you may have (or not know you have) about not just surviving this time but positioning yourself to thrive as soon as social distancing measures allow your business to function at full capacity again.

If you schedule a free 60-minute phone or video conferencing consultation with me or any of my 11 highly specialized colleagues, we’ll help you figure out any of your immediate and/or longterm business needs, or “everything but the staffing,” as we like to say. We’re not high-pressure sales kind of people, especially these days, so you don’t have to worry about fending off annoying pitches. Make an appointment on our website or Facebook page, or just call us the old-fashioned way at 314-768-0220.

Our experts have a combined 150 years in the alcoholic beverage industry, with deep knowledge in everything from sales and distribution, production, and regulatory compliance to marketing, package design, event planning, IT, (social) media, hospitality, and even values-based executive coaching. 

For example, we can coach you through this season when chain accounts have canceled their spring, in some cases, fall resets and distributors have drastically cut orders. Our director of business strategy and compliance can save you money – now – on excise taxes, caution you to avoid naming your beers in ways that risk alienating your buyers (Wuhan Wheat? Coronavirus Cream Ale? Groan. No.), and secure TTB approval for the tastefully named beers you do make. Our creative director and web team can get your e-commerce site up and running and launch a social media campaign that keeps you top of mind for current and future customers. Our director of storytelling can put you in front of the press so you can tell your story to your community. 

Once you’re ready, we can look forward together. Now is the time to talk about post-virus. We all suspect the legal landscape to look different. But how? And how do you prepare yourself in a way that positions you to charge out of the gate ready to maximize the potential and profit of whatever the “new normal” turns out to be? Please get in touch so we can talk about it. 

CBC’s roster includes local and regional clients like Epic Brewing, Logboat Brewing, Piney River Brewing, SudWerk Brewing, Waves Cider and Common Cider Company, just to name a few.  The agency was founded in 2004 by Jacob and Beth Halls, formerly known as Convergence Consulting; Rick Laxague, joined as a partner in charge of sales, marketing and distribution consulting in 2019. 

Rick hase close to 20 years of experience, a bulk of which was with Crescent Crown Distributing in Arizona. His last role there was Area Sales Manager for the dedicated craft beer division, coaching and leading a sales team to be nationally recognized. In early 2014 Rick helped take a regional brewery national as their Director of National Accounts and increase that segment of their business from 30,000 cases to almost 300,000 cases in two years, an increase that equates to $4.8 million in IRI dollar sales. 

Co-founder Jacob Halls brings 17 years of experience in regulatory compliance, business strategy, marketing and craft brand management to the company. In his former position as craft brand manager for the N.H. Scheppers Distributing Company in Columbia, Missouri, Jacob helped lead his team to winning the 2016 Distributor of the Year award from New Belgium and to a nomination for the Brewers Association’s Distributor of the Year award. Jacob is also the founder and director of the South East Craft Beer Fest and several other industry specific charitable event marketing festivities. Beth Halls is Director of Business Operations and Coordinator of Charity Operations for the festivals and events run by CBC, such as the South East Craft Beer Fest, MO Bacon & Bourbon, and many more. 

Again, please reach out to us for anything.  CBC can be reached at (314) 768-0220 or at craftbeverageconsultants.com.

We look forward to meeting/talking soon.

Sincerely,

Rick Laxague, Jacob Halls, and Beth Halls