Raging Bitch Lawsuit: Liquor Control Commissioners “In Heat” Over Flying Dog Label Rejection

Michigan Liquor Control Commissioners "in heat" over recent Sixth Circuit decision regarding a 2009 rejection of this Flying Dog Brewery label.
Liquor Control Commissioners “in heat” over recent Sixth Circuit decision regarding a 2009 rejection of this Flying Dog Brewery label. Click for full size.

Does the First Amendment extend to your brewery’s beer labels? You bet. Congratulations goes to Maryland’s Flying Dog Brewery for a big win this month. Unlike the brewery trademark disputes we’re used to seeing hit headlines, this brewery lawsuit involves Flying Dog’s rights to express itself on its labels. Like many cases tend to do, this one has been going on for quite some time. In fact, we reported on it here back in 2011. The background is that in 2009, Flying Dog sought to register its “Raging Bitch” beer label with the Michigan Liquor Control Commission. You can click the picture for a full-size version of the label. The MLCC did not approve the label, claiming it was offensive. In particular, it seems the MLCC took objection to language on the label that it found would be “detrimental to the health, safety, or welfare of the general public.”

The procedure gets a little messy. But, hang with me, because the outcome is important. When the MLCC denied the label, and Flying Dog lost its administrative appeal, Flying Dog filed a lawsuit pursuant to a federal statute, alleging the individuals at the MLCC had violated the brewery’s Freedom of Speech rights protected by the First Amendment. It’s not an unusual kind of lawsuit, except perhaps for the beer world. It’s the same kind of lawsuit involving government action that you’d see in headlines where a private citizen alleges that the police used excessive force. Constitutional violation. Keep in mind, however, that government actors can have different degrees of immunity from these kinds of lawsuits. It’s why you don’t see judges being sued every time they make a decision that impacts an individual’s rights. It’s prudent. We wouldn’t want a judge to be worried about being sued, for example, when trying to make the right, albeit unpopular, decision in a case. More on that soon.

At any rate, the MLCC Commissioners alleged that they had immunity, and put forth a couple of different theories, one being that their actions were quasi-judicial. The federal district court agreed, granting the Commissioners partial summary judgment. According to the court, it was the first time a court in the Sixth Circuit had decided whether members of a state administrative body who had the authority to make licensing decisions are entitled to quasi-judicial immunity. The district court thought so.

Flying Dog Brewery appealed the summary judgment ruling, and so the case went to the Sixth Circuit Court of Appeals. In reviewing the case, the Sixth Circuit observed that to determine whether an individual is entitled to quasi-judicial immunity, the court would consider factors like the nature of the government official’s functions, and how being exposed to various forms of liability for those decisions would affect the appropriate exercise of those functions. Here are some factors that are characteristic of the judicial process:

  • the need to assure that the individual can perform his functions without harassment or intimidation;
  • the presence of safeguards that reduce the need for private damages actions as a means of controlling unconstitutional conduct;
  • insulation from political influence;
  • the importance of precedent;
  • the adversary nature of the process; and
  • the correctability of error on appeal.

Through a measured analysis, the Sixth Circuit found that the factors divided evenly both for and against a grant of quasi-judicial immunity. For those interested, the opinion is here, and it’s worth a read. The court decided to call the close question in favor of Flying Dog, whose constitutional rights were at stake. No quasi-judicial immunity.

The court next analyzed whether the Commissioners had a different type of qualified immunity. That is, the MLCC’s commissioners would be protected against a lawsuit, only if the brewery’s freedom of speech right was clearly established, in light of the context of the case. A right is clearly established if a reasonable official would understand that what he or she was doing would violate the right.

The Commissioners urged that the right was not clearly established. It is true that “commercial speech” is afforded less protection than, say, the content of your favorite film. When evaluating whether commercial speech falls within the ambit of the First Amendment, courts apply what’s known as the Central Hudson test. First, the speech must concern lawful activity and not be misleading. Next, the asserted government interest (here, the health, safety, and welfare of the people of Michigan) must be substantial. If both answers are yes, the court asks whether the regulation directly advances the governmental interest asserted, and whether the regulation is more extensive than it needs to be to serve that interest.

The Sixth Circuit reached back to a notable case the Supreme Court took on called Rubin v. Coors Brewing Co., 514 U.S. 476 (1995). That case involved the federal government’s regulation on alcohol content on beer labels. Yes, a couple of decades ago, federal statute 27 U.S.C. § 205(e) prohibited brewers from putting any ABV information on their labels, unless state law required it. (The concern was that brewers would get into “strength” wars.) The Supreme Court applied commercial speech principles and found the whole regulatory scheme irrational, especially because the same statute required alcohol content on wine and spirits labels. The following year, the Supreme Court decided yet another brew-centric case. Rhode Island had banned ads that displayed accurate information about the retail prices of alcohol. The Court determined that Rhode Island’s ban was not justified by the Twenty-first Amendment, and that the Twenty-first Amendment does not “diminish the force” of a battery of constitutional protections, including the First Amendment.

This beer label was at issue in Bad Frog Brewing Co. v. New York State Liquor Authority.
This beer label was at issue in Bad Frog Brewing Co. v. New York State Liquor Authority.

The Commissioners pointed to a case in the Second Circuit, where state liquor commissioners had been granted qualified immunity when they banned a vulgar beer label (the aptly named Bad Frog Brewery had a label with a frog giving the finger), and where on appeal the Second Circuit determined that the commissioners reasonably believed they were entitled to reject the application. The Sixth Circuit found that, if anything, that case put all state liquor authorities on notice that banning a beer label for vulgarity does violate the First Amendment. Thus, a reasonable official would understand that his or her actions would violate the right. No qualified immunity.

So, the outcome of the Raging Bitch case. It’s not a complete win, it’s a win of a case within a case. That is, the Sixth Circuit determined that the Commissioners were not entitled to any form of immunity. However, because the district court had never reached the issue of whether the MLCC commissioners violated Flying Dog’s clearly established First Amendment rights, the case gets kicked back down to the district court, where we can only imagine the commissioners are hoping to settle. This is especially so because a dissenting judge on the Sixth Circuit thought that the factual record was developed enough that Flying Dog should be entitled to summary judgment in its favor as a matter of law! It’s worth noting here that the federal statute permitting Flying Dog’s claim has a fee-shifting provision, whereby a court may allow Flying Dog Brewery to recover its attorneys’ fees if it prevails. Those fees would be in addition to any judgment Flying Dog received for its constitutional injury. Keeping in mind that this dispute has been alive since 2009, you can do the math.

If you made it this far, you’re either a lawyer or a truly brave and persevering soul. Ultimately, I’ve gotten so deep into this case today because (1) I love a good Con Law session and (2) because there’s no doubt now that, thanks to one Ragin’ Bitch, state authorities are firmly on notice that a brewery’s beer labels have significant constitutional protections. I’ll raise a beer to that.

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The 2015 Beer Tax Bills: Insight and Coverage

I want to point you to excellent reporting by Chris Drosner (aka the Beer Baron) over at the Wisconsin State Journal on the potential impact of the two competing beer tax bills. Check out his article here. We covered the Beer Institute’s Fair BEER Act and the Brewers Association’s Small BREW Act last week here, and through insightful discussion with Chris, edited it to correct and improve our coverage. Good stuff, and glad the Brewery Law Blog can help create a dialogue on these important topics, which is what Doug envisioned when launching five years ago. Most importantly for this story, Chris helps tell the part that keeps getting lost in other coverage; the Fair BEER Act is not just beneficial for “big beer.” Of course, that act would cause the biggest cuts to the federal revenue, but may also position the majority of today’s brewers for the most explosive growth. Check out Chris’s article for more details on that. What do you think?

Note: I should disclose, I’m a member of the Brewers Association. However, as a member and given my position as a small-brewery lawyer, I’m interested in what’s best for craft breweries but also the beer industry at large. At times, the line drawing between “us” and “them” and “our growth” vs. “their growth” can seem less important, and this tax scenario might be a case where everyone could come together and agree that more jobs and growth in the entire beer industry is a good thing. After all, consumers still seem to be cheering for the little guys, even when they’re not so little anymore. I doubt that tax cuts and attendant growth across the board will dupe craft consumers and change their David-leaning preferences. Even if big beer exposes more would-be craft beer lovers to the product through their efforts to become more relevant, I think that, just like all of us did, we’d eventually still see those consumers start coming out to their local taprooms, plugging into the truly craft beer scene, and evangelizing the awesome awesome stuff microbreweries are making today. That excites me more than line drawing on these tax issues here. Either way, passage of some measure of brewery tax reform would be a wonderful thing, and a huge accomplishment for the industry.

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The Skinny on Red Bull vs. Old Ox Brewery: Understanding this Brewery Trademark Dispute

Here’s what Red Bull vs. Old Ox Brewery is and what it isn’t. If you read the Brewery Law Blog, you know I love craft beer trademarks more than the average Esquire. Same goes for craft cider trademarks, mead trademarks, the whole lot. Over the last year, I’ve appreciated seeing the public get fired up about a craft beer trademark dispute in the making. Having said that, there’s a lot of misinformation out there. This is especially the case when word of a brewery trademark spat takes off and spreads all over social media, as it definitely has this time. A lot of the misunderstanding stems from not knowing exactly what’s at stake in any given trademark dispute.

What Red Bull vs. Old Ox Brewery isn’t:

This trademark dispute is not a lawsuit over whether Old Ox Brewery can use its name or logo. This dispute has not reached federal court. It is not a lawsuit. That might happen. But, so far, this matter has nothing to do with whether Old Ox Brewery can call itself Old Ox Brewery or whether they can use their logo.

What Red Bull vs. Old Ox Brewery is:

This is an administrative opposition proceeding. This involves whether the United States should grant Old Ox Brewery a federal trademark (which gives you important rights). So, this matter completely involves Old Ox Brewery’s right to register their brand name. It has nothing to do with whether Old Ox Brewery can use that brand name. Of course, Old Ox Brewery may not want to use a brand name if they can’t use it with the benefit of important federal trademark rights.

How the Red Bull vs. Old Ox Brewery dispute came to be:

We can’t know all the details and interactions. But, here’s how these sorts of proceedings typically get started.

  1. Old Ox Brewery prudently sought to protect its intended brand name. It applied for an intent-to-use trademark for both its name and its logo. Breweries can file intent-to-use trademarks, before they ever open up, so they can feel confident moving forward and investing in their brand and branding materials. If you read the blog, I champion proactive brewery trademark clearance and registration quite a bit.
  2. The United States Patent and Trademark Office (USPTO) examines every trademark application that comes in, and looks to see whether the mark should be allowed to register. There are technical defects in applications, and then there are issues like the mark being too descriptive or too similar to another registered mark.
  3. If USPTO thinks the mark is okay, the mark publishes for thirty days for others to review. Here, Old Ox Brewery’s marks published on September 30, 2014.
  4. Publication is a chance for everyone else outside of USPTO to protect their interests. Whereas USPTO may not find a problem with a mark during its limited review, actual brand holders have an important stake in their brand. They may see an issue with a potential mark that USPTO doesn’t or doesn’t catch, and publication gives everyone a chance to prevent a mark from registering. Keep in mind, if a mark registers, it gets important rights and becomes more difficult to combat.
  5. Red Bull no doubt has a legal team all over the USPTO Gazette (where marks publish each week). Notably, beer is in the same trademark class (032) as energy drinks, soda, bottled water, etc. That’s likely how Red Bull found it so quickly. They monitor Class 032 every week for problematic uses. However, bear in mind class has nothing to do with whether two marks are confusingly similar, it’s merely an administrative convenience for USPTO. Confusing similarity will turn on a number of things, including comparing the actual goods in the application vs. Red Bull’s.

Why Red Bull is doing this, even if you don’t think the marks are similar:

Opposition proceedings are relatively cheap. If a trademark owner sees a problem with another mark, an opposition proceeding can quickly nip it in the bud. It costs $300 to file and not much time to prepare a notice of opposition. On the other side, often small brands feel scared and don’t want to fight (or don’t have the funds to fight), so they willingly abandon their mark. This is often the case when it’s an intent-to-use mark (as Old Ox Brewery’s is), which typically means the mark isn’t yet in use at all or, at the very least, hasn’t been used too widely for very long. It appears Old Ox Brewery has been in operation for about seven months. So, $300, one filed document, and Red Bull potentially never has to worry about whether the Old Ox marks really are confusing again—because they’re gone. Some might think that’s bullying, others might think it’s effective brand protection.

What often happens behind the scenes in scenarios like the Red Bull v. Old Ox Brewery:

Usually, everyone wants out of an opposition proceeding. Here, Red Bull admittedly has a lot more in its cash reserves than the typical opposer. What can happen is that the two brands come to some agreement. They iron out a “coexistence agreement” which is essentially a plan for both brands to coexist in the marketplace to avoid consumer confusion. That might mean that one brand avoids the other’s colors and imagery or that Old Ox Brewery never makes an energy drink or a soda of any kind. In fact, given Red Bull’s statements to the media, it looks like they do want to iron something out:

“Red Bull has not sued anyone. Brands, big and small, seek to protect their trademarks every day. All we are asking for is to allow the administrative process at the US Patent & Trademark Office to run its course and we remain hopeful that a fair settlement can be reached by both parties.”

What could happen in Red Bull v. Old Ox Brewery:

If they don’t strike up a coexistence agreement, a few things could happen. Old Ox Brewery could forget about its trademarks and give up fighting on the USPTO front. As I highlighted before, though, this has nothing to do with whether Old Ox Brewery can use those marks. This is not a lawsuit. We might expect a full-on lawsuit from Red Bull in federal court, which they could file at any time given Old Ox is using their marks already in a territory Red Bull no doubt is in. Whatever you think of Red Bull’s merits in the lawsuit, they certainly have the most cash in the bank to drag things out and make it hurt. Thus, we typically a smaller brand like Old Ox Brewery just change its name, to avoid sinking cash into something like this, when it could be using that money to fuel its awesome growth. Meanwhile, whatever the outcome, Red Bull has scared off other users from adopting anything with the word “Ox” in the name going forward, showing everyone just how broadly they construe their brand. We’ll see where this one goes.

It’s also worth keeping in mind that beyond any confusing similarity between the marks, Red Bull can also toss in a claim of trademark dilution. If you have a famous mark, there’s an additional mechanism to protect it. We didn’t see this ground included in Red Bull’s Notice of Opposition, but it’s certainly something extra we might see tossed into any federal lawsuit, which would add even more to defend against, whatever you think of the merits.

Red Bull v. Old Ox Brewery, The Wrap-up:

I hope that gives everyone better insight into the Red Bull v. Old Ox Brewery matter. When reviewing an emerging trademark dispute, it’s important to pay attention to where it is procedurally. Is this in federal court involving a right to use a mark? Or is this an administrative proceeding before the Trademark Trial and Appeal Board involving a right to register a mark? That can help onlookers understand exactly what’s at stake. For more on trademark law, and why federal trademark rights matter, see our Brewery Trademark Law Explained (In a Nutshell) post here.

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Examining the Two Craft Beer Tax Bills: What Brewers Need to Know About the Fair BEER Act and the Small BREW Act

Edit: 2/15/2015 at 8:55pm PST. Thanks to journalist and Twitter comrade @WSJbeerbaron (Chris Drosner) who is working on a piece for The Beer Baron column relating to beer tax reform, he spotted a correction for the article. I had read language in the Fair BEER Act to maintain certain production rate carveouts for smaller producers. ‘Tis not the case. I have updated the article and calculations to reflect this. Cheers to Chris for taking on this heady issue to get the word out; I’ll link to his article when it’s in. I anticipate he’ll have a lot of great analysis coming your way.

Beer tax reform might be on the horizon, as two competing bills are teed up for debate in Congress. On the one side is the Beer Institute, which advocates for all sizes of breweries but is known for having Anheuser-Busch InBev and MillerCoors among its interested parties. They’re standing behind the Fair BEER Act and, as we’ll get to in a minute, the majority of breweries out there may be the biggest fans of what this act would offer. Another bill out there is the Small BREW Act, which the Brewers Association is behind. The Brewers Association advocates for the interests of those brewing under 6 million bbl per year. As we all know, that 6 million bbl distinction is big enough to sweep in a brewery like Boston Beer Co. (Sam Adams), but small enough to keep the two big guys out. As you’ll soon see, the Small BREW Act spells tax breaks across the board, including advantageous ones for the pretty-big-but-still-craft breweries, but not as dramatic of breaks for the majority of breweries in America. The Fair BEER Act would provide lowest tax rates of all.

What do the federal beer tax bills look like, whose interests are we looking at here, and why should you care? Let’s start with how federal brewery tax law operates right now. Then, I’ll walk through each of the proposed bills, and wrap up with examples comparing tax rates for different-sized brewing operations under all three schemes. Let’s dig in.

Brewery TTB Tax Law Part I

How Beer is Taxed Right Now at the Federal level

Presently, the Alcohol and Tobacco Tax and Trade Bureau taxes beer at two different per-barrel rates. There’s the Regular Rate of $18. Then, there’s the Reduced Rate of $7. Here’s how those rates are applied:

Small Breweries60,000 bbl or less? Pay $7/bbl
If you brew 60,000 bbl or less in a year, like the vast majority of breweries, you pay the Reduced Rate of $7/bbl (in addition to whatever your state tax rate may be).

Medium Breweries
If you brew more than 60,000 bbl but less than 2 million bbl (such as a brewery like New Belgium or Dogfish Head, for example), you pay a mixed rate. You get to take advantage of the $7/bbl rate for your first 60,000 bbl ($420,000, which is up to a discount of $660,000 off the regular rate). After that, you must pay the Regular Rate of $18/bbl for the rest of your lot.

Large Breweries
If you brew more than 2 million bbl (so, the two big guys, and also a brewery like Boston Beer Co. (Sam Adams) or D.G. Yuengling & Son (Yuengling)), you pay the Regular Rate of $18 for everything. The prime point being, they’re paying $11 more per barrel on the first 60,000 bbl than everyone else (that’s $660,000 more on those barrels).

As we all know, everyone would love to pay less, and that’s what this is about.

Brewery TTB Tax Law Part II

Fair BEER Act – Backed by the Beer Institute (Which includes the interests of Anheuser-Busch InBev and MillerCoors)

This bill would offer the most tax advantages to the vast majority of breweries out there, eliminating federal excise tax altogether for the typical neighborhood brewery and most that are engaged in community-wide distribution. At the same time, this bill would make even the biggest of brewers eligible for tax breaks. Essentially, it’s a graduated scale that applies to all breweries—and almost all breweries (90%) are at the bottom of the scale, which would mean zero excise taxes. Take a look.

The first 7143 bbl: Pay $0/bbl.
-Thus, if you brew under 7,144 bbl/year, you’d pay no federal excise tax. $0. This would mean roughly 90% of American breweries would pay no federal excise tax. This sounds pretty good for all of the small breweries and start-ups out there. Keep in mind that 7,144 bbl/year is more than 137 bbl produced per week. That’s a lot of headroom for most of our breweries today. Indeed, likely far more than the wildest dreams of many of the family-owned breweries we’re seeing nestle into our neighborhoods. Just to ground the numbers, that’s more than 13 brew days a week on a 10bbl system. Not possible.

The 7144th bbl/year to 60,000th bbl: Pay $3.50/bbl. 
-If you brew more than 7144 bbl/year and up to 60,000 bbl/year, you’d see your federal excise taxes cut in half. It’d be just $3.50/bbl. To ground that bbl/year figure, 60,000 bbl/year would translate to more than 1153 bbl/week. If you had a 100bbl system, that’d be more than 11 brew days a week. Again, not possible.

From the 60,001 bbl/year to 2 million bbl: Pay $16/bbl.
-So, this is a cut for the “medium” breweries noted above—eligibility for the lower breaks, with $2 off per barrel thereafter up until the two millionth bbl.

Everything after the 2 millionth bbl in a year? Pay $18/bbl.

-No change. This is the current rate, just that it only starts applying at your 2 millionth bbl. Before that, all breweries are eligible for the reduced rates on initial bbl leading up to it.

The Wrap-up on the Fair BEER Act:

Federal excise tax would be eliminated for nearly all craft breweries, putting an extra $7/bbl back into the brewery’s pocket. Most notably, huge breweries would get a break on beer leading up to the two millionth bbl. We’ll see how this plays out when we crunch the numbers later.

Brewery TTB Tax Law Part III

The Small BREW Act backed by the Brewers Association:

Craft Breweries – <6,000,000 bbl/year
-Change the definition of Small Brewery from those that produce under 2 million bbl/year to those that produce under 6 million bbl/year. So, sweep in folks like Boston Beer Co., just like the Brewers Association definition does by its definition.
-Create the following tax structure for all Small Breweries:
$3.50/bbl on the first 60,000 bbl (That’s the current reduced rate cut in half)
$16/bbl on the next bbl leading up to 1,940,000 bbl (a reduction of $2/bbl, but also a reduction on the quantity of barrels it applies to.)
$18/bbl on everything beyond 1,940,000 bbl.

Not Craft Breweries – >6,000,000 bbl/year
-$18/bbl on everything.

The Wrap-up on the Small BREW Act:

For most breweries, federal excise tax would be cut in half. The biggest winners are the folks like Boston Beer Co., who would become eligible for the reduced rate on the first 60,000 bbl and also a $2/bbl cut on a bunch of beer, too. Huge savings here, as we’ll walk through in a second. Though, again, for the majority of breweries in the United States, the tax breaks are not as dramatic under the Small BREW Act as they are under the Fair BEER Act.

Brewery TTB Tax Law Part IV

The three tax programs compared (Current, Fair BEER Act, and Small BREW Act):

Before providing a look at real numbers below, the gist is this. The Fair BEER Act would result in the lowest taxes of all strategies, and it impacts the majority of breweries in the United States by eliminating federal excise tax entirely. The biggest difference in federal brewery tax policy with the Fair BEER Act is that the biggest of the big remain eligible for significant tax breaks. In contrast, the Small BREW Act would result in more even-handed savings for craft breweries, no matter the size, but provide no benefits to the big guys. Nevertheless, the Small BREW Act lets a swath of extremely-big-but-still-considered-to-be-craft brewers get in on the tax breaks, while keeping things the same for the biggest of the big. (Side note here about conglomerates, just so no one is confused. These are called “controlled groups” and tax rate eligibility is calculated by adding up all of the production rates of all of the breweries within the group. So, just because A-B InBev owns Elysian now, they wouldn’t get tax benefits off of Elysian’s production rate.)

Check out the numbers below—note that I’m using formulas, but they were formulas made by this human whose best skills undoubtedly tip on the verbal side. The figures should give you the big picture of the competing bills, what’s at stake, and why different breweries at different sizes feel the way they do. If you spot any errors, please let me know—and I invite someone to make a fluid graph of all of the equations, which is beyond the time I have for this project at the moment:

If you brew 100 bbl/year:

Current Federal Excise Taxes on Beer: $700
Federal Taxes Under the Fair BEER Act (FBA): $0
Federal Taxes Under the Small BREW Act (SBA): $350

If you brew 500 bbl/year:

Current: $3,500
FBA: $0
SBA: $1,750

If you brew 1,000 bbl/year:

Current: $7,000
FBA: $0
SBA: $3,500

If you brew 5,000 bbl/year:

Current: $35,000
FBA: $0
SBA: $17,500

If you brew 7,000 bbl/year:

Current: $49,000
FBA: $0
SBA: $24,500

If you brew 7,143 bbl/year:

Current: $50,001
FBA: $0
SBA: $25,000.50

If you brew 7,145 bbl/year:

Current: $50,015
FBA: $7
SBA: $25,007.50

If you brew 10,000 bbl/year:

Current: $70,000
FBA: $9999.50
SBA: $35,000

If you brew 20,000 bbl/year:

Current: $140,000
FBA: $44,999.50
SBA: $70,000

If you brew 50,000 bbl/year:

Current: $350,000
FBA: $149,999.50
SBA: $175,000

If you brew 59,999 bbl/year:

Current: $419,993
FBA: $184,996
SBA: $209,996.50

If you brew 60,001 bbl/year:

Current: $420,018
FBA: $185,015.50
SBA: $210,016

If you brew 80,000 bbl/year: (Deschutes at approx. 89,000 bbl)

Current: $780,000
FBA: $504,999.50
SBA: $530,000 

If you brew 100,000 bbl/year:

Current: $1.14 million
FBA: $824,999.50
SBA: $850,000

If you brew 150,000 bbl/year: (Dogfish Head at approx. 175,000 bbl)

Current: $2.04 million
FBA: $1.62 million
SBA: $1.65 million

If you brew 200,000 bbl/year:

Current: $2.94 million
FBA: $2.42 million
SBA: $2.45 million

If you brew 250,000 bbl/year:

Current: $3.84 million
FBA: $3.24 million
SBA: $3.25 million

If you brew 300,000 bbl/year:

Current: $4.74 million
FBA: $4.02 million
SBA: $4.05 million

If you brew 500,000 bbl/year: (New Belgium at approx. 712,000 bbl; Sierra Nevada at approx. 800,000 bbl)

Current: $8.34 million
FBA: $7.22 million
SBA: $7.25 million

If you brew 1,000,000 bbl/year:

Current: $17.34 million
FBA: $15.22 million
SBA: $15.25 million

If you brew 1,500,000 bbl/year:

Current: $26.34 million
FBA: $23.22 million
SBA: $23.25 million

If you brew 1,939,999 bbl/year:

Current: $34.26 million
FBA: $30.26 million
SBA: $30.29 million

If you brew 1,940,001 bbl/year:

Current: $34.26 million
FBA: $30.26 million
SBA: $30.29 million

If you brew 1,999,999 bbl/year:

Current: $35.33 million
FBA: $31.22 million
SBA: $31.37 million

If you brew 2,000,001 bbl/year:

Current: $36 million
FBA: $31.22 million
SBA: $31.37 million

If you brew 2,500,000 bbl/year: (approximately Boston Beer Company)

Current: $45 million
FBA: $40.22 million
SBA: $40.37 million

If you brew 5,999,999 bbl/year:

Current: $108 million
FBA: $103.22 million
SBA: $103.37 million

If you brew 6,000,001 bbl/year:

Current: $108 million
FBA: $103.22 million
SBA: $108 million

If you brew 67,000,000 bbl/year: (approximately MillerCoors)

Current: $1.206 billion
FBA: $1.201 billion
SBA: $1.206 billion

If you brew 100,000,000 bbl/year:

Current: $1.8 billion
FBA: $1.795 billion
SBA: $1.8 billion

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New TTB Cider FAQ: TTB Clarifies Labeling and Other Regs for Cider Industry

There’s a new TTB Cider FAQ out. We’ve touched on Washington Cider Law in the past, but the feds play an important role in it too. Just today, TTB has provided helpful insight to the growing craft cider industry. Here’s a link to the new TTB Cider FAQ, with six bullet points from us below covering more notable stuff, especially for those comparing regs on the cider side with things on the beer side. Different worlds, but we help with both sides at Reiser Legal.

1. Cider is a wine, we know that. It’s not a malt beverage under the law.

2. From TTB’s labeling standpoint, to call a product just “cider” it has to come from fermented apples and optionally contain added sugar, water, or alcohol. Anything else, it’s not just “cider.” Fortunately, when you submit your formula, TTB will provide a suggested statement of composition to help you, and you can always designate a fanciful name on the label, so long as it’s not misleading.

3. If your cider contains less than 7% ABV, you do not need a COLA. This stems back from the TTB/FDA regulatory authority divide we’ve discussed in the past. If your cider is 7% to 24% ABV, you need that COLA to ship in interstate commerce, as you’re subject to TTB authority. Notably, Washington is going to want that COLA to get your project on the shelves here. Either way, even if you don’t need to obtain a COLA, if the cider leaves the premises, it still has to comply with certain basic labeling requirements.

4. Because cider is a wine, 7%+ ABV cider is subject to TTB’s standards of fill. That means 12oz packages (like the cans we know and love to see on the shelves) are no good for cider at that ABV. Below 7%, it’s all good. Notably also, as long as you’re shipping wine in containers above 18L (4.75G), you don’t have to comply with TTB’s standards of fill. Here are some standards of fill, which feel pretty arbitrary but it’s a reg so what do you expect:

  • 3 liters
  • 1.5 liters
  • 1 liter
  • 750 mL
  • 500 mL
  • 375 mL
  • 187 mL
  • 100 mL
  • 50 mL (just a sip at 1.6907!)

5. If you’re only making cider below 7% ABV, you don’t need a basic TTB permit. Keep in mind, you’re still subject to applicable federal authority, and your local liquor board (in Washington, the Liquor Control Board) more than likely has its own sets of permitting requirements and onerous regs.

6. If your cider has CO2 in it (technically about .392g CO2/100mL, be careful. If CO2 is coming from secondary fermentation in a closed vessel (like a bottle), it’s considered “sparkling.” But, if you’re injecting CO2, it’s artificially carbonated so it has to be labeled as such. Note that sparkling/carbonated wines are taxed at higher rates. Speaking of tax, there are all kinds of nuances with respect to how you’d be going about your cider business.

The takeaway on the TTB Cider FAQ:

Regulations are really confusing, inconsistent among industries, and you might be subject to a completely different set of regulations depending on how much alcohol is in your project. For anyone thinking about starting a cidery in Washington State, we’re happy to help you wade through these tricky regulations. We’ll post further resources for cideries on the blog soon.


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