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The "barrel aged cocktail" is growing in popularity. Many craft distillers are putting their used oak barrels to use as promotional tools in on-premise accounts where the mixologist creates a cocktail, ages it in a recently emptied whiskey barrel on the back bar where it can be seen by customers, then serves it to consumers when it has taken on the rich qualities of the whiskey impregnated oak. Regulators in some States have noticed and are taking action to enforce Prohibition era laws, and are applying questionable precedents where no specific regulation clearly addresses the issue. Some alcohol control laws prohibit serving spirits "from a tap".

This is State regulator territory, States control distribution. The State regulators’ oft cited basis for enforcement of such regulations is protection of the consumer. The server may be short changing the consumer on alcohol content if the spirit is not being poured directly from the bottle it came in is the logic. Some States are, in the case of barrel aged cocktails, claiming that aging spirits in oak is “manipulation” of the spirits and therefore falls under the definition of “rectifying” which requires a rectifier’s permit. It this is the case, every bartender and mixologist is breaking the law every time they manipulate the a spirit when they prepare a cocktail, or for that matter even put an ice cube or water into a spirit. And serving a pre mixed drink from a barrel is not serving “spirits” from a tap, it is serving a “cocktail”, they are not the same thing.

Can we hear from the spirits producers and on-premise operators, barmen, mixologists, consumers? Some of the important questions which are being asked:

How widespread is the practice of pre-batching cocktails in oak barrels, are you doing it, is it popular with consumers?

Is there some State regulation which applies to this practice? Or is it not directly addressed in your State law and open to interpretation by regulators? Are regulators applying questionable legal precedent to regulating barrel aging cocktails in your State?

Has your barrel aged program been challenged by State regulators? Was it resolved? How?

State Regulating authorities are at a loss determining the scope of the practice and are eager to understand it. Some are reaching out to the trade to get basic data on barrel aging programs. Your responses and State alcohol law information will be very helpful.

Ralph

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Sherman    1

Kentucky is fairly clear about the practice.

244.310 Containers that drink retailer may keep upon premises.

(1) No licensee for sale of distilled spirits and wine by the drink, other than a

railroad system licensee, shall keep upon the licensed premises any distilled

spirits or wine in any container except in the original package containing

quantities of not exceeding one and seventy-five hundredths (1.75) liters of

distilled spirits or two hundred twenty (220) liters of wine, and containing not

less than two hundred (200) milliliters of distilled spirits, and not less than one

hundred (100) milliliters of wine not exceeding fourteen percent (14%) alcohol

by volume, as received from the wholesaler.

(2) Each container shall have affixed to it such labels as may be required by the

regulations of the board, together with all required federal revenue tax stamps.

Even Infusion by bars and restaurants is illegal in KY because of this definition in KRS 241

(41) "Rectifier" means any person who rectifies, purifies, or refines distilled spirits or

wine by any process other than as provided for on distillery premises, and

every person who, without rectifying, purifying, or refining distilled spirits by

mixing alcoholic beverages with any materials, manufactures any imitations of

or compounds liquors for sale under the name of whiskey, brandy, gin, rum,

wine, spirits, cordials, bitters, or any other name;

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thats definitely clear in most states, bar tenders are just trying to be creative but are finding they are breaking laws quite frequently overlooked in the sf bay area. mascerated vodkas are popular as well as other mixes. seems like even americas celebrated hangover remedy is illegal too, sangria.

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nick jones    1

Regulators in some States... are applying questionable precedents where no specific regulation clearly addresses the issue...

This is State regulator territory, States control distribution.

Barrel-aged cocktails are illegal on a federal level (c.f. 27 CFR 31.233):

31.233 Mixing cocktails in advance of

sale.

A retail liquor dealer shall not mix

cocktails, or compound any alcoholic

liquors in advance of sale, except for

the purpose of filling, for immediate

consumption on the premises, orders

received, or expected to be immediately

received, at the bar. See § 31.204

for additional mixed cocktail rules.

The regulation seems pretty clear to me.

On a side note, now that the attorney general instructed local law enforcement agencies to stop prosecuting petty marijuana possession in states where it's been decriminalized (or outright legalized), the local piggies are starting to fear an interruption to their civil forfeiture based revenue streams. Perhaps the smart ones will figure out that all they need to do is find a bar where barrel aged cocktails are being sold, and then they can seize the bar along with all of its assets and auction it off, keeping 1/2 of the proceeds (the other 1/2 goes to the feds, of course).

God bless America!

Nick

My homies over at the Institite of Justice have a nice little video on civil forfeiture for the more video-inclined:

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It's been a while since I looked into the issue, but as I recall there was a big fuss in California last year or earlier about not only barrel aged cocktails, but house infusions and bitters as well. Not sure how it came out in the end.

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porter    0

Don't know why all the flap. Barrel age just the non-alch part of the cocktail just like a margarita machine does. Then add the alch when serving.

Simple fix...........but still a barrel aged cocktail.

Sounds like the bar keepers set themselves for this problem.

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Roger    23

Wouldn't it be the alcohol in the barrel that would keep it from spoiling ? For example I dont think your could keep margarita mix in a non refrigerated and or non food safe vessel for any given time.

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The point of a "barrel aged cocktail" is that the whole cocktail is aged together and served out of the barrel, in most cases. Aging the non-alcoholic parts would not produce the same result. And the popular aged cocktails being prepared are spirits mainly, like a MANHATTAN. Putting juice or a mixer in an oak whiskey barrel would not produce the same result as putting the spirit (a solvent) into oak along with the other ingredients.

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Wait, so this is illegal: http://www.caskstore.com/spirits/liqueur/brandy-manhattan-fluid-dynamic.html

They obviously got a COLA for it. What about those gas station margarita drinks in a capri-sun pouch?

chris

Barrel-aged cocktails are illegal on a federal level (c.f. 27 CFR 31.233):

31.233 Mixing cocktails in advance of

sale.

A retail liquor dealer shall not mix

cocktails, or compound any alcoholic

liquors in advance of sale, except for

the purpose of filling, for immediate

consumption on the premises, orders

received, or expected to be immediately

received, at the bar. See § 31.204

for additional mixed cocktail rules.

The regulation seems pretty clear to me.

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bluestar    42

Wait, so this is illegal: http://www.caskstore...id-dynamic.html

They obviously got a COLA for it. What about those gas station margarita drinks in a capri-sun pouch?

chris

No, that is not illegal, because it is being done under a DSP permit. That's the point: you need a permit, and must meet all the laws, to make any spirit based beverage that will be stored for any length of time, other than preparation just prior to service.

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dhdunbar    35

Here is the context in which to understand TTB’s likely position on the matter of aging premixed cocktails prepared for on premises consumption. §5171 of the Internal Revenue Code provides that operations as a processor may be conducted only on the bonded premises of a distilled spirits plant. §5002 (a)(5) defines processor to mean any person who manufactures, mixes, or otherwise processes distilled spirits. §5002(a)(6) provides that any mixing (after determination of tax) of distilled spirits for immediate consumption is not processing. The issue of exemption for cocktails thus hinges on whether they are mixed “for immediate” consumption. This is not new territory. Precedents exist.

Prior to 1985, the government collected a “rectification” tax. It no longer does. Rectification and processing are different words for the same thing. The law still prohibits processing spirits anywhere other than at a DSP. Certain processing operations at a DSP sound a lot like mixing a cocktail in a bar. In fact, distilled spirits specialty items include “premixed cocktails.” But even when rectification was taxed, the government had no interest in prohibiting retailer’s mixing cocktails. That is the genesis of the exclusion contained in §5002(a)(6), which carries over into the language of the regulation found at §31.233, which others have already cited.

The first test of these rules of which I am aware came with the advent of premixed margaritas. I recall a formal opinion of some sort on this issue, but I am unable to find it now. Confronted with the question of whether premixed margaritas held in a vat in anticipation of orders not yet received were “mixed for immediate consumption, ” TTB held that it would interpret “immediate consumption” to mean mixing of cocktails for consumption up to 24 hours in advance of an order. As I recall, the issue then went to sleep. TTB had no intention of ever enforcing the 24 hour rule, which was, at any rate, beyond its ability.

The next innovation, infusions, tested the 24 hour rule. In its newsletter for the week of May 18, 2012 (http://www.ttb.gov/newsletters/archives/2012/ttb-newsletter051812.html), TTB responded to a request from the National Alcohol Beverage Control Association (NABCA). The NABCA asked TTB to state its position on the “increasing trend of bars and restaurants infusing distilled spirits with fruits, herbs, and other nonalcoholic ingredients in order to make infusions, which are served on premises in cocktails.” From my experience, I know that TTB had been aware of the practice for at least ten years, but had made non-action an unstated policy. It simply ignored the issue. The NABCA request brought it to a head.

As TTB’s letter observed, it understands that infusions “are generally not for immediate consumption at the time the ingredients are mixed and would, accordingly, be subject to the IRC requirements.” The IRC requirements to which the letter refers were, of course, the requirements of §5171 that processing operations be conducted on DSP premises. The practice of making infusions at retail premises is clearly in violation of §5171, but let’s look at this from another angel.

When the rectification tax was still in force, making an infusion was a taxable act. After the tax went away, as long as no one asked, TTB did not have to articulate a reason for not doing anything about retailers infusing vodka by stuffing a peach into the bottle. When the NABCA asked, TTB had to respond. It adopted a “no harm, no foul” rule even though it recognized that the act is subject to the IRC requirements.

In truth, from the outset, enforcing a prohibition against infusions was a non-starter at the federal level. Even if TTB had proclaimed them illegal, with authorized staffing of a little over 500 people (and that is everyone), it would have been powerless to do much about what happens in the bars and restaurants where infusions are made. Thus, it’s letter to the NABCA, TTB states, “Since taxpaid spirits are used in the process, TTB believes there is little risk to the Federal excise tax revenue. Additionally, because infusions are served on premises as or in cocktails, we do not foresee FAA Act packaging and labeling concerns. Under these circumstances, TTB exercises its enforcement discretion not to take enforcement action solely on the basis of violations with regard to a retail liquor dealer that mixes taxpaid spirits to produce infusions for on-premise consumption.”

However, TTB was not obligated to exercise what it calls its enforcement discretion. TTB says that infusions violate the provisions of §5171 and at the end of its infusions letter, TTB stated that although it was exercising enforcement discretion in the case of infusions, “This position does not apply to and TTB will continue to enforce prohibitions on processing with non-taxpaid spirits, bottling spirits, aging spirits in barrels, heating spirits, refilling of liquor bottles by retail liquor dealers, and with respect to any other conduct that may jeopardize the revenue. " TTB dressed the issue solely in revenue terms.

We can turn now to barrel aging. Like infusions, barrel aged cocktails do not jeopardize the revenue. Like pre-mixed margaritas, they are not served from the original container. Thus, they do not run afoul, as infusions may do, of the provisions of §31.204, which prohibits using a liquor bottle “in which distilled spirits have been previously packaged for the storage of the mixture or compound pending that sale.” Thus, TTB could hold that the barrel is a suitable container required for use in lieu of liquor bottles. If TTB adopts such arguments, it may choose again to exercise its discretion and not enforce the provisions of the law that barrel aging cocktails tests, particularly in light of its obvious inability to do so effectively with the staff available to go out and do that.

Ultimately, although the states may look to TTB for guidance, I think this will remain a state issue. Even if TTB again declares it will not enforce the federal law, as I suspect it would if pressed, any state may choose to enforce its laws. TTB’s position may influence the decision a state makes, but it may not. The 21st Amendment gives states broad power to regulate commerce in alcoholic beverages within their borders.

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nick jones    1

If TTB adopts such arguments, it may choose again to exercise its discretion and not enforce the provisions of the law that barrel aging cocktails tests, particularly in light of its obvious inability to do so effectively with the staff available to go out and do that.

You post on this forum all too infrequently, Mr. Dhdunbar! You describe some excellent background on this subject. In particular, I had always wondered why the whole "rectification" thing was grouped in with distilleries, and why the term seems to have fallen out of use. Now I know where to look!

Anyway, I was wondering if you would indulge me by addressing an off-topic question that your informative post left me with...

If a government is arbitrary in enforcing its laws, should it expect its citizens to be anything but arbitrary in following them? If a lack of enforcement resources excuses a government from enforcing its own laws, does a lack of compliance resources likewise excuse citizens from following laws that they deem to be too expensive to abide?

Nick

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Natrat    3

Nick, you hijacked this thread, and if admin wants to move it, great. I'm going to take what you just said a little further...

I moved to NC from Canada (I'm a dual citizen) and in the 20 month odyssey to get proper paperwork for my wife's green card, we learned that the system of immigration has actually morphed into a labyrinth of laws that encourages the users to cheat. Had I simply lied at the border, my wife could have resided with me in the US until her green card arrived, instead of incurring thousands of dollars in paperwork verification, cross-country travel for interviews, and multiple photo sessions.

So the lesson upon first arriving on US soil is that it is better to game the system than to toe the line. In fact, in my community, there is practically an industry based upon this very idea, albeit with poverty line programs.

I'm not sure where the TTB fits into this, but I do recognize that it's primary mission is to collect tax revenue on what is regarded as a recreational drug industry. I, for one, am somewhat thankful for their spotty enforcement of ill-defined grey area laws. I know how frustrating it can be to scrupulously toe the line while watching the other guy get away with metaphorical murder...I went through a painful 20 month separation while others in my situation simply strolled across the border. BUT...and I'm sure lots of people will disagree with me here...I actually think that the vague wording, archaic laws, and arbitrary enforcement help to stimulate the American craft liquor scene. This type of environment forces us to be creative in the way we interpret, argue, and apply the playbook we have been given. In the end, I think that it will be easier for the TTB to maintain its revenue stream from us by ADAPTING TO US, because the alternative...strict enforcement...is far too expensive to contemplate. I believe this because that's exactly what I have seen in the other federal arms of government...except for the ludicrous "war on drugs," which has it's own, unrelated, revenue stream.

So I prefer to adopt a creative and labyrinthine approach to my formulations, and to push as hard as possible in the "grey areas," because when it all snaps and they re-write the code that we make our living by, I want it to favor ME.

And if I can just address the last part of your very succinct post, I think that regular civil disobedience of expensive or outdated unenforcable laws is actually an illustration that the law itself may be without merit. I think we're seeing that with marijuana right now.

And I second the opinion that dhdunbar posts all to infrequently! I think I need to look into getting a hotline to him!

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dhdunbar    35

If a government is arbitrary in enforcing its laws, should it expect its citizens to be anything but arbitrary in following them? If a lack of enforcement resources excuses a government from enforcing its own laws, does a lack of compliance resources likewise excuse citizens from following laws that they deem to be too expensive to abide

First, you assume that the government is 'arbitrary." That is any interesting word. I think that they do "pick and chose" about where to place their resources. but I think in most cases the decisions are not arbitrary. Congress hands them a list of laws, says write regulations, and administer the programs necessary to enforce them. Congress separately hands them a budget and says this is the money you have to enforce the laws we have written. In essence, some of what congress requires becomes an "unfunded mandate." TTB cannot seek other funds to cover the gap between what it would cost to enforce and what it has available to do so. Nor can it run in the red. Therefore, it must pick and chose. But that is not an arbitrary process. It cannot decide, on whim, not to collect taxes, for example, or ignore the fact that someone is selling beer it labels as bourbon. Things sort themselves out by importance.

In some cases the choice to enforce or not is obvious. In others it is not. That middle ground between things it clearly must pursue and things it clearly should not pursue at the expense of another program is where decisions become more "arbitrary." It is the ground where reasonable men disagree and usually agree to disagree. One solution to that is to look at some "arbitrary" things one year and look at others the next. But there are certain things it is unlikely ever to look at.

In theory, distillers do not have that luxury. If it is required, the government can tell you that you must comply, regardless of the cost. If an agency has a regulation and it chooses to enforce that regulation, and if you are ensnared in that enforcement, and if they charge you, and if you challenge that in court, then the court is going to say that it will not replace its judgement with the agencies judgement, even if it would reach a different decision of the decision were its decision to make. It will then tell you that also are not free to pick and choose what requirements you will comply with and what requirements you will not comply with.

That is a long and complicated sentence, with a series of important "ifs" attached. The probability of getting to the end of the sentence decreases with each of the "ifs" that we insert. In fact, most businesses do pick and choose, to some "reasonalbe" extenty, what regulations they will comply with and what regulations they will not. True, some cross lines that are clearly going to bring problems, for example, choosing not to Spay taxes, and end up in real trouble. But what about other, less clearly important requirements? for example, are all of your tanks equipped with a method for determining the number of wine gallons they contain? Have they been calibrated by a person certified to make the calibrations? If you move a tank, do you get it recalibrated by a person certified to make the calibration?

If you answer yes, you are surely in the minority. Yet TTB does not have a tank enforcement initiative in force. They do not have an army of tank police going from distillery to distillery. But to answer your question directly, they could have such an army and they could rigorously enforce those requirements. If they choose to do so, you are not free to say, "I'd love to, but I can't afford it." If you ignore their requirement that you "come into compliance," they can take action to bring you into compliance

If we come at the question from the ideological side, where "should" reigns, and if the "should" of your convictions includes the principal that TTB should enforce all regulation, then that same "should" leads directly to a conclusion that you should comply. If we come at the question from a pragmatic side, then TTB is freed from the requirement that it take you to task for not complying with the calibration requirements, for example, when it clearly has not affected the accuracy of your reports, the eligibility for the label claims you make for products, or the the taxes you pay. But in the end, it is for the agency to decide, not the distiller. That is true. The law does not afford citizens the same discretion it affords to the government, but courts do grant the government discretion within reason. That is a pragmatic way of letting a regulatory system work. Skewing to the ideological side makes the system rigid. Things that cannot bend break. I think that is the lesson of tree branches.

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nabtastic    13

I think it is quite clear that the system needs to be reevaluated as a whole: from tax laws to bar keeps. dunbar went all philosophical on us. Barrel aging at a bar is no different than barrel aging at home and I'm certain that we are all familiar with the microbarrels being sold either directly packaged with unaged spirits or otherwise. On that same notion though - just because the TTB said it, doesn't mean that they will enforce it. Take Jefferson's Ocean Age and Absolute's barrel aged VODKA. Both products are technical violations of the TTB bilaws. If they can't prevent international spirits from getting TTB approval, why should they worry what a bar is doing?

just my 2 cents.

nab

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The ABC raided several bars in Idaho for serving barrel aged cocktails. It's a state law issue. Section 23-921 of Idaho's Alcoholic Beverage statute states, "It shall be unlawful for any licensee to sell, keep for sale, dispense, give away, or otherwise dispose of any liquor in the original containers or otherwise than by retail sale by the drink."

It's a law meant to protect patrons from deceptive rebottling of cheap liquor in premium bottles. Under a broad construction of the statute, the ABC enforced it against bars that pour spirits out of the original bottles into barrels, then into patrons glasses. Ironically, a law meant to uphold quality is hobbling the craft cocktail movement in Idaho. At our Boise distillery, we'll be creating barrel aged cocktails as a special order item for local bars.

Here is a link to a Boise Weekly article about the barrel aged cocktail raids:

http://legislature.idaho.gov/idstat/Title23/T23CH9SECT23-921PrinterFriendly.htm

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nabtastic    13

I can't blame Idaho for enforcing this. If you saw the fairly recent news out of Jersey then you know what I'm talking about. Bars (large scale chain bars at that) were selling inferior spirits as the higher end products, even going so far as adding denatured alcohol to the spirits. Needless to say, idiots ruin it for everybody.

NAB

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