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U.S. Beer Industry
U.S. Government Beer Regulations
The brewing industry is subject to extensive government regulations at both the federal and state levels and sometimes at the local level as well, concerning distribution, labeling, advertising, credit, container characteristics, alcoholic content, tax rates, and litter assessments. Nearly all federal regulations involving the brewing are issued by the Bureau of Alcohol, Tobacco, and Firearms (BATF), which was established by the FAA Act. Each state has a complex set of laws and regulations governing its industry. State beer regulations are issued, for the most part, by state alcohol control agencies. The Commerce Clearing House in Chicago publishes a compilation of such regulations.
Federal Beer Regulations
Federal beer regulations can be categorized into seven groups, relating to basic permits, breweries and beer production, labeling and advertising, beer removal/excise taxes, distribution, the supplier/retailer relationship, and trade. Under the Federal Alcohol Administration (FAA) Act, Congress established a permit system, to be administered by the Secretary of the Treasury, to regulate interstate and foreign commerce in alcoholic beverages, to enforce the 21st Amendment, to protect revenue, and for other reasons. The FAA Act made it illegal, except pursuant to a permit issued by the Secretary of the Treasury, to import into the United States or purchase for resale alcoholic beverages, including beer.
The Bureau of Alcohol, Tobacco, and Firearms (BATF) has issued regulations on the production and removal of beer. These include restrictions on the location, use, construction, and equipment of breweries, as well as laws pertaining to the qualification of breweries and their issuance of bonds and consents of surety. BATF has also issued regulations governing the use of pilot brewing plants for research purposes and the maintenance of records and reports. BATF brewing process regulations include mandatory approval of the formula and process for domestic flavored beers, such as lambics, and requirements for the measurement of beer. In addition, federal law imposes a special occupational tax (SOT) on all brewers.
State Beer Regulations
After Prohibition, state governments were given considerable authority over the production, importation, distribution, sale, and consumption of beer within their borders. Today, state beer regulations vary widely throughout the nation. For example, Minnesota requires that the beer label show the alcohol content, while Michigan does not permit the label to show alcohol content. States also have varying requirements on the maximum and minimum permissible alcohol content. Some states require sales to be on a cash basis, whereas other states allow credit. Some states stipulate both the maximum and minimum size of containers, and some regulate advertising, while others have no such regulations. In general, there are four different types of state beer regulations: production, taxation, distribution, and retailing.
Local Beer Regulations
Many states permit local jurisdictions to regulate and separately tax beer sales, and even to prohibit the sale of beer within their jurisdiction. Jurisdictions in which the sale of alcoholic beverages is prohibited are called "dry." More than half of all states have dry cities or counties, and about 4.3% of the U.S. population live in dry counties. Many cities and counties that are not dry regulate operations and/or impose taxes on the sale of beer. In addition to the federal and state excise taxes, some states have local taxes, on-premise taxes, wholesale taxes, and private club taxes. Georgia, Illinois, Louisiana, Maryland, New York, and Ohio have cities or counties that impose local beer taxes. As might be expected, taxes can potentially represent the largest single-cost item in a glass of beer.
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