The Distillery Without Walls
Alcohol Beverage attorney Jason Barker spoke to the Portland Business Journal about brand licensing and contract production agreements in the alcoholic beverage industry. Industry participants are increasingly choosing to avoid or delay investing in traditional brick-and-mortar establishments through alternative branding and licensing strategies; these not only give smaller startups a significant financial advantage but also allow investors to navigate regulatory obstacles such as "tied house" laws. In this Q&A, Mr. Barker explains why clients may choose these strategies, what they need to know about implementing them and how they can obtain a license without owning their own facilities.
"By being a licensed alcoholic beverage supplier, the brewery or distillery can directly control the process of production and thereby ensure consistency and quality," he said. "Also, depending on the state and the type of production license held, the producer may be able to sell directly from the production premises to retailers or directly to consumers from a separately licensed tap or tasting room. Small licensed producers, operating through alternating proprietorships, are also able to take advantage of lower federal taxes on alcoholic beverage products they produce directly."
READ: The Distillery Without Walls (Subscription required, article begins on page 27)