Laws and regulations that govern the production and sale of alcoholic beverage products can seem very strict. This is true for the most part. However, there are circumstances when variances from the rules–either permanent or temporary–are authorized.

The key to any variance from federal or state alcoholic beverage regulations is the same: a request for variance must be made in advance. If an industry member proposes to act a manner that differs from federal regulations, an advance request must be made to the federal Alcoholic Beverages and Tobacco Tax and Trade Bureau (the TTB). Likewise, if action that is contrary to the requirements of Florida administrative rules, an advance request must be made to the state Division of Alcoholic Beverages and Tobacco (the ABT). These agencies cannot and will not grant every variance request–their authority to do so is limited. However, there are many circumstances when the agencies have a surprising amount of discretion.

This article discuss three common scenarios when a variance request is required, and in many cases will be granted.

Scenario #1: Alternation of Premises

The most common scenario requiring variance approval by the TTB is the alternation of premises. A manufacturer is prohibited under federal regulations from using the same premises and equipment for the production of different commodities–beer, wine, and distilled spirits. However, the TTB will often grant requests for a variance from this prohibition provided that appropriate steps are taken to ensure that the alternation will not impede the TTB’s ability to administer federal alcoholic beverage regulations and will not jeopardize the reporting and payment of federal excise taxes.

In alternating premises scenario, letterhead requests (that is, signed letters on the manufacturer’s letterhead) must specifically request that the TTB exercise its authority under 27 CFR 25.52 to permit variation from the requirements of two regulations. First, the request must be made for the TTB’s approval of an alternate method of pursuant to 27 CFR 25.78 or 27 CFR 25.81. This request should specifically request permission to use the manufacturer’s daily and monthly records of production and packaging for each process as notice of the alternation.  Second, a separate letterhead request must be made to use the manufacturing premises for other purposes. The request must indicate the reason for the requested variation: for instance, to realize the maximum benefit from the premises and equipment.

It is not enough, however, to request alternation. The manufacturer must explain how it intends to keep separate and available for inspection the tax-unpaid products of each commodity. Practically, this requires the manufacturer to designate specific areas for each commodity, and to create sufficient barriers to ensure that products of one commodity (such as beer) are not intentionally or accidentally located on the area designated for a different commodity (such as distilled spirits). The designates areas must be indicated on an update premises diagram filed with the TTB.

Scenario #2: Inaccurate Labels

TTB variance approval is also required when an alcoholic beverage products have inaccurate labels. When a supplier relocates a manufacturing plant or changes a contract manufacturer relationship, it is common to have an excess of bottles or cans that are pre-labeled with information that is no longer accurate. For instance, the city and/or state of manufacture may have changed. Instead of abandoning all of that pre-labeled packaging, the supplier to make a variance request to use up the supply.

In this situation, the supplier should make a letterhead request explaining the inaccuracy that appears on the labels. The request should also explain the method by which the TTB can know the actual information–for instance, the city and state of manufacture–if it is not accurately reflected on the label. Lastly, the TTB should be assured that this variance is for a temporary situation only, and necessary to avoid unnecessary cost and waste.

Scenario #3: Patron Events

Florida manufacturers occasionally want to use their manufacturing area to host an event at which patrons are permitted into the area and retail sales are made. Alternatively, a Florida manufacturer may want to host an event its taproom or tasting room as which unapproved commodity types will be sold or served. In each, variance requests must be made to both the TTB and the ABT for permission to host these types of events.

Generally, federal regulations prohibit patrons to be allowed in the manufacturing area. Likewise, a manufacturer’s state license will specifically describe the boundaries of the manufacturing area separate from any retail areas. Before hosting a patron event in the manufacturing area, a letterhead variance request must be made to the TTB. The request should describe the event  and the steps that will be taken to ensure that that patrons cannot access tax-unpaid alcoholic beverage products. At the same time, Form ABT-6029 must be filed with the ABT to request a temporary extension of the manufacturer’s licensed retail area for a limited period. Note that, during the time of the event, the manufacturer must desist from all manufacturing activities.

A Florida manufacturer that has a 2COP-licensed taproom or tasting room is generally permitted to have on the premises beer and wine only. In the event that the retail space will be used for an event at which distilled spirit products are sold or served, permission must be requested from the ABT. During the time of the event, the manufacturer must agree to voluntarily suspend its retail license, meaning that the manufacturer cannot make retail sales during the event. If alcoholic beverages are to be sold at the event–whether, beer, wine, or distilled spirits–the alcohol must be handled entirely by a 13CT-licensed alcoholic beverage caterer. All sales during the event must be conducted by the caterer, even if the caterer acquires its supply of beer or wine from the manufacturer.

Do you have questions about variances from federal and state alcoholic beverage regulations? Contact us to schedule a consultation with a beverage attorney.

Because we’re attorneys: Disclaimer. Posted December 11, 2022.

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