After years of persistent petitioning from the Brewers Association, TTB has made big revisions to the formula and labeling requirements for beer. Prior to the ruling made on June 5th, 2014, in many cases craft brewers were required to submit a formula for approval as well as obtain a COLA before they were able to get their beer to consumers. This lengthy process substantially increased time to market.
In May 2006, the Brewers Association proposed changes to what TTB recognized as traditional ingredients such as certain fruits, spices, and processes including aging beer in barrels that were used in the production or storage of wine and spirits. These proposed ingredients and processes would no longer require the extra step of acquiring a formula approval from TTB and would be labeled according to trade understanding. Since the initial petition in 2006, TTB has seen a substantial rise in formula approval requests from a new age of brewers that have revived traditional, historical brewing practices which include a variety of innovative ingredients and processes. Because of the recent steep rise in requests, TTB undertook additional research to find out if these now commonly used ingredients would cause compliance issues further down the road. These studies produced conclusive results that the requested ingredients and processes would not cause compliance issues because they were so widely utilized.
This new ruling is a huge lift for many breweries, since it eliminates the tedious and time-consuming process of acquiring formula approvals. TTB has conveyed that this ruling is a means to “provide immediate relief from the formula requirement burden for certain products.” It is also the beginning of a reassessment of how the TTB can “reduce regulatory burdens” and be most effective in working together with brewers to get quality beer to consumers.
Brewers are already experiencing the positive effects of this ruling. When we reached out to Heather Gleeson from New Belgium Brewing Company, she said that previously, it would take around 75 days for all formula approvals from TTB. “Eliminating the need for formulas with ingredients that you can pick up at the local grocery store which are generally recognized as safe and common is super exciting.” Heather is also very pleased to see that formulas are no longer required for the utilization of wood barrels that previously contained wine or spirits since New Belgium Brewing Company makes so many different sour ales that are aged in wood barrels. She has already seen a drop in approval time from 75 to 65 days for formulas that actually do require approval. “Getting beer to market much faster is huge. It is also less of an administrative burden for TTB that just makes a lot of sense.” Everyone is looking forward to faster approval times for formulas, and already enjoying being able to withdraw formula applications that are no longer required.
*Even since June 10th we’ve seen a drop in formula approval times from 72 days to 63 days.
While certain ingredients and processes are now exempt from formula approval, TTB may request further information about ingredient and production on a case-by-case basis. TTB also requires that brewers label their beer accurately so that ingredients and brewing processes are not misleading. For more details about what has changed, see TTB Ruling 2014-4 and its attachments for a complete list of exempt ingredients and acceptable labeling. For even more positive feedback on this ruling, check out the Brewer’s Association’s response.
It’s that time of year again; the Kansas label renewal period is upon us. Kansas has pushed the renewal period back by a month this year so licensees will be able to renew previously approved labels from June 1st through July 31st. But, that doesn’t mean that you should procrastinate! Just like last year, Kansas will be utilizing the PRO system to offer a quick and easy substitute to laborious paper submissions. Licensees will be able to submit electronically with three simple steps; check which products they would like to renew, review the selection, and make a payment. It should take only a few minutes to complete. That will be one more item checked off your to-do list.
Arkansas, the latest state to adopt wholesale label registration practices, has begun their first renewal period. The state recently sent out an email communication to all licensees with previously registered labels. Just in case you missed the email, here’s what you need to know:
- The renewal period will run from June 1st through June 30th, and requires that all wine and spirit labels registered prior to March 1st be renewed. Labels registered after March 1st will be valid through the end of next year’s renewal period (through June 30th, 2015).
- Renewals should take only a few minutes. The renewal fee is $20 per label.
- Renewals must be performed electronically and can be completed in bulk here: ar.productregistrationonline.com/renewalslogin.
- New labels (not renewals) in Arkansas can also be performed with a ShipCompliant login. If you don’t have a ShipCompliant login, set up an account with ProductRegistrationOnline here: productregistrationonline.com
- Arkansas Supplier Permits must be renewed prior to June 30, 2014. If you currently hold a Supplier Permit, you should have received a renewal notice.
Currently there are only a handful of states that offer DTC beer shipments in the country. New York could be next up to bat with a bill that, among other things, would allow beer shipments to cross state lines into the hands of consumers. New York is the 4th largest consumer of beer products in the country, and may become the largest consumer of beer of any state that allows interstate direct shipping of beer if this bill passes as written. Laws that allow DTC beer and cider shipments in states with higher consumption will create an interesting opportunity for breweries around the country. With 2 weeks left in the session, it will be interesting to see if beer shipments will make it in the final bill.
Other changes proposed in the current version of the bill include:
- The removal of the existing wine direct shipping reciprocal customer shipping volume limit
- A new common carrier license
- Wineries and farm wineries would be able to ship not only their own wines, but wines from neighboring wineries. (See page 47 of the bill)
Keep an eye on our blog and our twitter feed (@shipcompliant) for updates as we follow the story.
In May of 2012, Governor Jan Brewer established the Transaction Privilege Tax Simplification Task Force in order to identify ways the current complex sales tax code could be simplified in the hopes of reducing tax filer stress and increasing tax-filer compliance. The conclusions of this task force, available in full in the Final Report, led to the creation and subsequent passage of HB 2111. HB 2111, which goes into effect January 1, 2015, calls for all licensing and taxes to be paid and reported through a single online portal.
This change, outlined in more detail in Section 42-5015 of the bill, will be an especially welcomed change to how Transaction Privilege Taxes (TPT) are reported. Currently cities are split between 73 “program” cities, where the state collects the tax, and 18 “non-program” cities, where cities are responsible for collecting the tax. For licensed wine direct shippers who remit applicable taxes to several locations, this can result in an overwhelming set of tax filing requirements. The state will release more information regarding the new online platform throughout 2014. ShipCompliant clients should stay tuned for announcements that will further outline the changes as well as subsequent updates that will ease the transition in their account to the new “one-stop-shop” process. All updates to clients will take place well in advance of the January 1, 2015 effective date.
South Dakota is one of the few remaining states that prohibits the direct-to-consumer shipment of wine, but that could change if supporters of wine shipping quickly encourage the South Dakota House of Representatives to support SB 114. And speed is of the essence since SB 114 must pass out of the House by March 11 if it is to become law this year.
Passed by the South Dakota Senate by a vote of 23-11, SB 114 would allow a licensed winery to deliver up to twelve cases of wine to an individual consumer within a calendar year. The bill includes a $150 annual permit fee and remittance of sales and excise taxes. It also goes a little further than most states with existing shipping laws by requiring both age verification of the purchaser and also the registration of each label shipped into the state in advance.
The next step for SB 114 is to move through the Commerce and Energy Committee in the House of Representatives. Then, if voted through, receive a positive vote on the floor of the South Dakota House of Representatives before the bill would head to the Governor’s desk for signing, which he said he would do. The Commerce and Energy Committee is expected to consider and vote on the bill early next week.
Free the Grapes! is recommending that South Dakotans contact immediately House Commerce Committee members. Winery proponents can help the effort by reaching out to any customers and contacts in South Dakota and urging them to visit the Free the Grapes! website to send their thoughts on the bill to South Dakota lawmakers.