NABCA Legal Symposium – Day 2
Source: NABCA
March 14th
NABCA’s 24th Annual Symposium on Alcohol Beverage Law & Regulation successfully concluded on day two with positive comments and more than 280 people participating as part of the live audience or online. Below are summaries of Tuesday’s presentations.
New 1st Amendment Challenges to Alcohol Laws
Moderator Paul Pisano of the National Beer Wholesale Association opened the session by discussing the 8th Circuit Missouri Broadcasters v. Lacy alcohol case and the 9th Circuit Retail Digital Network v. Ramona alcohol case.
Presenter Brannon Denning of the Cumberland School of Law discussed commercial speech and alcohol regulation cases. He went into some detail explaining the 1995 Rubin v. Coors Brewing Co. case.
Presenter Lisa Soronen of the State and Local Legal Center discussed current Supreme Court views about commercial speech, 1st Amendment cases to be decided this term, and Judge Gorsuch’s views on the 1st Amendment. Ms. Soronen asked conference attendees her “million dollar question; Are content-based distinctions in commercial speech subject to strict scrutiny?” This term, the 1st Amendment free speech cases are Expressions Hair Design v. Schneiderman, Packaging v. North Carolina, and Lee v. Tam.
Presenter John Lundquist of the Iowa Alcoholic Beverage Division discussed how he would approach handling 1st Amendment and alcohol cases or situations through identifying the substantial governmental interest in the issue. He noted that limitations on speech must be rational and narrowly tailored, among other variables.
The “Gray Market”
Panelists for this session discussed the value of the three-tier regulatory system which prevents untaxed or counterfeit products from entering the marketplace and cited various examples of violations they have encountered.
Mary Tortorice, chief compliance officer Sazerac Company, served as moderator and opened the discussion by citing websites and advertisements using social media to illegally sell alcohol through lotteries or by simply selling alcoholic beverages without proper licensing. She noted the three-tier system has ensured that safe alcohol products are entered into the marketplace and that it should not be tampered with.
Donald McGehee of the Alcohol and Gambling Enforcement Division of the Michigan Liquor Control Commission cited examples in his state of licensees and others that get themselves into trouble by not complying with Michigan’s rules. The Commission has issued several cease and desist letters to licensees that have violated the law. He noted those that receive the letters take it seriously and seek assistance to come into compliance. He added these kinds of violations are felonies and licensees could face imprisonment.
Peter Willsey, partner with Cooley LLP talked about the challenges companies that produce alcohol face in trying to combat illegal sales of their product. He cited several options under which, those that are caught can be charged, for example the first sale doctrine, but also added the difficulty in getting cases to court as there are challenges in proving the violations.
Panelists expressed a bit of overwhelm in trying to find and stop the illegal sale of alcohol as enforcement agents do not have sufficient time to look through the various internet sites to find those that violate the law and because of the volume of individuals and licensees that perform these illegal activities. Regardless, suppliers, alcohol beverage agencies and lawyers need to continue working together to try to preserve the three-tier system and ensure compliance.
Opening Pandora’s Box
This closing session focused on the journey that jurisdictions take when updating their alcohol regulatory scheme.
Moderator Leo Gibson, General Counsel of WhistlePig, noted that the inspiration for this panel was the work done in Vermont on updating their liquor laws and the challenges faced by the state during this process as well as unintended consequences and lessons learned.
Stephen Humphress, general counsel with the Kentucky Department of Alcoholic Beverage Control, provided information on his state’s experience. Kentucky’s need to amend its statutes arose because 80 years of alcohol laws were put together piecemeal and included conflicts and inconsistencies. New laws have made major improvements in alcohol statutes over the last several years. Mr. Humphress noted that the agency was able to develop more trust with the state legislature and the alcohol industry through this process, which led to additional successes.
Travis Hill of the Virginia Department of Alcoholic Beverage Control commented that Virginia’s experience with updating alcohol laws focused on having a plan for the update, identifying stakeholders, and engaging the executive branch so there are no issues with the governor’s office at the end of this process. Recent updates and areas being looked at include licensing requirements for vacation rental properties that serve alcohol, channel pricing, advertising in college publications, and emerging industries such as alcohol delivery and edible products.
Pennsylvania Liquor Control Board Director of Legislative & Governmental Affairs Christopher Harrington presented on the major changes that Pennsylvania has made to its liquor code in the last year. Act 39 changed state alcohol agency operations and wine sales. The agency had 60 days to establish the necessary procedures for implementation of Act 39 and they were able to do so. Acts 85 and 166 came after Act 39 and made additional changes to the alcohol system in Pennsylvania, leading to an internal review by agency officials of current alcohol laws.
The panel concluded by noting the similarities in state experiences with updating alcohol laws and the need to continually push for necessary improvements in alcohol statutes and regulations.
The 2018 Annual Symposium on Alcohol Beverage Law & Regulation will return to the Crystal Gateway Marriott in Arlington, VA from March 18 – 20.