And The Source Of The Pennsylvania Beer Stings Is…

…still not known. About two months ago, a few days after the initial raids conducted by Pennsylvania law enforcement officers on a small number of beer bars due to concerns over unregistered brands, I quickly put together a public records request designed to answer many of the questions raised by people both in and outside of the beer business regarding the whole affair. I frequently write FOIA and other information requests in my legal practice, so this didn’t require much additional effort. In its entirety, the request read as follows:

March 16, 2010

BY FACSIMILE

Open Records Law Officer
Bureau of Liquor Control Enforcement
3655 Vartan Way
Harrisburg, PA 17110

Dear Sir or Madam,

This is a request pursuant to the Pennsylvania Open Records Law. I am writing to request a copy of the complaint(s) or report(s) that lead to the investigation of the sale of unregistered beer brands that the Pennsylvania State Police Bureau of Liquor Code Enforcement undertook on March 4, 2010, at the Memphis Taproom, 2331 East Cumberland Street, Philadelphia, PA 19125, the Resurrection Ale House, 2425 Grays Ferry Avenue, Philadelphia, PA 19146, and Local 44, 4333 Spruce Street, Philadelphia, PA 19104. I would like to receive copies of the above requested records, do not request to inspect the records, and do not request certified copies of the records.

I have also enclosed a copy of the Open Records Law request Form. Please do not hesitate to contact me with any questions.

Sincerely,

Andrew Crouch

Enclosure

As the initial one week deadline for the government’s response drew near, I received a standard response saying that the department required an additional period of time in which to respond. The second deadline occurred while I was away on a recent trip to Cambodia, Vietnam, and Germany, so I didn’t have the opportunity to post the government’s response until now. So here for your review, as an example of how government works, is the response I received from the Pennsylvania State Police regarding my inquiry.

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The Philly Beer Raids, Part Deux…

With news that agents of the Pennsylvania State Police have visited/raided a local Philly distributor, Origlio (named 2009 Craft Beer Distributor of the Year by the Brewers Association, by the way), I finally looked at the governing laws for this growing fiasco. For starters, if you are a distributor or a brewer who works in the Philadelphia area, or frankly, anywhere in the state, you might want to have a gander at the Pennsylvania Liquor Control Board’s website. Say what you will about the agency’s involvement in the recent news, it offers a pretty detailed and accessible site for those it regulates. For starters, here’s the language at issue with the registration of beer brands:

SECTION 4-445. Brand registration

No brand or brands of malt or brewed beverages shall be offered, sold or delivered to any trade buyer within this Commonwealth unless the manufacturer thereof shall first submit an application in the form and manner prescribed by the board for the registration of the said brand or brands of malt beverages, together with an annual filing fee not to exceed twenty-five dollars ($ 25) for each brand registration requested. In the event an out-of-State or foreign manufacturer of malt or brewed beverages has granted franchise rights to any person for the sale and distribution of its brand products but which person is not licensed to sell and distribute the same in this Commonwealth, said such person shall nevertheless be required to register the involved brand before offering the same for sale in Pennsylvania. It is further conditioned that the person holding such franchise rights shall, together with its application for brand registration, file with the board copies of all agreements between it and the Pennsylvania importing distributor appointed by such person to sell and distribute the brands of malt or brewed beverages as provided by sections 431 and 492. Such agreement shall contain the manufacturer’s consent and approval to the appointment of the Pennsylvania importing distributor and the rights conferred thereunder.

And here is the required paperwork at issue, the Application for Malt or Brewed Beverage Brand Registration. The simple 1-2 page form should be filled out by the brewer in conjunction with the distributor (or better yet, by the distributor who likely has greater administrative resources).

In filling out the form, the brewer or distributor agrees, under signed affirmation, to keep the PLCB informed of brand changes and additions and to otherwise follow the state’s liquor code.

And while the retailer might have its stock confiscated for selling unregistered brands, the distributor is the one that should really be sweating in these cases as the penalties, adjudged through an administrative law process, for failing to get its brands registered could be a fine or suspension and revocation of its distribution license.

And, of course, the Board handily posts its daily list of registered brands in the state for all (retailers, distributors, brewers, and the public) to see. Of the 2856 brands registered ($214,200 in registration fees), there are inevitably going to be some mistakes. And now distributors are going to be sure and get them fixed as Pennsylvania appears to take a strict liability approach to violations. The penalty for failing to do so is just too high.

And by way of note, good for the PLCB in putting its administrative law decisions on-line. If you want to see how one of these cases pans out in the legal process, as this one likely will against the retailers and distributors involved in this case, check out this short decision.

On a lighter note, a quick perusal of this list turned up some notes of interest. My old favorite subject, the Old Dominion Brewing Company, ye of troubling history, has several brands represented in the state. And they are registered by…Anheuser-Busch, even though they are produced by Coastal, a joint venture with another craft brewery. Unless there has been a fundamental change in ownership in the last year that I have somehow missed, I wonder if the registration for these brands follows the letter of the law for identifying the producer.

-The above information does not constitute legal advice. If you have questions regarding the application and nature of the Pennsylvania Liquor Code, please contact an attorney.

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McCarthyism and Eliot Ness This Is Not…The Hysteria Over Beer Raids In Penn…

I’ve somewhat distantly followed the developing story/drama out of Pennsylvania following police visits/raids (everything has two distinct sides here) to a small number of beer bars in the Philadelphia area. Others are pretty worked up about the situation, which revolved around a report that the bars were selling beers that were not registered with the state, and for some understandable reasons. First, the caveats: I can certainly appreciate the argument that requiring breweries to register their brands with the state liquor board is not a particularly meaningful regulation, but I can also appreciate the role such registration lists play with respect to both taking in taxes and keeping track of products with an eye towards consumer safety. It’s not a particularly unusual practice and breweries certainly have to deal with odder state regulations. I can also understand the concern that these regulations discourage brewer creativity and increase the regulatory burden on them to have their products registered.

But with these points said, most of the accounts I’ve read tend to hit hysterical hyper-speed all while quickly glossing over the underlying facts, few of which appear to be in dispute. The Pennsylvania Liquor Control Board (PLCB) and the police apparently received a report(s) about bars selling beers that were not registered with the state. At least one of these bar owners acknowledged having run afoul of the law by procuring a keg from outside the state and driving it back to their bar and putting it on tap. Now this bar owner, and all others who frequently rotate their products, likely knows that a few of the brands they sell, especially specialty one-off releases, have not been properly registered with the state and that they are therefore violating the law in selling them. Someone, somewhere along the way, could very easily have noticed that a beer such as Pliny the Younger does not appear on the state’s list. Be it the distributor or the bar owner, rules are rules, stupid or not. And these bar owners know how heavily the beverage alcohol business is regulated and they well know the rules in Pennsylvania and they’ve cleared flouted them on occasion.

Now there is certainly another argument that the theatrical nature of the raids, from the undoubtedly one-sided reports we’ve been hearing, was over the top and that governmental (and certainly police) priorities could likely be better placed elsewhere. And there is without question room for criticism where the police confiscated beers whose names are somehow slightly altered from that found on the state’s lists and are actually lawfully registered. The parties, including distributors and breweries, should quickly work with the PLCB and the police to make these determinations, separate the violators from the properly registered, and return the stock

As usual, I don’t mean to be intentionally contrarian here. Instead, I’m just considering the full picture here. This situation will hopefully lead to a fuller discussion about the purposes of particular laws and state agencies and their relevance and responsibilities in a new age of craft beer (and spirits…and wine).

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Popping The Cap In Massachusetts? The 15% ABV Ban…

Late word coming through various channels today complaining that the Alcoholic Beverages Control Commission (ABCC) sent out an advisory to all wine and beverage licensees that they are prohibited from selling beers whose alcohol levels exceed 12-percent by weight (or 15-percent by volume). The advisory statement stems from a state law that defines malt beverages, in relevant part, as those products made with malt or cereal grains and fermentable sugars, resulting in alcohol levels less than 12% ABW. A beer exceeding this threshold is no longer classified as a malt beverage in Massachusetts, the practical effect of which prohibits many licensees who lack a liquor license from selling these products.

The advisory appears on the ABCC’s website.

Due to other, unrelated legal work, I haven’t had a chance to review the advisory or its legal underpinnings, including the General Law on which it is based. I hope to have something written up after I finish reviewing the materials. Until then, no Utopias for you…

Quick Update: I took a quick read of the statute and the administrative codes and it’s a bit of an oddity the legal status of beers whose alcohol levels exceed 12-percent ABW. They are indeed no longer considered malt beverages under the law and therefore cannot be sold by certain licensees (both on and off-premise) who only possess a beer and wine license. On the other hand, the law does not appear to preclude their sale within the Commonwealth to establishments that possess full alcoholic beverage licenses. So this is not a Pop the Cap situation, more like a share the wealth complaint.

As local distributors scramble to take back expensive Utopias purchases, looks like the pool of available high-alcohol beers just grew a little for enterprising stores and bars.

Another interesting sidenote is how this advisory will affect beer festivals in the state. The venues hosting the events would conceivably be required to possess a full alcohol license before allowing attendees to pour high-alcohol beers at their locations.

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