marijuana. In short, until federal law changes we may be a long way before THC and/or CBD-infused spirits hit the market. State law, even in states where marijuana is legal, may present additional challenges to a distiller seeking to directly integrate weed into its distilling business. The statutes and regulations governing legal recreational marijuana use often prohibit such use on the premises of an alcohol licensee. While there are initiatives to change that status quo in some places (e.g., Colorado), distillers need to carefully scrutinize their home state’s laws — even in states that have legalized recreational marijuana — to avoid inadvertently putting their state licenses in jeopardy. Even if a distiller can navigate the TTB formula process and receive approval of a spirit containing marijuana-derived ingredients, labeling presents yet another potential obstacle. As indicated above, spirits must receive a COLA if the product will enter into interstate commerce (i.e., cross state lines). Here, TTB’s only published policy (the 2000 hemp policy) is that the distiller is “prohibited from using depictions, graphics, designs, devices, puffery, statement, slang, representations, etc. implying or referencing the presence of hemp, marijuana, any other controlled substance; or any psychoactive effects.” Since then, TTB has informally stated that it continues to adhere to that policy. More broadly, however, TTB’s COLA-approval decisions have indicated a slow loosening of its previously-staunch stance on drug lingo and references in the labeling of alcoholic beverages. TTB has approved labels with the phrases “Legalized 2014” on Colorado High Mtn. Vodka and “Cannabis Sativa L.” on Sea Hemp Flavored Vodka.
To sum up, the spread of recreational marijuana laws through the states does not yet create a clear or risk-free path for distillers to integrate the cannabis business, cannabis use, or cannabis-derived ingredients into their distilling operation. Given the considerable public sentiment in favor of greater liberalization of marijuana laws, some distillers may decide to take risks in order to become early participants in this exciting new business opportunity. The more cautious will likely survey the layers of legal uncertainty and decide to wait for changes in conflicting federal laws before risking a situation where their distillery investment goes “up in smoke.” A version of this article will also appear in The New Brewer.
Marc E. Sorini is a partner in the law firm of McDermott Will & Emery LLP, based in the Firm’s Washington D.C. office. He leads the Firm’s Alcohol Regulatory & Distribution Group, where he concentrates his practice on regulatory and litigation issues faced by supplier-tier industry members. His practice for distillers includes distribution agreements, distribution counseling and litigation, labeling, promotional compliance, compliance strategy, and federal and state tax and trade practice enforcement defense. Vanessa K. Burrows is an associate in the law firm of McDermott Will & Emery LLP, based in the Firm’s Washington D.C. office. She is a member of the Firm’s Alcohol Regulatory & Distribution Group, where she advises clients on FDA, TTB and DEA laws, regulations, guidance, and responses to enforcement matters. Her regulatory experience related to medical and recreational marijuana issues includes scheduling, packaging, labeling, drug coverage and exclusions, and federal prohibitions and requirements for marijuana and industrial hemp.
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Published on Dec 14, 2017