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dhdunbar

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Everything posted by dhdunbar

  1. dhdunbar

    COLA for Products in Individual Boxes

    Try this for a definitive answer. It is a matter of knowing that the key word for which to search is "carton." §5.41 Bottle cartons, booklets and leaflets. (a) General. An individual covering, carton, or other container of the bottle used for sale at retail (other than a shipping container), or any written, printed, graphic, or other matter accompanying the bottle to the consumer buyer shall not contain any statement, design, device, or graphic, pictorial, or emblematic representation that is prohibited by §§5.31 through 5.42 on labels. (b) Sealed opaque cartons. If bottles are enclosed in sealed opaque coverings, cartons, or other containers used for sale at retail (other than shipping containers), such coverings, cartons, or other containers must bear all mandatory label information. (c) Other cartons. (1) If an individual covering, carton, or other container of the bottle used for sale at retail (other than a shipping container) is so designed that the bottle is readily removable, it may display any information which is not in conflict with the label on the bottle contained therein. (2) Cartons displaying brand names and/or designations must display such names and designations in their entirety—brand names required to be modified, e.g. by “Brand” or “Product of U.S.A.”, must also display such modification. (3) Specialty products for which a truthful and adequate statement of composition is required must display such statement.
  2. dhdunbar

    COLA Help for Blended Whiskey Products

    I consult on TTB matters and a consultant I avoid both labels and formulas. My reason is simple. I want to keep my hair! I can tell you what the regulations require, but I can't tell you what a specialist may say is required (and I can be wrong too, but ...). Next, I could never estimate how much time I would need to spend to get things straight and you would not want to pay me what I would charge to do that if we ran into the sorts of problems that can often arise. It is best if you can fight the fights yourself. Conisder what the following would cost, and which I offer here because I hope it is of general interest. You state that you want to blend a bourbon and a rye whiskey. I would prefer that you say mix the bourbon and rye. It avoids confusion with standards. "Blend" is a rabbit hole. Blended whiskeys are standard of identity products. Although the standards are ostensible a way of informing the consumer, they confound even the experts. Too many bottlers have too many problems too many times when seeking a COLA. Okay, so get out the Excedrin. As you may know, there are two standards that use the word blend. They are: A blend of straight whiskies (blended straight whiskies) is a mixture of: Straight whiskies which does not conform to the standard of identify for “straight whisky.” Now, if the bourbon and the rye both qualify as straight whiskeys, but the mixture does not - that is how I read the curious straight whiskeys that don't confrontation to the straight whiskey standard language, because anything else is nonsensical, then you have a blend of straight whiskeys. That is the answer to your question. But if they don't, then what you mix is not a blend of straight whiskeys. Next, stripping out some embedded phrases that complicate, blended whiskey is a mixture which: Contains straight whisky or A blend of straight whiskies at not less than 20 percent on a proof gallon basis ... and, separately, or in combination: whisky or neutral spirits. Blended whiskey must have straight whiskey and also must have either whiskey or neutral spirits, or both whiskey and neutral spirits. So if the bourbon is straight and the rye is not, then you have a blended whiskey, which to some means it has NSG, but it doesn't necessarily mean that.. Next - , this is not clear, but TTB's new regulations want to make it clear - if a spirit conforms to a standard, then you must use that as the standard on the label. So, if it meets the standards for either a blend of straight whiskey or blended whiskey, you so designate it. But if it doesn't? Look, it is obviously whiskey. So we start to eliminate. It is not bourbon or rye (unless the 51% requirement for corn and rye respectively is somehow realized in the blend - and then I'm not sure, if we could say that there has been no change of class and type in the spirit that comes in at 51% or more - it is not whiskey distilled from either mash, it is not light, or spirit whiskey and it sure as hell isn't Scotch or Irish or Canadian, so guess what, if it isn't entitled to one of blended designations, then it is just plain whiskey - what else is left? It is an alcoholic distillate from a fermented mash of grain produced at less than 190° proof in such manner that the distillate possesses the taste, aroma, and characteristics generally attributed to whisky, stored in oak containers (except that corn whisky need not be so stored), and bottled at not less than 80° proof. And you tell the story of your mixture in the text that you add. I don't have the energy to fight that fight with AFLD. But I think I am correct. TTB may not agree. And I can guarantee, they don't care what I think!
  3. Please remember that I am neither a tax attorney or someone who specializes in the rudiments of business acquisition, etc... I'm just someone whose been around for awhile and seen a few things. That does not make me immune form being blind to a lot of others. 1. The company may have existing, undisclosed liabilities. These may be either to other businesses,e.g., unpaid bills, or to a government, e.g. unpaid taxes, or to employees, e.g. unpaid taxes; or might be involved in litigation or potential litigation. 2. An attorney should be able to advise you how to protect yourself, and whether you can protect yourself against such contingencies. 3. In fact, you should look to the attorney for guidance on what contingencies you need to anticipate. When I conduct interviews, I would often end it with, "Is there anything I should have asked you that I have not?" With your attorney, the primary question should be, "What should I ask you?" 4. Speaking about things of which I do have knowledge: A business which is being sold is being sold for a reason. One of the reasons can be that it is that it is not profitable. even if you think you can turn it around, one of the result of loses or not much profit, etc, can be a "delay" in paying excise taxes. Have they been paid; were all taxable events reported, etc... Eight year old bourbon has one value, three year old another, and a one year old generic whiskey still another. Can the seller demonstrate, by the records it has kept, that the eight year old bourbon is entitled to that designation and does not need to be labeled as whiskey not more than three days old. You want to pay only for what you get and you get only what the seller can prove by its records. Does the seller have records that support the entries on the operating reports, i.e, do the records reflect all of the changes in proof gallons that appear on the operating reports, which give rise to the book inventory shown on the operating reports. Next, does the book inventory exist? You need to make an inventory prior to sale. You should do this, with the proprietor, and if bulk spirits are involved, with someone, other than the proprietor, who can use a hydrometer and knows how to determine volume. Does that agree with what the last TTB operating reports show, reconciled for transactions that have occurred since that report was prepared? You should also take another inventory at the time of sale to make sure there have not been any last minute, unreported removals :-). Remember, the LLC is responsible for the taxes for any spirits for which it cannot account, and the LLC is going to be you and any other investors. Does the seller have label approvals for all of the labels it is using and has used? I'm sure that that list is not exhaustive, but it should give you and others who might be considering a purchase, a place to start. If you decide to buy the assets and so not assume the liabilities, ask your attorney about sales taxes in Washington. I sent you a link on that, I think. Finally, don't rely on what I'm saying being accurate. Get more than one opinion. That is general advise I offer to everyone here for free. For more specific advice about TTB matters, contact me by PM and we can discuss how I might be able to help you.
  4. dhdunbar

    Reporting distilled spirit specialty

    Yes, report it as alcohol under 190 unless it meets the standard of identity for some other product. I could give a better answer if I knew how you were producing a specialty by original distillation. Perhaps maceration of the distilling material or distillation over substances that don't qualify the distillate for designation as gin. TTB's formulation people answer questions like this. And if they give the wrong answer, you've got cover.
  5. If you purchase the assets, the federal permit (and I'll wager dollars to donuts the state licenses and permits too) cannot be transferred legally. If the federal permit is transferred , itd is terminated by terminated by operation of law, which means without TTB having to take any action, the permit is invalid immediately upon the transfer (or your starting to operate the business) . So, the sellers permits have no value, because you cannot use them (See §1.44). You first must qualify on your own to distill before you can start using the assets you purchased to do so., Further, the seller cannot sell or deliver, to you, the bulk spirits (spirits in containers of more than one gallon) because you are not eligible to receive them (see §1.80 and following). Additionally, if you purchase the packaged spirits in containers of one gallon or less, for the purpose of reselling them, and you do not have a basic permit as a distiller, you will first have to have a basic permit as a wholesaler. See §1.22. If you purchase a majority interest in a limited liability entity (corporation or LLC), which then continues to operate the DSP, you have a change in control and the permit terminates, but if you apply for a permit within 39 days of the date of the change, the LLC can continue to operate on the existing permit until TTB takes action on the new application (see §1.42 and 1.44). Remember, if you buy an interest in an existing entity, then you also inherit the entities liabilities. I would not make such a purchase without contacting an attorney and seeing what precautions you might be able to take to ensure that the seller has disclosed all existing obligations. See, for example, https://dor.wa.gov/get-form-or-publication/publications-subject/tax-topics/buying-assets-business. Get competent legal advice. I can point out questions you should ask; I cannot provide answers to those question. Where your proposed transaction falls under the provisions of parts 1 and 19 is going to be case specific. I've just described the general rules. I do not know the WSLCB rules. If you elect to operate in the same space,. you should have some assurance that the local authorities do not object to the location and construction and that you meet fire codes, etc., but nothing is ever assured just because it was approved once. Listen to what those who are in the business say; they know more about those issues than I ever will or want to. Then do your own due diligence. Don't buy blue sky that is overcast and grey :-). And keeping with that metaphor, don't drive in a fog so thick that you can't see where you are going.
  6. dhdunbar

    Thoughts on Quinoa

    My son owns goats. They love everything. The cartoon tin can is apropos. As a side comment, if any of my clients want to try quinoa, I'll refer them to this. As usual, James, you've written something interesting, even to someone who doesn't know squat about distilling. "-)
  7. dhdunbar

    Amendment Management - Transfer In Bond

    I understand that transfers in bond can be important, but ... I recommend that you not terminate any application that you have pending that involves reportable changes in principals. UisceChuck's advise on how to withdraw is sound. I just question whether you want to use it. Here's why: If you had need to report the changes, then you should not withdraw the application. That has consequences. Some changes in LLC members result in what TTB dubs a change in ownership and control. That requires a new permit. Here is the pertinent regulation, in full text, which I will parse, bullet style, for clarity: §1.44 Automatic termination of permits. No basic permit shall be leased, sold, or otherwise voluntarily transferred, and In the event of such lease, sale, or other voluntary transfer, such basic permit shall automatically terminate thereupon. If any basic permit is transferred by operation of law or If actual or legal control of the permittee is acquired, directly or indirectly whether by stock ownership or in any other manner, by any person, Then such permit shall be automatically terminated at the expiration of 30 days thereafter: Provided, That if within such 30-day period application for a new basic permit is made by the transferee or permittee, respectively, Then the outstanding basic permit shall continue in effect until such time as the application is finally acted upon. That does not mean that TTB will act on the automatic termination provision. My experience is that they often ignore it when a change is reported after the 30 day window has lapsed. I've not personally had a problem with it, when helping clients, so I don't want to be alarmist, but I do see mention of offers-in-comprise, etc, for operating without a permit, which is what happens when you continue to operate after the permit is terminated by operation of law. Someone once told me that we should make a distinction between complicated and complex. Complicated can be taken to mean "hard to understand, but if you understand it you can predict what will happen." Complex can be taken to go beyond that, to involve things like chaos or, say, ,as is consistent in the case of dealings with TTB, what a human will do in reaction to the situation presented. Therefore, I can not predict the consequences of missing the 30-day window. Generally, there are none. Potentially, there are. So, my advice to clients is to report changes within the window,. When they have not, i recommend that they submit the application, truthfully state the date of the change, and see what happens. Important - Report changes before TTB finds them on its own. That is when it seems most likely to apply the automatic termination provision. I have to attach here, a statement that I am not an attorney and this should not be construed as legal advice. You should contact your attorney with any concerns you may have.
  8. Barley, if this message was for me, I tried to P:M. The system tells me that you can't receive messages. I'm inept at things like that. Email me at dhdunbAr1@gmail.com if the message was for me. Otherwise, have a nice day :-).
  9. Questions of why have no answer. But you ask how? The law dates to 1935. It replaced some codes - voluntary codes of fair competition - that had been established under the National Recovery Act, which had been deemed unconstitutional. The voluntary codes of fair competition were instituted at the end of prohibition. The FAA Act as proposed was largely modeled on those codes. Two sections of the FAA do apply to producer-distributor relationships. They are the consignment sales and commercial bribery provisions. Exclusive outlet and tied house provisions do not. The tied house provisions, as first introduced, addressed ties between industry members (wholesalers and producers) and retailers. The stated purpose was to prevent "those evils" that had led to prohibition. Industry favored them because regulation tends to legitimize activities about which the public otherwise might have some doubt. The Senate's finance committee report stated as follows: The House bill (sec. 5) prohibited two classes of trade prac- tices. The first class of these prohibited practices were those which tended to produce monopolistic control' of retail outlets, such as arrangements for exclusive outlets, creation of tied houses, commercial bribery, and sales on consignment or with the privilege of return. The reports of the National Commis- sion on Law Observance and Enforcement (Wickersham Com- mission) and of other agencies that conducted surveys of liquor enforcement problems, all indicated that control by producers and wholesalers of retail outlets through the various devices such as those prohibited by the bill has been productive not only of monopoly but also of serious social and political evils which were in large measure responsible for bringing on prohibition. The bill seeks to prevent the recurrence of these evils in the fields that cannot be reached by the States, provided the evils occur in interstate commerce or reach such an extent in the par- ticular case that they constitute a substantial restraint on inter- state commerce or deterrent to the free flow of interstate com- merce in distilled spirits and wines (S. Rept. No. 1215, Federal Alcohol Control Act, pp. 6 and 7). So that is the how of it. See what you get when you ask a wonky question of a wonk :-)! You can find this in the Legislative History of the Federal Alcohol Administration Act., which is available, online, on TTB's website. https://archive.org/stream/legislativehisto00unit/legislativehisto00unit_djvu.txt
  10. Re federal law: I should have cited chapter and verse on this because I insist that no one rely on information for which authority is not cited. I get lazy sometimes. Since the issue of trade practices is one of common interest to many, I'll address it in a bit more detail. §6.21 Application. Except as provided in subpart D, it is unlawful for any industry member to induce, directly or indirectly, any retailer to purchase any products from the industry member to the exclusion, in whole or in part, of such products sold or offered for sale by other persons in interstate or foreign commerce by any of the following means: (a) By acquiring or holding (after the expiration of any license held at the time the FAA Act was enacted) any interest in any license with respect to the premises of the retailer; The regulation goes on to elaborate on the prohibition. 6.25 General. The act by an industry member of acquiring or holding any interest in any license (State, county or municipal) with respect to the premises of a retailer constitutes a means to induce within the meaning of the Act. [T.D. ATF-364, 60 FR 20421, Apr. 26, 1995] - Tip - this citation tells you where to look for the authority for the regulation. In this case it is a treasury decision issued in 1995, which you can find by searching the internet if you are so inclined. Such citations appear at the bottom of most sections of the regulation. It is where you can go to dig deeper into the issue. §6.26 Indirect interest. Industry member interest in retail licenses includes any interest acquired by corporate officials, partners, employees or other representatives of the industry member. Any interest in a retail license acquired by a separate corporation in which the industry member or its officials, hold ownership or are otherwise affiliated, is an interest in a retail license. 6.27 Proprietary interest. (a) Complete ownership. Outright ownership of a retail business by an industry member is not an interest which may result in a violation of section 105(b)(1) of the Act. (b) Partial ownership. Less than complete ownership of a retail business by an industry member constitutes an interest in a retail license within the meaning of the Act. Although less than complete ownership of a retail business by an industry member constitutes an interest in a retail license within the meaning of the Act, it is merely a proscribed inducement. Remember, the "if" provisions of §6.21. A violation only occurs if the jurisdictional elements, exclusion and interstate commerce are also present as a result of the proscribed inducement. Interstate commerce is usually easily proven. But exclusion is a thorny issue. It makes for court cases. §6.151 Exclusion, in general. (a) Exclusion, in whole or in part occurs: (1) When a practice by an industry member, whether direct, indirect, or through an affiliate, places (or has the potential to place) retailer independence at risk by means of a tie or link between the industry member and retailer or by any other means of industry member control over the retailer; and (2) Such practice results in the retailer purchasing less than it would have of a competitor's product. So, not only must the proscribed practice threaten independence, it must also result in the retailer the retailer purchasing less than it would have of a competitor's product. Section 6.151 goes on: (b) Section 6.152 lists practices that create a tie or link that places retailer independence at risk. Section 6.153 lists the criteria used for determining whether other practices can put retailer independence at risk. 6.152 Practices which put retailer independence at risk. The practices specified in this section put retailer independence at risk. The practices specified here are examples and do not constitute a complete list of those practices that put retailer independence at risk. (a) The act by an industry member of resetting stock on a retailer's premises (other than stock offered for sale by the industry member). (b) The act by an industry member of purchasing or renting display, shelf, storage or warehouse space (i.e.slotting allowance). (c) Ownership by an industry member of less than a 100 percent interest in a retailer, where such ownership is used to influence the purchases of the retailer. (d) The act by an industry member of requiring a retailer to purchase one alcoholic beverage product in order to be allowed to purchase another alcoholic beverage product at the same time. Because of the substantial the burden of showing that someone purchased less of a competitor's product than it would have absent the proscribed inducement, the federal government generally devotes its limited resources for trade practice enforcement to only the most egregious cases. That is why, if you look at the offers in compromise and other administrative actions that TTB has taken, for violations of the trade practice provisions, you will see that they are large beyond the ability of any small industry member to pay. Of all of the acts listed that are deemed to put retailer independence at risk, the one of most danger to small producers is the paying of a slotting fee (§6.152(b), probably indirectly, through payments made to a wholesaler, in support of the wholesalers's efforts, through payments the wholesaler makes to the retailer, to get products onto the shelves of the retailer. Because slotting fees are common in many industries, they are ingrained in the retail business model. They just happen to be prohibited in the case of alcoholic beverages. And if a large industry member is making them and you are contributing to them, you could get caught up in them. But the chances of that ...... As you can probably deduce from the above, answers about the likelihood of a practice resulting in a violation of federal trade practice provisions are very (a word I try not to use "very" often) case specific. In the case of inducement, which can only take place in the head of the person making a purchasing decision, it is impossible to for a governmental agency to predict, in advance, if the proscribed payment or service will have the desired effect. But I suspect that you would not make it if you did not have reason to believe it would get you what you are seeking from it. The burden is then on the government to prove you were right. The risk of their doing so is yours. Being small reduces that risk, but not to zero.
  11. Husband and wife are of no consequence under federal law. They may be under state law. Texas law is draconian. Re: Federal law - The federal tied house regulation prohibits holding an interest in a retail license, not a wholesale license. And it does not prohibit 100% ownership of a retailer, since the a violation only results if the ownership induces the retailer to buy products to the exclusion of products offered for sale by others in interstate commerce. The legal theory is one cannot induce oneself, so 100% ownership is not prohibited. People mistakenly think that the federal law protects the three tier system. It does not. Consider all of the wholesale operations that are owned by ABInBbev, for example, which for a time, at least also held an interest in retail outlets at places like Sea-World, in which it held an interest. I do not know how that stands now.
  12. dhdunbar

    Form 5100.16 Download Glitch

    If you submitted your application using permits online, then you must submit transfer in bond applications using permits online. You do this as an amendment to the existing registration.
  13. Of course, the employees are not getting paid, either. It isn;'t like TTB has declined to provide service. They are forbidden to provide it. That is a bit of a difference :-). I can add a smiley face, but if I were a TTB employee who needed to make a mortgage payment, it would be :-(, just as it is for those who need their services to do business.
  14. Indyspirits sums it up. No one is authorized to act contrary to law just because the government is not functioning and cannot fulfill its responsibilities. My advice - file the label approvals now, so that you are in the queue when the gates open. And do as Silk City says, let your congressman know that the impasse has an effect, but also send a comment to the White House, because whoever you hold to blame, the shutdown is not without consequences for many of us.
  15. If the friend needs so advice on federal regulation, have her contact me. I'll chip in for what it is worth.
  16. dhdunbar

    State Excise Tax

    This is a state by state rule that cannot be generalized. How can I stress this enough - ask the state taxing authority! They will be glad to answer the question and do so correctly. I'll bet its a per gallon basis, not proof gallon basis, unless it says proof gallon. BUT I DON'T KNOW THAT. So I'm starting 2019 with screaming capitals. Ask the state. They will tell you. Silk City points out that in most states the wholesaler is the one who pays the tax, unless you are acting as the wholesaler, or are selling at retail through a tasting room. But you still need to consider the tax because of the mark up that the wholesaler and retailer will take on the product. What shelf price do you want? You need to know the tax and the markups. And I'd say that as a general rule, if you want to sell for about $27.00 a bottle, you would be much better off at $26.98 than you will be at $27.02. Here, your wholesaler should be able to tell you the target price to the wholesaler to get the shelf price you are looking for.
  17. dhdunbar

    Changes to CFR

    We need to get on the same page with our understandings of what the regulation requires and what it does not. The standards of identity for all whiskey, except whiskey designated straight whiskey, do not require that the product have any particular age. That has been proposed in the past and rejected by the government. The last time of which I am aware was 1968. After a notice of proposed rule making and a comment period, the government issued Treasury Decision 6945, which was published in the Federal Register for January 26, 1968. It addressed four issues decided by that ruling and the government’s rationale for its decisions. Those rulings reflect the government views on the effect storage in oak has on the character of whiskey. Because these issues were decided after hearing, they establish clear precedent for any future decisions concerning the whiskey standards. They come with regulatory inertia. They should not be ignored. In discussing the issue of new versus charred oak, faced with Scotch and other whiskey matured in used oak, the government focused on the proof of distillation standard. It found, "charred new oak wood is necessary to properly mature these types of whiskies distilled not in excess of 160° proof.” It held, “Reused cooperage does not provide the char and proper balance of wood extractives to mature and develop such whiskies in the traditional manner.” It then concluded that removing the requirement that products designated bourbon, wheat, rye, and malt whiskey be stored in charred new oak would “would facilitate the production of whiskies to be marketed as bourbon, rye, etc., or "straight" whisky which generally lack the distinguishing characteristics of such whiskies,” which, it concluded, would not be in the interests of the consumer. Now, if you look to the standard of identity for the American type whiskeys (those of the type designated bourbon, rye, malt, wheat and oat whiskey) that the government was addressing, you will that it does not require a minimum period of storage in those sanctified new oak containers that the government "deemed necessary to properly mature" them. It requires storage in new charred oak. It does not specify for how long. Age is a separate matter. The standard of identity appears in §5.22; the age requirement appears in §5.40. Age is a shell that is placed over the standard. Age is defined for the whiskeys in question, as the time spent in new charred oak containers." Two petitioners had requested that the government establish a minimum period of storage in new charred oak for these whiskeys. One asked that the minimum be two years; the other asked that it be four year. Now, It would seem that the government, buy its insistence on the necessity of contact with new charrred oak, had created its own hurdle to denial. Surely, if contact with new charred oak is necessary to mature a whiskey, then it follows that there must be some minimum necessary period of contact to accomplish the transformation into a mature whiskey. De minimis contact of, say, thirteen seconds, or even 13 days, and probably 13 weeks, and for some 13 months, is not going to properly mature a whiskey right off the still. The government's own "necessary to properly" maturity criteria screams for some time in the barrel standard. Yet the the government rejected this proposal. If it could not clear the hurdle it had constructed, it could walk around it by declaring a no harm no foul rule. And so the government gave two reasons for not requiring a minimum time in the barrel for whiskey designated bourbon, rye, wheat, oat or malt whiskey. First, the government argued that the proponents had not established a need for a minimum age requirement for “current domestic types of whiskey,” because,.it argued, “there are no appreciable amounts of immature whiskies currently being sold.” It went on, “Although some whisky is being offered at less than two years of age, this is, in the main, corn whisky.” Second, the government said, "In any event, the present regulations protect the consumer by requiring all whiskies less than four years old to bear a true age statement.” And with that the government left the barn door open. Well, times change. TTB, which used to have staff to enforce, no longer does. And the glut of aged whiskeys that was around in 1968 no longer is. So, if you want to argue in favor of a minimum time in the barrel for some types of whiskey, as some do here, then their best approach is to hoist the government on its 1968 petard. Blow up its justifications for not requiring a minimuy tiome in the barrel. Argue that the situation has evolved. Argue that the need to mature has not changed since the government described it, so well, in 1968. Point out that the only reasons the government gave for not imposing a time in barrel standard was that there was little immature whiskey in the market and that the age statement acted to inform the consumer. Then point out that both those justifications are flawed today. Argue that, whatever may have been the case in 1968, that is not the case now. Argue that immature whiskey is common. Argue that, if the government cannot enforce the requirement for an age statement, it can enforce a different requirement. Propose that before the government approves a label for a whiskey for which it has deemed contact with new charged oak necessary to mature properly, the bottler must submit, with the label approval, a formula showing the minimum time in new charred oak was four years or more if there is no age statement. And for straight whiskey, require a formula that shows two years of more in new charred oak. Require a statement that the person submitting the label affirms that they understand the age requirements and that violations of the age requirement will be considered willful and will put the permit at risk. Argue that not to do so facilitates "the production of whiskies to be marketed as bourbon, rye, etc., or "straight" whisky which generally lack the distinguishing characteristics of such whiskies,” which, as the government concluded in 1968, is not in the interests of the consumer. Now, this is not a part of the proposals that TTB has put forth in the notice, so it is unlikely that they will take action on time in the barrel requirements this go around, but you can make these arguments in support of rejecting the ludicrous 53 gallon - cylindrical standard they want to impose on barrels. There are better arguments against that definition of barrel, and I will make them, but it is a back door into getting comments on "time in the barrel requirements" on the record. NPR's of the sort the government has put forth open the doors to other changes. Look, sometime, at the way viticultural areas came to permeate wine marketing.
  18. dhdunbar

    Spirits Case Labels

    Multiple choice: (a) Very few people get audited. :-). (b) What an auditor looks at depends on the scope of the audit, which might not include looking at the case labeling :-). (c) The auditor may not care about case markings and uses independent judgement :-). (d) TTB has so many problems that it doesn't want to have to deal with minutia :-). (e) All of the above. Important - TTB gets to pick what it looks at when it visits. It gets to say what is important and what is not. For example, however obvious it may be, you do not get to decide if paying taxes is more important than putting a serial number on a gauge record. TTB can look at whatever it wants. It can cite "picky" violations. You just don't know what it will do. If you do your best to comply, TTB will see that. Trying matters to them.
  19. dhdunbar

    TTB Locks - 27 CFR 19.192

    You are asking for comments from persons who have had visits from TTB. I would like to hear that as well, but the lock requirement is generally not enforced because, in my opinion, it does not apply to entry doors, etc. Iy is meant to apply when you secure tanks with locks. I know of no instance in which TTB has taken exception to the lack of padlocks on doors. If you have locks that adequately protect your assets, then you will have locks that protect TTB's interest in the revenue. That said, if you secure a garage door with a padlock, I think it should be one of the type described in 19.192(f). Remember, I am not TTB and I do not pretend to answer for them. I speak only from my experience. If you want to know, ask TTB, but remember the adage about letting sleeping dogs lie.
  20. The issue of barrels has been central to arguments about whiskey since the Pure Food and Drug Act of 1908. Barrels were debated by congress when it passed the FAA Act, were the subject of hearings in 1936, 1939, 1947, and 1968 - that's off the top of my head and the years may be wrong - and now once again. If you want to argue convincingly, it would help to know that history. Look to what the Distilled Spirits Counsel says and be prepared to use or rebut that. The large producers do not have a unified agenda. Divergent economic interest have been central to the debates from 1908 forward. Interesting times. I really don't have the time to dig deeply into this. You guys may want to divide and conquer - get your heads together and divide up the research. Then put it all together into a cogent argument, if you can agree on what the answer should be, because I know of some craft distillers who hold that small barrel strategy is not the way to go and others think they need them to create cash flow. If someone wants to do the research, PM me and I will try to find the Treasury Decisions, etc that create the historical record of how TTB has arrived where it has.
  21. They are seeking comments. You should make comments. Radical changes can take place when issues are opened for examination, like, oh someone asks for a definition of "north coast" as used on labels of California wine and holy smokes suddenly you have vitacultrual areas. Stay alert and look at the comments that TTB receives. You can find them at: Docket No. TTB–2018–0007 at Regulations.gov. For me, this works as a direct link to the comments: https://www.regulations.gov/docketBrowser?rpp=25&so=DESC&sb=commentDueDate&po=0&D=TTB-2018-0007 There are only five comments to date. Here is one that specifically address barrel size: Comment The proposed rule for defining an "oak barrel" as having a capacity of 50 gallons is arbitrary and is unnecessarily restricting for defining categories. Spirits which have been in a smaller or larger cask can reasonably acquire the flavor and appearance of spirits in 50 gallon casks. Smaller producers use the smaller casks to produce spirits that are in line with the categories and opposition to their use is SUBJECTIVE and should not be a basis for rule making. Note that the comment includes the name of the person making it. I did not. But if you comment, persons will know. You can also sign up for notifications when new comments are received. I didn't do that. I think it will avalanche. Look for what the Distilled Spirits Counsel says when its comments hit the site.
  22. dhdunbar

    Changes to CFR

    It occurs to me that I've said a lot about what you might want to do, but not much about how to do it. My fault. To view the proposed rule and any comments related to this proposed rule, go to Docket No. TTB–2018–0007 at Regulations.gov. To comment on our proposals electronically, use the Regulations.gov comment form for Notice No. 176. To submit comments by mail or hand delivery, see the instructions in the proposed rule. You also may view the proposed rule as published in the printed Federal Register or as posted online at Federal Register 2.0. Here is a link to the Treasury Decision. https://www.gpo.gov/fdsys/pkg/FR-1968-01-26/pdf/FR-1968-01-26.pdf It is a slightly jaundiced pdf print of a microfilm copy. Those with access to HeinOnline can probably get a clearer copy, but at a subscription price, unless you have access to a library that subscribes to the service.
  23. dhdunbar

    Changes to CFR

    The NAS issue exposes the kind of battles that are going to take place. If you have an argument you want to make, making it here does no good. You need to submit a comment to TTB through the portal it provides to do so. That can make a difference. That is the message I am preaching. I don't have a dog in the NAS fight, so I don't personally care how TTB rules. For some people whiskey is a religion, for others it is a way to make a buck, and for some it is a way they can use religion to make a buck. I've had clients of each of those stripes and I don't make judgements. They are all valid, but maybe that is because I'm not religious about it, and maybe it is because I make a buck because some people are. I insert here, the mandatory smiley face, to say I'm jesting, but ... For me, personally, it is a matter of drinking Redbreast Irish whiskey - yes Roger, I turn to what I know I can rely on, which is the heart of your argument - when I drink whiskey and feel happy about it. But, If you want to comment effectively, you should know the history of the whiskey standards. Indyspirits, you are right, NAS does work for Scotch, and Roger, you are right, it works because the minimum age is build in and enforced. But how many of you know that the government has built a wall between American type whiskey, and Scotch, Irish, and Canadian products. It has officially held, "The mere desire to conform American regulations to those applicable in foreign countries is not sufficient justification for imposing the proposed limitation." At the same time, TTB - well the IRS at that time - addressed all sorts of whiskey issues beyond age. I refer all of you to Treasury Decision 6945. It is something anyone who wants to understand how the rules were written needs to read. Here are my summary notes, written for myself, on the age issue: First, the government argued that the proponents had not established a need for a minimum age requirement for “current domestic types of whiskey.” It argued, “There are no appreciable amounts of immature whiskies currently being sold.” It went on, “Although some whisky is being offered at less than two years of age, this is, in the main, corn whisky.” It goes without saying that the conditions then are not the current conditions. Whiskey less than two years old is now common. But the government then argued, “In any event, the present regulations protect the consumer by requiring all whiskies less than four years old to bear a true age statement.” Those requirements remain, and nothing I see in the public record indicates that TTB sees a need to revisit So, the last stated position would seem to be that, even if there are many whiskeys that are less than two years old on the market, the consumer is still protected by the required age statement. That, of course, presumes that bottlers are including the required age statement. And here is what the government concluded from all of that: "The proposal to establish a minimum age requirement for whiskies is rejected. It is preferable to permit the consumer an adequate basis for the selection of whiskies (even immature ones) than to limit his choice by banning them from the market. The mere desire to conform American regulations to those applicable in foreign countries is not sufficient justification for imposing the proposed limitation. We are, I think, well past the "mere desire to conform" argument. The argument that there are no appreciable amounts of what the government itself chose to call "immature whiskeys" being sold is certainly subject top challenge. I refrained for saying that it is absurd. The ability of TTB to enforce the age statement requirement to protect the consumer - which is the holy grail under which it marches, even if economic interests probably come to play a far greater role in the decisions it makes - is also subject to challenge. And, given those circumstances, I conclude that the bucket that carries the water of the consumer being best served by not requiring a minimum age, at least for bourbon, rye, wheat, and malt whiskey, leaks through as many holes as Swiss cheese. Roger sees, in that, a danger to the reputation of craft. I think most would agree. The locavore impetus that is driving experimentation, etc., is in no way guaranteed. So, if I had a horse in the race or skin in the game - chose your idiom - , I'd be asking, "How, given the history of the regulation, can you plug the damned holes? Chuck Cowdery once cautioned, for good reason, that writing regulations is not for amateurs. It is true, , but it should not prevent you from expressing your concerns and pointing out the need for those who write them to find solutions to problems that regulation, and the government's lack of enforcement ability, are creating. When it comes to the issues that affect small distilleries, TTB is the amateur, not you. They need your input.
  24. dhdunbar

    Changes to CFR

    If only it were so. I agree that a user fee can generate the funds needed to regulation. I also agree that the solution is trivial once you arrive at it. The catch is that TTB cannot charge fees that it is not authorized, by law, to charge. So the trivial solution is only trivial if the industry lobbies congress to authorize fees and congress does it, the idea of which requires a smiley face :-). Such a fee used to exist. "Once upon a time" there was something called a special occupational tax (there still is on some occupations), which was a fee that was paid to the general fund, but which worked to cover some of the costs associated with regulating an industry that wanted to be regulated, to protect against, say, persons who make the industry look bad by not putting an age statement on something that has barely rubbed shoulders with oak.. But it was a tax, so it was eliminated. Congress could also authorize imposing a fee for permits and registrations, etc. But again, TTB can't just do it. As I understand it, The FDA found itself in something of the same position with GRAS determinations. Niche players want to use all sorts of ingredients not heard of before. Think about the exotic gins that pop up with extracts from an obscure desert plant indigenous to a small area in upper wherever. The onslaught of applications for GRAS determinations was costly - too costly to sustain, since the FDA did not impose a fee to do the research required to declare an ingredient GRAS. So out of what I think was desperation, if nothing else, the FDA now lets persons declare ingredients GRAS on their own, but only if the persons conduct tests with the same rigor that the FDA would have done if it were doing them. I have no idea how that venture into self-regulation is going. Perhaps it is going better than TTB's unintended experiment in letting people self-regulate label claims, which Roger argues, if I may put words into his mouth, is akin to letting some people with drills punch holes in a ship that was lifting all on the rising tide of craft. I'm walking on the thin ice of political statements and controversy,. I know that. But when TTB undertakes a major revision to its labeling regulations, which will influence how it regulates label claims, for the foreseeable future, it becomes a political exercise. We may disagree on the issues, but if you want a say in how spirits are marketed for the next 20 years, now it is time to speak up. Major players have power, and they will use it, but if enough small businesses band together, they exert more power. Don't underestimate the pressure you can bring to the table on this.
  25. dhdunbar

    Spirits Case Labels

    Well, you give a lot of examples, but try this for the definitive answer 🙂: Sec. 19.483 Specifications for marks. (a) Basic requirements. A proprietor must place the marks prescribed by this subpart on cases, encased containers, and packages of spirits and denatured spirits so that they are: (1) Of adequate size to be easily read; (2) Of a color in distinct contrast to the color of the background; (3) Legible; and (4) Durably affixed. (b) Use of labels. A proprietor may use labels as the means for applying prescribed marks if the labels meet the requirements of paragraph (a) of this section. (c) Location. A proprietor must place the prescribed marks on one side of the case or encased container, or on the head of the package. Sec. 19.489 Marks on cases filled in processing. (a) Mandatory marks. Except for cases marked in accordance with Sec. 19.496, a proprietor must mark in accordance with Sec. 19.483 the following information on each case of spirits filled in processing (you bottle in processing and must put the bottles into cases: (1) Serial number in accordance with Sec. 19.490 (every case must be serially numbered, but I thnk many small bottlers miss this requirement); (2) Kind of spirits in accordance with the classes and types of spirits set forth in part 5 of this chapter (see 5.35 and 5.22); (3) The distilled spirits plant number where bottled; (4) Date filled; (5) Proof; and (6) Liters or proof gallons. (b) Export marks. In addition to the marks referred to in paragraph (a) of this section, the proprietor must include the marks required by part 28 of this chapter on cases removed for export, for transfer to any customs bonded warehouses, for transfer to foreign trade zones, or for use as supplies on certain vessels and aircraft. (c) Other marks. A proprietor may include other marks on cases filled in processing in addition to the marks prescribed under this section. Any additional marks must not interfere with, or detract from, the marks prescribed in this section. The proprietor may include other marks such as: (1) The name or trade name, and the location if desired, of the bottler, displayed with the word ``Bottler''; (2) For products distilled or processed by the proprietor, the proprietor's name or trade name, and the location of the distilled spirits plant, if desired, displayed with the words ``Distiller'' or ``Processor'', as applicable; (3) For products imported and bottled by the proprietor, the words ``Imported and Bottled By'', followed by the proprietor's name or tradename and location of the distilled spirits plant if desired; (4) For products bottled for a dealer, the words ``Bottled For'', followed by the name of that dealer; (5) Any material required by Federal or State law and regulations; and (6) Labels or data describing the contents for commercial identification or accounting purposes or indicating payment of State or local taxes. That should do it.
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