Ask Me Anything: Robert Lehrman, Federal Alcohol Compliance Attorney

Alex OxfordAlex Oxford Posts: 42 admin
edited September 2015 in TTB/Federal Compliance

Hi Everyone! I'd like to welcome you to our first Ask Me Anything event in the BevAlc forum! This is an opportunity for you to get your federal beer compliance questions answered by an expert in the field. 

Reply to this post with your question, providing as much detail as possible, and Robert Lehrman will answer it when he can. Please be sure to provide as much information as possible. If you'd like to ask your question privately, you can do so by submitting it here

When: September 16th-18th
Where: Right Here!
What: Ask your federal beer compliance issues 

Disclaimer: It's never a good idea to rely on an online event for legal advice, and nothing in this event should be construed as legal advice. Consult with a qualified accountant for tax advice, and a qualified lawyer for legal advice specific to your circumstances. 
Post edited by Alex Oxford on

Comments

  • mikevolzmikevolz Posts: 1
    edited September 2015
    Hi again Robert!

    I've heard people mention issues with the Trans-Pacific Partnership and intellectual property law. I haven't read the proposed trade agreement, but do you think it will affect Alcohol, or Beverage Law in general?

    -Michael
  • Robert LehrmanRobert Lehrman Posts: 29 admin
    edited September 2015
    Yes. By the way this video, and this news source, seem pretty good on this topic. I am not an international trade lawyer, and Mike you'd need a good one on a topic like this, but this article seems to have good information on TPP, plus this one.
    Post edited by Robert Lehrman on
  • lunacylunacy Posts: 2
    We have a small brewery in NJ and were thinking about expanding. Do you know if there is an issue having a production facility in one building and a tasting room in another?
  • Robert LehrmanRobert Lehrman Posts: 29 admin
    edited September 2015
    Lunacy that sounds good from a federal perspective. NJ may think otherwise. Let me know if you need a good NJ specialist. How far apart are the buildings? If you are taking taxpaid beer to the separate tasting room for retail sales, it should not be a problem on the federal level. TTB will care if you are taking non-taxpaid beer to another building – not covered by your Brewer’s Notice – to use for free samples. In that case, you will need to amend your Brewer’s Notice to include the additional building and get a consent of surety to cover the tasting room area.
    Post edited by Robert Lehrman on
  • BeckieBeckie Posts: 1

    Can you submit formula approvals without having the beer name decided on?  For example, can you submit a formula for “Pineapple IPA” then use that approved formula with your COLA for a beer named Pineapple Hoptastic, which, which is a pineapple IPA?

  • lunacylunacy Posts: 2
    We are still looking into another property but it could potentially be in another town. 
  • Robert LehrmanRobert Lehrman Posts: 29 admin
    Beckie in fact you probably should submit the formula well before you have every last thing decided upon, such as brand name. Why? Because the wait is so long. It can be many weeks to get flavor approval, then something like 67 lonely days to get the formula approved, as per this: http://www.ttb.gov/formulation/processing-times.shtml. I don't think you can run a business sitting on your hands for a few months. Plus the time to get label approval, then state filings, on and on. You simply need to dive in and start getting stuff done. Brand name is a prime example of something that can be changed later. There is no sense putting it on your formula in any event. It's too much detail and too constraining, and can slow you down too much. The other extreme would be submitting the formula before you decide what it should taste like, and that goes too far.
  • Hi! I have a question about Cola. I am working on cola for keg rings for growler fills at our brew pub. We are not to the point of bottling our beer for distribution, only in house and possibly growlers for the next year.  When do we need to submit formulas for our beers? Also, in the state of PA, do i need to register each individual beer if we are not distributing? 
  • What is an allowable difference of stated net contents and actual contents? For example, if the stated net contents is 12 fl oz, would 11.2 oz or 12.6 oz be within an allowable difference?   
  • Alex OxfordAlex Oxford Posts: 42 admin
    edited September 2015
    Here's a new private question we have: Does a flavored cider beverage have the same compliance requirements as a flavored malt beverage?

    Robert: I am going to try and answer in here to see if it's clearer, to have the answer more near to the question. Yes flavored cider should have rules and requirements quite different from those for flavored beer. Flavored cider is probably wine for tax, permit and labeling purposes. If under 7% alc./vol., the product would need FDA labeling (e.g., nutrition facts, ingredient list), not TTB labeling or label approval. By contrast, the flavored beer would be taxed as a beer, unless it contains a lot of spirits-based flavors. It would be subject to TTB's malt beverage labeling rules, and you would need a label approval. You probably need a formula approval for both products (to the extent they contain compounded flavors).
    Post edited by Robert Lehrman on
  • Robert LehrmanRobert Lehrman Posts: 29 admin
    Hey miscreation; this document does quite a good job of explaining when you do and don't need a TTB formula approval: http://www.ttb.gov/beer/exempt-ingre.shtml. This is a big improvement over the much stricter rules that prevailed before June 2014. You can also take a look at Dan's formula evaluation tool here: http://www.dcbrewlaw.com/?page_id=868. I am going to ask JB Brombacher to jump in on the state question, because he's an expert on Pennsylvania beer rules.
  • Robert LehrmanRobert Lehrman Posts: 29 admin
    edited September 2015
    Hi Michelle. The federal rule is nice and clear on the allowable tolerance for beer, as to net contents. 27 CFR 25.142(d) says: Tolerances. The statement of net contents shall indicate exactly the volume of beer within the bottle except for variations in measuring as may occur in filling conducted in compliance with good commercial practice. The barrel equivalent of bottles filled during a consecutive three month period, calculated on the basis of the brewer's fill test records, may not vary more than 0.5 percent from the barrel equivalent of bottles filled during the same period, calculated on the basis of the stated net contents of the bottles. The brewer is liable for the tax on the entire amount of beer removed, without benefit of tolerance, when the fill of bottles and cans exceeds the tolerance for the three month period, or when filling is not conducted in compliance with good commercial practice.
  • Alex OxfordAlex Oxford Posts: 42 admin
    edited September 2015
    Here's another anonymous question: Is it worth driving over to TTB when I have something urgent?

    Robert: A lot has changed. I started going to TTB/ATF in 1988. Way back then, it was possible to walk over, 1-2 times per day, sign in via pen and paper (probably without an ID or escort). Then wander around. Maybe bump into ATF's associate general counsel in the hallway. Ask 10 questions. Get five good answers. Then wait in a line of about five people. Bring in a sheaf of labels, on paper. I think ATF required actual can flats for beer, to judge the legibility. Sit with the actual reviewer once your turn came around. Talk things over when the specialist was inclined to reject something. Maybe make a few notations to save the label. If necessary, ask for a few months of use-up, and get it easily. Walk out an hour later with 2/3 of your labels approved and the others rejected. Maybe flip through the stacks of paper labels (tens of thousands of pages stacked up).

    During this age it was well worth going in, nearly indispensable. There were a few regulars. Some are still around. Ann Morse. Geez not sure I can think of anyone else who went in a lot back then and is still active now.

    Then there was the age of xray machines and go in with an escort only.

    Then the internet showed up and everything began to change fast. Plus 9/11. TTB's hours started to get shorter and shorter, from something like 30 hours per week, of availability to the public, down to a few per week. With a receptionist and walls between the reviewers and the applicants. These days it is still worth going in on occasion. But more often, it is just as productive to use the internet or call. It is not wise to just show up, unannounced. You may be in for a big letdown, unless you show up in a private jet with a flotilla of lawyers and lobbyists (as some probably do). In the old days, but well after the age of same-day approvals, every now and then I would see a person show up, unannounced, from NY or further. The person had their fingers crossed, hoping to get lucky and walk out with approval. I suppose it happened every now and again. But more often, a harried clerk would tell the anxious applicant to drop their application in the basket, with a few score others. If the applicant was feisty, explaining that he e.g. drove in from Boston, the clerk might ask one of the reviewers to come up. Whereupon the reviewer would chat briefly with the applicant, explain a few things, and then direct the applicant to put the papers in the bin.

    It is still possible to get a lot done, by virtue of visiting TTB headquarters. It is still great to meet directly with the reviewers, even if only to be quickly and firmly told no, so one can make other plans. Or, speaking of beer, every true beer person should have had the chance to meet with Battle Martin at least once,
    Post edited by Robert Lehrman on
  • Alex OxfordAlex Oxford Posts: 42 admin
    edited September 2015
    Here's another anonymous question: What is the necessary labeling criteria and process to be able to distribute kegged beer from Montana to neighboring states and into Canada.

    Robert: You should just get a COLA and make sure all the US mandatory is on the keg label. You need the COLA the moment you ship interstate, even for kegs. You don't necessarily need the COLA for export, but you do need to make sure to follow Canada's labeling rules. By the way here is a nice, clear confirmation that you don't need a COLA when you are selling solely intrastate: http://www.ttb.gov/rulings/2013-1.pdf.
    Post edited by Robert Lehrman on
  • Robert LehrmanRobert Lehrman Posts: 29 admin
    edited September 2015
    What is the number one beer rule TTB should get rid of? What is the number one beer rule TTB should add? (aka c'mon people you better get busy and add some questions because I am out of here in 12 hours. If you add some banter, perhaps a helpful discussion may ensue.)
  • T_DubT_Dub Posts: 1
    edited September 2015
    When using non-standard ingredients, what is the process for approval? Some historic brewing spices live in a grey area according to TTB and FDA-not approved and not banned. What information can you share about this?

    Along the same lines, what is necessary for formula approval? I imagine brewing a batch, bottling it for lab analysis, sending in for COLA and then trying to sell that batch of beer two months later wouldn't work very well. Is it sufficient to submit a recipe with calculated specs (ABV, IBU, SRM)? Does it become necessary to brew a test batch for formula approval before brewing a commercial batch? How are brewpubs, who make one-off brews regularly, handling the COLA piece?

    Robert: T_Dub I may have some good news. It's not as onerous as you seem to suggest. Brewpubs don't need to bother with COLAs because they are not selling out of state. A large percentage of even flavored malt beverages don't need formula approval as of about a year ago. See the TTB Ruling I linked in one of the other responses, and this should help too: http://www.ttb.gov/rulings/2014-4a.pdf. It shows that you don't need a formula approval if you add for example raspberry juice. But you do need one if you add a multi-ingredient (compounded) raspberry flavor. You don't need so much detail about abv, IBU, etc. It can be as simple as 3-8% abv, a range/use-rate on hops, a range on malt, water and yeast, a range on the raspberry juice. There is no need to pinpoint the amount of raspberry juice, or identify the brix, or the supplier. Moreover, it is probably a mistake to be too specific. Because you are imposing a big burden on you and TTB when something changes. Yes there is a gray area on many ingredients; you will just have to get used to it. It is wishful thinking that there is a handy list of all things, in neat little categories about food safety. FDA has set out thousands of ingredients on its EAFUS List (easy to find in Google). But this just scratches the surface compared to the hundreds of thousands of potential ingredients out there (birch buds, for example). There is a whole industry of FDA consultants and lawyers to sort that out. On many ingredients it is not as simple as calling TTB or FDA, or thumbing through a reference book. Caffeine might be a sort of good example, We all know it's common, and been around a long time, and probably even safe even in alcohol beverages (think Kahlua, coffee stouts, Twisted Tea). And yet it's not ok (anymore) to add any caffeine directly to any alcohol beverage (think Four Loko).
    Post edited by Robert Lehrman on
  • RMakinsterRMakinster Posts: 1
    Robert,

    I was wondering what the rules and regulations are on shipping product samples.  I am putting together a media outreach program including a FAM trip and we are looking to get pitches to regional and national media and tastemakers, but would like to include samples of AK beers with the media kits.


  • JeremyOneJeremyOne Posts: 1
    edited September 2015
    Is it possible to open a brewery and a cidery/winery in the same space using alternating proprietorship, or some other method? 

    My goal is to be able to brew beer and cider in the same space with some shared equipment, and serve beer and cider in a taproom.

    Robert. I think you will be able to have these operations in the same building, but they should be in separate areas. One comes under beer rules and the other comes under wine rules. The specialists at TTB's National Revenue Center in Cincinnati are very helpful with questions of this sort, and not too hard to reach. Also, John Messinger in our office knows a lot about this and so I will ask him to chime in. This regulation explains how you can have the operations side by side, and then alternate/adjust/curtail/extend back and forth.
    Post edited by Robert Lehrman on
  • GregDGregD Posts: 2
    edited September 2015
    Thanks for doing this AMA. I have a question about beer labeling. Can a beer be named after a geographical landmark? For example, "Mt St Helens IPA" or "Beacon Rock Stout"?

    Robert:
    Yes definitely. This is common and ok. Think of Saranac, Brooklyn, Boston, etc. But, to the extent there is a fair amount of divergence between the brand name and the actual place of production, you probably need some fairly prominent language, to make sure it's not too confusing. This is not just so you can get TTB approval. These days, it is also very easy to get sued, to the extent it misleads a substantial number of consumers. Here is Bronx branded beer.
  • dcbrewlawdcbrewlaw Posts: 1
    edited September 2015
    What is the difference between "beer" and "malt beverages" and why/when does it matter?

    Robert:
    To normal people, the terms are roughly synonymous. But in the TTB world they are actually quite different. "Malt beverage" is the term used in the FAA Act and regulations, so it controls labeling and permits. As part of the definition, malted barley and hops are required. But not all fermented grains have hops and malted barley. Think of sake (fermented rice, but no hops or barley, taxed as a beer), or the gluten free beers, or even kombucha. These latter things are usually beer for tax purposes, even though they are not malt beverages. Your garden variety Bud or Sierra Nevada is both a malt beverage and a beer. The somewhat looser definition, for beer, is here. The primary reason this distinction matters is because something that is a beer but not a malt beverage could and in fact would dodge the 27 CFR Part 7 (TTB labeling) and Part 6 (tied house) rules. Thus, a typical kombucha or gluten free beer needs to follow the FDA, not the TTB labeling rules. Sake needs to follow the wine labeling rules (but it's taxed as a beer, unless it contains spirits, in which case it's taxed as a spirit). Yes it's confusing. But it is important to know which particular rules do and don't apply to each product.
    Post edited by Robert Lehrman on
  • GregDGregD Posts: 2
    Very helpful. Thanks.
  • ChrisHChrisH Posts: 1
    edited September 2015
    Hello Robert,   Thank you for doing this!   This following question is in regards of trademarks:   If a registered trademark for a historical year date, say f.e. “1945” exists in class 32 and/or 33 and I would want to call my product “1945 Wheat” without claiming exclusivity for neither the terms “1945” nor “Wheat”, would that a) be acceptable by USPTO and b) potentially be grounds for trademark infringement?

    Robert:
    I checked with Dan Christopherson, a trademark lawyer, and he said:

    Hello ChrisH, a) No, I expect that the USPTO would refuse an application for “1945” citing the prior registrations. The USPTO’s current trend is to consider beer/wine/spirits to all be highly related goods. b) Yes, I expect this might be grounds for trademark infringement. I would recommend looking to see if and how other alcohol beverage companies have used the same name in the past, though. The registrant’s ability to enforce a mark is lessened where it is used by a number of other alcohol beverages.
    Post edited by Robert Lehrman on
  • dmoharadmohara Posts: 2
    edited September 2015
    What sort of enforcement actions have you experienced or aware of with breweries and/or retailers shipping beer intrastate and/or interstate?  Some states seem to be more overt in their legal position on this, but its obvious there are retailers and brewers out there shipping direct to consumers.

    Robert:
    I don't follow this closely. We focus mostly on the federal regulation of beer, wine and spirits. That includes things like labels, formulas, permits (TTB), and trademarks. I am hoping some BAC members will step in to provide some good information here. In the meantime, I will say shipment of beer -- outside the three tier system -- is in fact happening every day on a massive scale. With little to no enforcement action so far. Can I prove it? Maybe. Lots of kombucha is in fact "beer" as per TTB and other rules. And yet it continues to be sold direct from producer to retailer on a very large scale.
    Post edited by Robert Lehrman on
  • dmoharadmohara Posts: 2
    edited September 2015
    Have you had a chance to review the latest lawsuit filed by Deep Ellum Brewery in Texas against the TABC, and do you feel there is a sound legal basis for their claim?  Do you see this being the trend in any other states, either by lawsuits or legislation, to permit "beer-to-go" from breweries?

    Robert:
    I am asking a Texas (plus litigation plus beverage) expert. Back soon.
    Post edited by Robert Lehrman on
  • Alex OxfordAlex Oxford Posts: 42 admin
    That's all for now, folks. Thanks for participating! We'll be sending out a PDF with the questions and answers to everyone soon. 
This discussion has been closed.