One of the unique aspects of the alcohol beverage industry is the clear and continual regulatory separation of different facets of the industry. For example, in the United States, laws known as tied house laws heavily regulate any form of vertical integration in the alcohol beverage industry. Generally speaking, tied house laws help to divide the basic three tier system—the interests of manufacturers, wholesalers, and retailers are separate and distinct. Essentially, the name “tied house” speaks for itself: houses of different tiers that are tied together by means of ownership (i.e., not separate nor distinct) are generally illegal in the United States. And while tied house laws have populated our federal and state laws as post-Prohibition anti-segregation measures, perhaps the more curious inner-industry regulations are those that separate ownership of one type of alcohol beverage producer from another.
A classic example recently came to news in a heartfelt battle against the law by two Arizona state sisters. The two siblings sought to establish a winery-brewery in Arizona, but were inevitably halted by a strict provision of the law: Title 4, Chapter of Arizona Revised Statutes prohibits a winery from brewing beer on the same property. (See Sisters Fighting Law to Open Arizona Winery-Brewery.) And while other states permit the operation of a winery-brewery, there seems to be no indication why the Arizona statutes explicitly forbid the dual operation. (See, e.g., Sneak Peek at Winery and Brewery in Downtown Jackson; Virginia’s First Winery-Brewery Expands this Fall.) Despite the faithful attempt of the sisters to question the Arizona law, the prohibition currently remains in tact.
The above story seems rather curious, as lawmakers—at some point in time—proactively sought to prohibit a winery and brewery from operating under one roof. But the question is why? And is this law destined to change? The answer to the latter is simply this: Perhaps. As has been a recurrent pattern in the wine world, change is often necessary—but how quickly changes in the law are executed remains unknown.
For more information on wine or alcohol law, licensing, or TTB matters, please contact Lindsey Zahn.
DISCLAIMER: This blog post is for general information purposes only, is not intended to constitute legal advice, and no attorney-client relationship results. Please consult your own attorney for legal advice.