ALCOHOL LAW ADVISOR
ALCOHOL LAW ADVISOR
Regulatory and Distribution Law Updates for the Alcohol Industry
ALCOHOL LAW ADVISOR
Regulatory and Distribution Law Updates for the Alcohol Industry
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Navigating the Buzz: How State Agencies Are Addressing Confusion Around Hemp and Low-Dose THC Beverages

by and | Oct 25, 2024 | , , ,

Hemp and low-dose delta-9 tetrahydrocannabinol (THC) beverages continue to flood the marketplace. Depending on the state, these products can be purchased in liquor stores, gas stations, grocery stores, bars, restaurants, and/or online. Despite their rise in popularity and presumed legality under the 2018 Farm Bill, some state agencies have recently made headlines with decisions to ban these products from being sold by alcohol-licensees in their states.

In this blog post, we walk through some recent examples of how different state alcohol agencies are handling the regulation of hemp and low-dose THC beverages.

Understanding Hemp and Low-Dose THC Beverages

As we mentioned in our previous blog post on this topic, hemp and low-dose THC beverages are nonalcoholic beverages infused with delta-9 THC derived from hemp, distinguishing them from traditional marijuana products. The 2018 Farm Bill legalized hemp and its derivatives, provided they contain no more than 0.3% THC on a dry weight basis. This legal gray area has led to a surge in products that can deliver psychoactive effects while being marketed alongside or as alternatives to alcohol.

State-by-State Overview

The rise of hemp and low-dose THC beverages in the market has prompted state alcohol, health, agriculture, and cannabis agencies to review their regulatory frameworks regarding the sale and distribution of these products. Each state approaches the issue differently, which has resulted in a patchwork of regulations across the country.

  • California: The California Department of Alcoholic Beverage Control (ABC) has taken a strict stance on hemp beverages containing THC. On October 3, 2024, the ABC issued an industry advisory stating that alcohol licensed businesses may not carry, market, offer for sale, or sell any industrial hemp products intended for human consumption (including food, beverages, and dietary supplements) that contain a detectable amount of total THC or other intoxicating cannabinoids. Any businesses that do not comply will subject the licensee to disciplinary action. To date, the ABC has already begun enforcement efforts. Recently, ABC agents have been reported visiting licensed locations across the state and seizing hundreds of products from several licensees, removing them from shelves and preventing them from being sold.
  • Massachusetts: On May 30, 2024, the Massachusetts Alcoholic Beverages Control Commission (ABCC) issued an advisory in connection with the joint notice issued by the Massachusetts Department of Public Health (MDPH) and the Massachusetts Department of Agricultural Resources (MDAR) regarding the sale of beverages and food with hemp-derived cannabinoid extracts (CBD) or THC. The ABCC made clear that it is unlawful to manufacture and/or sell food or beverages containing CBD and/or THC. This applies to alcoholic and nonalcoholic beverages. Under the advisory, the ABCC directed that products need to be removed immediately, and anyone found in violation faces potential revocation or suspension of its license. The joint notice and advisory each make clear that they only apply to hemp-derived CBD and THC products and are separate from marijuana products regulated by the Massachusetts Cannabis Control Commission.
  • Minnesota: In contrast to California and Massachusetts, Minnesota explicitly [...]

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Massachusetts Court Dismisses Brand Owner’s Suit against Wholesaler

by | Oct 30, 2017 | , ,

Earlier this month, a Massachusetts Superior Court judge granted beer wholesaler Craft Beer Guild, LLC’s (Craft) motion to dismiss a civil suit, Shelton Bros., Inc. v. Craft Beer Guild, LLC d/b/a Craft Brewer’s Guild, brought against it by beer importer Shelton Brothers, Inc. (Shelton) in connection with Craft’s alleged breach of its distribution agreement with Shelton. Craft distributed beer imported by Shelton throughout Massachusetts.

In November 2016, Shelton filed a complaint alleging that Craft breached a 2009 oral agreement between Craft and Shelton by failing to follow through on its promises regarding pricing and providing two dedicated sales people to support Shelton’s brands. In its complaint, Shelton alleged that sales of its products were in “steep decline” by 2011 due to Craft’s discriminatory pricing of Shelton’s products in the market. (more…)



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Massachusetts Court Upholds Record $2.6M Fine against Beer Distributor

by | Oct 23, 2017 |

Earlier this month, a Massachusetts state trial court judge issued a decision in the matter of Craft Beer Guild LLC d/b/a Craft Brewers Guild v. Alcoholic Beverages Control Commission. The court upheld a decision by the Alcoholic Beverages Control Commission (ABCC) finding violations of Massachusetts’ trade practice laws by a large beer distributor. The case originated in the Fall of 2014, when a craft brewer alleged on Twitter that a Boston retailer had removed the brewer’s brands from the tap because suppliers and distributors were paying retailers in exchange for those retailers carrying their brands. The ABCC launched an investigation that culminated in administrative charges against Craft Beer Guild LLC d/b/a Craft Brewers Guild (CBG) for violations of Massachusetts’ anti-price discrimination statute (Mass. Gen. Laws ch. 138, § 25A(a)) (the Statute) and an ABCC regulation prohibiting inducements by licensees (204 Code Mass. Regs. § 2.08) (the Regulation).

After a hearing, the ABCC found that CBG violated the Statute and the Regulation based on its alleged implementation of schemes with multiple retailers and third-party management companies working on behalf of the retailers to provide payments in exchange for the retailers committing tap lines to CBG’s brands. The payments allegedly involved fictitious invoices issued by the third-party companies to CBG, as well as CBG’s payment of at least $120,000 to the retailers and/or third-party companies.

In lieu of a suspension, CBG paid a record-setting fine of more than $2.6 million to settle the violations. CBG then appealed the ABCC’s decision in March 2016. In June 2017, CBG filed a motion for judgment on the pleadings. The Massachusetts trial court held a hearing in September 2017, and then a few weeks later issued the order denying the motion, dismissing CBG’s complaint and affirming the ABCC’s decision against CBG. (more…)



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Trump Administration Indicates Plans to Increase Enforcement of Recreational Marijuana Laws

by | Feb 27, 2017 | , ,

To follow up on our prediction last month that the Trump Administration may take a more aggressive stance toward the legalization of marijuana, White House Press Secretary Sean Spicer stated during the February 23 daily briefing that he anticipates greater federal enforcement of marijuana laws.  Spicer emphasized the distinction between medical marijuana (the legalization of which President Trump does not oppose) and recreational marijuana.  In discussing the latter, Spicer invoked the country’s opioid addiction crisis, suggesting a link between recreational marijuana use and such other drugs.

Spicer hinted that the Justice Department’s enforcement of federal drug laws would extend to the nine jurisdictions that have legalized recreational marijuana, potentially putting at risk the schemes many of these states have created–or are in the process of creating–to regulate marijuana.  As of today, the recreational use of marijuana is legal in Alaska, California, Colorado, the District of Columbia, Maine, Massachusetts, Nevada, Oregon and Washington.  (Note:  Congress has blocked the DC government from using funds to actually implement a system to regulate recreational marijuana, so although technically legal, there is currently no “market” for recreational marijuana in DC.)

If President Trump’s Justice Department does begin to pursue more active enforcement of marijuana laws in states that have legalized marijuana, it may meet pushback from Congress.  Just last week, four congressmen announced the formation of the Congressional Cannabis Caucus (the Caucus), a bipartisan organization seeking to change the federal government’s attitude toward legalized marijuana and, notably, to leave the legalization question to the states.  In support of this mission, earlier this month Representative Dana Rohrabacher (R-CA), a member of the Caucus, introduced a bill (HR 975) in the House that would prevent federal enforcement of the Controlled Substances Act (the Act) in states that have legalized the recreational use of marijuana.

Likely by design, the bill’s introduction occurred just a day before the confirmation of Jeff Sessions, a vocal opponent of marijuana legalization, as Attorney General.  The bill would add a new section to the Act expressly stating that the Act’s provisions concerning marijuana do not apply to persons acting in compliance with state law regarding the possession or sale of marijuana.  The bill, titled the “Respect State Marijuana Laws Act of 2017,” has been referred to the House Judiciary and Energy and Commerce Committees.

Of course, whether the bill will gain enough support to pass in Congress and survive a potential Trump veto remains to be seen.  Nevertheless, the timing of the bill’s introduction, the bipartisan support it has garnered to date (half of its current cosponsors are Republicans), and the announcement of the Caucus indicate a growing tension between Congress–including some members of President Trump’s own party–and the Administration with respect to the enforcement of federal marijuana laws.



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