The Liquor Control Board Makes Rule Change Recommendations – Deadline To Respond Is Tomorrow!

Newly proposed regulations will go to public hearing tomorrow. 

 

If you have been really pining for more Initiative 1183 talk, well I have more news for you! While I know everyone is probably as tired as I of the endless conversation about I-1183’s implementation, the Washington State Liquor Control Board has proposed some new code amendments to help fill the gaps left by the I-1183 legislation.

 

The new code articles can be found by following this link.  Perhaps the easiest way to view how and what each of these proposals does to the current law is to follow this link to the Notice to Stakeholders. In general, the LCB has requested that these changes be made to lessen their own interpretation and enforcement obligations. Some of the changes impact how retail licensees can operate their business, how they can purchase liquor and how they can serve people. There are also quite a bit of changes to the existing wine distributions laws.

 

Any person who feels that the newly proposed changes may impact their business is encouraged to let their voice be heard by June 27, 2012 at 10AM – leaving you with just a few hours to look them over. Here are the contact addresses (I have neglected to give you the mail address, as you don’t have time for that):

 

By e-mail: rules@liq.wa.gov

By fax: 360-360-664-9689
The public hearing will be held at 10:00 AM on June 27, 2012 at Washington State Liquor Control Board – Board Room, 3000 Pacific Ave. S.E, Olympia, WA.

 

 

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Correction on SB 64 – New Law Does Not Apply to Breweries

LA Breweries likely will not benefit from SB 64 (Photo: OffBeat.com, Illustration by Jon Sperry)

 

A few days ago, I published a post about the passage of SB 64. At the time, I believed that the law would provide breweries with the opportunity to open taprooms and sell beer at retail to consumers. Turns out, I was most likely wrong.

 

Thanks to some super sleuthing from Parish Brewing owner, Andrew Hadley, I found out today that the intention behind the law was to help out a new distiller and that because the law was placed in the first chapter of beverage regulations (which applies to alcohol of high content) the ATC is treating the law merely as a permission for liquor producers. Wow.

 

So, as much as it pains me to let brewers know that this law is not for them – I must concede. Louisiana law still does provide brewers with the opportunity to open a taproom and sell their beer at retail. Unfortunately, those sales must be kept to 10% of monthly production (See La RS 26:273(C)). Here is what Andrew said:

 

I spoke with the lead counsel for Louisiana ATC today and confirmed that this change to 85.1 only applies to beverages of high alcohol content (liquors and wine) since it is in the chapter dealing with these kinds of beverages. Low alcohol beverages like beer are governed in the following chapter. Quoting from a follow-up email from the lead counsel of the ATC: “SB 64 only applies to liquor wholesalers as R.S. 26:85.1 is for high content only. Louisiana alcoholic beverage law is divided into several chapters; Chapter 1 (which contains 85.1) only applies to high content alcoholic beverages and Chapter 2 (which contains 273C) only applies to low content alcoholic beverages.”

This is not my opinion, this is the exact response from the ATC’s lead attorney. It is very clear about this law not applying to breweries at all.

I know that everyone wants this law to apply to breweries but the legislative intent was to impact only liquor manufacturers. As a lawyer, you know that legislative intent is paramount here.

As a brewery we want a better law than this anyway. If anything, I would rather be able to sell 10% of my production than be limited to only one case per person per month.

 

My first thought is that I am saddened that Louisiana breweries continue to be forgotten. Why distillers and not brewers!? In my opinion, lawmakers should make a uniform decision to help a blossoming industry in Louisiana. This is a bummer, but I will guarantee that the clean passage of this law, mixed with the emotional response of the industry will help push a similar law through very soon – perhaps in the next session.

 

We all want taprooms. Make it happen, lawmakers. Thanks again to Andrew Godley and his help interpreting the new law.

 

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Guest Post: A Primer on Brewer Surety Bond Contracts

Today's lesson: Getting a brewery bond

 

***Brewers need to know a lot about regulation to function everyday. Whether you have a legal team or not, it is vital to understand what the TTB requires of your brewery. I have asked Danielle Rodabaugh of SuretyBonds.com to stop by and talk about what types  of surety contracts a brewer might need to know about. Thanks to Danielle for the following post.***

 

Whether you’re looking to start up a new brewery or have been working in the industry for decades, you’ve probably heard that you need to purchase a surety bond before your enterprise can be legally licensed. Government agencies that regulate breweries typically require them to provide brewer bonds to ensure all taxes are paid appropriately.

 

Brewer bonds are a specific type of license and permit bond used to guarantee compliance with licensing laws and other relevant industry regulations. Brewery surety bonds are known by a number of aliases, including alcohol tax bonds, liquor license bonds, ATF bonds (short for the state Alcohol, Tobacco and Firearm agencies that might require them) and TTB bonds (short for the federal Alcohol, Tobacco Tax and Trade Bureau).

 

Each alcohol bond that’s issued is a legal contract that binds three entities together.

 

  • The principal is the business or individual that plans to sell, manufacture or warehouse beer.
  • The obligee is the government agency that requires the bond to ensure taxes are paid appropriately.
  • The surety is the insurance company that backs the brewer’s future performance with a financial guarantee.

If a bonded brewery fails to pay taxes appropriately, the bond amount can be used to pay the owed taxes as well as any other fees that might accompany the unfulfilled payment. Claims on brewery bond contracts are rare, but without the bonding requirement, state agencies would lose the benefit of the surety’s prequalification standards. But what does this mean?

 

Because surety providers intend to avoid losing money on claims, they carefully review applicants before issuing brewers bonds. To put it simply, the bonding process keeps individuals who lack the financial capacity to fulfill their tax obligations from getting a surety bond. Without the required bond, breweries cannot qualify for the necessary licenses and permits. Thus, unqualified individuals are kept from working in the industry if they lack financial stability.

 

Another barrier to getting bonds is their costs, which depend on a number of factors such as the bond amount and the applicant’s financial credentials. The amount of surety bond protection a brewery must provide typically depends on the enterprise’s anticipated tax liability for a full calendar year. Brewery owners who have good credit should expect to pay a rate that’s 1 to 5 percent of the bond amount, and those with poor credit should expect a rate that ranges from 15 to 25 percent of the bond amount. So if a brewery is expected to pay $10,000 in taxes during a year, a $10,000 surety bond will be required. Those with good credit will pay $100 to $500 while those with bad credit will pay $1,500 to $2,500.

 

Before applying for a bond, brewery owners should check with their state, county and city government agencies to verify bonding requirements. Failing to understand which bonding regulations apply to your brewery could hinder the licensing process. This guide should help you on your way.

 

Danielle Rodabaugh is the chief editor at SuretyBonds.com, a surety provider that issues bonds to working professionals across the nation. As a part of the company’s educational outreach program, Danielle writes articles that help new business owners better understand how surety bonds affect the business licensing process. You can keep up with Danielle on Google+.

 

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