On November 9, 2022, the Alcohol Tax and Trade Bureau (TTB) issued an Advance Notice of Proposed Rulemaking, the next step in the process requested by President Biden under Executive Order 14036 (“Promoting Competition in the American Economy”). The TTB seeks public comment on trade practice regulations, “tied house” laws, and more.
President Biden issued Executive Order 14036 in July of 2021, ordering the TTB to investigate anti-competitive effects of current alcohol rules and consider making, amending, or repealing any current alcohol rules with the intent to promote competition in the American alcohol market. The Department of the Treasury issued its findings through a report in February 2022. The Treasury identified a number of areas of concern that may contribute to anti-competitive practices in the alcohol industry, including certain restrictions on labeling and advertising and some rules restricting manufacturers and wholesalers from participating in retail sales. The report recognized the recent boom of “Craft” markets in beer, wine, and distilled spirits and noted that complex alcohol regulations, which effectively tempered the problems faced in the prohibition era, may be unintentionally inhibiting new or small businesses from entering the market.
The TTB recognizes that the trade practice regulations have not been revised in over 20 years and may struggle to account for current marketplace realities. Something else that’s just over 20 years old—the internet! As a result, the TTB has requested public comment regarding the current state of a number of regulations, including rules governing trade practices, competition, and the digital marketplace. The TTB concedes that certain “tied-house” rules, which aim to prevent manufacturers and wholesalers from unduly influencing the conduct of retailers, may be ripe for revision to reflect that certain industry conduct which (contrary to previous beliefs) does not effectively place retailer independence at risk. In terms of the digital age, the TTB has specifically asked for comments on the use of third-party companies for services like delivery, advertising, and sales and to what extent the TTB can amend its rules to address third-party services. The TTB is also open to considering whether certain minority interests in different tiers and to what extent might a member of one tier take an interest in a business at a different tier without creating a monopoly or exclusive effect.
Although the TTB listed 16 specific areas for which it seeks comments, the public is free to submit comments on any other concern related to the TTB’s trade practice regulations until March 9, 2023. This is a positive step forward in the development of the law to address the growth of alcohol sales through digital mediums. Also, there is an abundance of potential to address a number of trade practices and new business opportunities which have been unnecessarily prevented by outdated regulations. Alcohol laws are constantly attempting to balance the interests of growing businesses and opportunities with the need to promote public safety and temperate consumption. Adjusting to the digital age is naturally the next step in the process. TTB rulemaking on these subjects will be good for businesses and consumers alike.
The full TTB Advance Notice of Proposed Rulemaking can be found here.
To submit a comment, click here.
About the Author:
Rachel Lawson and the alcohol team at Dickinson Wright have the knowledge and experience necessary to navigate the complex regulations which govern the ever-growing alcohol market, particularly in relation to the booming digital marketplace. Rachel and her team have been tracking these issues, and are well-equipped to advise or submit comments on behalf of new or existing clients regarding this Advanced Notice of Proposed Rulemaking. For more information or to get your comment to the TTB, call her today.