Dec. 3, 2014 – Mixing a drink is easy, but the alcohol beverages industry is highly regulated, and so actually getting a drink to the table legally is not nearly so simple.
State Bar of Wisconsin PINNACLE’s Alcohol Beverages Regulation in Wisconsin, recently supplemented by author Aaron Gary, answers almost any questions you might have about distilled spirits, wine, and beer.
For example, is there really a difference between types of whisky? To federal regulators, there is a distinction, and it does matter: “Bourbon whisky (named for Bourbon County, Kentucky) is made from a grain mixture mash that is more than half corn and is aged in new charred oak barrels, usually for at least four years.” (Section 1.31)
Can anyone make and sell Bourbon whisky or other types of distilled spirits? Only registered facilities may do so; under federal law, operations relating to the production of distilled spirits must occur at a distilled spirits plant registered with the Alcohol and Tobacco Tax and Trade Bureau in the U.S. Treasury Department. (Section 7.1) State law also imposes restrictions; in Wisconsin, a person cannot produce distilled spirits, or engage in any related activity, unless the person holds a manufacturer’s permit or rectifier’s permit issued by the Wisconsin Department of Revenue.
Can the person or company that manufactured the whisky sell the drink to customers? Generally, no. And not only are distilled spirits producers prohibited from selling alcohol directly to consumers (a retailer must participate), but also wholesalers must be part of the chain of sale (the so-called three-tier system).
What’s to keep a bar or liquor store owner from buying cheap whisky and trying to pass it off to customers as the good stuff? A few things: “It is unlawful for a person to alter, mutilate, destroy, obliterate, or remove any label or mark on distilled spirits that are held for sale in, or that have been shipped in, interstate or foreign commerce, except as specifically authorized by federal law.” (Section 7.109). In addition, “[i]ntoxicating liquor must be sold in its original container. It is a crime to do any of the following: (1) refill any original container previously used for intoxicating liquor containing 21% or more alcohol by volume; (2) dilute any intoxicating liquor for purposes of sale as undiluted intoxicating liquor; or (3) possess diluted intoxicating liquor or refilled original containers on the licensed premises of a liquor retailer.” (Section 3.130)
The information above is just the tip of the iceberg of what’s discussed in Alcohol Beverages Regulation (and yes, ice is mentioned, too: it’s one of the items excepted from the general prohibition on industry members selling or reselling items to retailers). Topics covered in the two-volume, 10-chapter treatise include brewers, wineries, and distilled spirits producers; retailers, wholesalers, out-of-state shippers, and importers; advertising; taxation; and administrative enforcement of state and federal regulations. The book contains hundreds of primary and secondary sources and provides links to many of the forms required for operating in the alcohol-beverages industry.
Aaron Gary is an attorney with the Legislative Reference Bureau and has been the drafter of the Wisconsin statutes regulating alcohol beverages for more than a decade. He has authored articles in the Wisconsin Lawyer about the Real ID Act, interstate alcohol shipping, and how to buy a liquor store or business with a retail alcohol beverage license.
Members of the State Bar of Wisconsin can buy Alcohol Beverages Regulation in Wisconsin in print for $219, plus tax and shipping. Current owners of the print book who subscribe to the State Bar’s automatic supplementation service will receive future updates at a 10 percent discount off the regular update price. Annual subscriptions to Books UnBound start at $149 per title and $769 for the full library (single-user prices; call for firm pricing). Current full-library subscribers to Books UnBound automatically receive this update. To order, or for more information, call the State Bar at (800) 728-7788 or (608) 257-3838.