First off – I apologize for the delay since my last general email blast. There hasn’t been too much to communicate, and I’ve been pretty busy just like you all. But, it’s time to update everyone on how things are progressing.
I did a revision to our COVID-19 Resources page and cut out a lot of stuff that is available elsewhere. My goal is for that page is to be as brief and concise as possible and focus mostly on issues that are well within our wheelhouse.
We continue to push for an emergency rule to allow delivery by both manufacturers and retailers. If I were you I would not expect this to happen, but we’ve gotten further along with the Administration than I would have thought possible.
We have seen some success with getting local chambers of commerce involved, particularly the Huntsville/Madison County Chamber after they were engaged by Straight to Ale. At this point, I would strongly advise that you ask your local chamber of commerce to reach out the Governor’s office in support of delivery. When asking for help, please keep the following in mind:
- This is not just about the 50 or so craft breweries in Alabama, but also about the thousands of restaurants that have been ordered to shut their doors to the public. This is extremely important not only because we support our retailers, but also because the Administration is probably not going to issue an emergency rule that only benefits breweries.
- By my count, 25 states currently allow delivery, either because it was already legal or as a temporary measure in response to the pandemic. This includes southern states such as Arkansas and Tennessee.
Even if this effort at an emergency rule is not successful, the work we are doing on this is still important for future legislative endeavors.
Another issue I am working on is with regard to buy-backs with your wholesaler. Some may not realize that a buy-back is often considered an illegal consignment sale under federal law with a few narrow exceptions. It is never permissible to return beer to the manufacturer simply because there is a lack of demand. Also keep in mind that in the event of an illegal consignment sale, both the buyer and seller are culpable, and the parties can’t agree to “waive” the regulations.
I understand that this happens often and goes relatively unnoticed by regulators, but they aren’t going to be able to look the other way this time due to the massive volume of draft beer that will be returned. I suspect that the ABC and TTB will provide guidance that buy-backs are permissible as a result of certain COVID-19 orders such as the Stay at Home order in Alabama. Our position on this follows:
- We do not believe buy-backs can be compulsory. Although most breweries should want to maintain a good relationship with their wholesaler, the brewery should also be able to negotiate the timeline of buy-backs or outright refuse if they choose.
- We do believe the brewery can voluntarily buy back kegs, including at a discount, as a result of the COVID-19 response. Please continue to read this section before you call or email me.
- If beer is returned because of the COVID-19 response, we believe it may be re-packaged and returned to the market. This wasn’t obvious to the ABC at first due to some confusing guidance from the TTB from a few years ago.
Some members may prefer that we push for buy-backs due to COVID-19 to be strictly forbidden by law, but you should keep in mind that buy-backs are always permissible if the beer goes out of date. However, if it is returned because it was out of date, then that beer can not re-enter the market.
So there are two scenarios: (1) You are forbidden to buy back kegs until it goes bad in the market, and you then can do nothing but destroy it and lose money; or (2) you can choose to buy back kegs (but are not required to) while it is still fresh and then have the option to monetize the liquid before it goes out of date, either by selling it in growlers or re-packaging it into six packs.
I had a very productive conversation with ABC staff this week on this issue, and I feel reasonably confident that they will agree with our interpretation. I hope to have the final word by the end of this week.
Liquor Liability Insurance for temporarily-closed businesses
Although I have not heard of any brewery that plans to close, I wanted to relay this. Based on guidance from the ABC (see guidance), if you choose to temporarily close your business you are not required to maintain liquor liability insurance. Provided, however, that you must inform the ABC’s Licensing and Compliance Division of your shut-down. Please see the Guidance page for more information.
The ABC has written down their guidance on gift cards that we worked with them to establish a couple years ago. You can read that guidance here.