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As with the early days of post-prohibition regarding alcohol, the early days of post-

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number of regulatory issues requiring agency action to interpret and explain in policy and ruling statements.

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prohibition for marijuana will certainly see a

John McGinn (262)-909-7267

marijuana. Either tax-paid alcohol, or a denatured solvent (typically CDA formula 12A using Heptane) are possibly used, and as I understand it the solvent alcohol and chemical are totally dissipated during processing (not being a technical expert on these processes, I can only rely on what I have learned in conversation and online research). Could these extraction uses become eligible for non-beverage drawback of tax at some point? TTB regulations in 27 CFR Part 17 for non-beverage claimants require that any food or flavoring product, which historically has included processing of dietary supplements through extraction processing of plant materials, must be allowed in Food and Drug Administration (FDA) rules as approved type materials, either as generally safe or categorized for use, to be allowed as an ingredient in, or as a finished product eligible for drawback of excise tax. Might the proposed laws include provisions for this activity, in conjunction with the allowance for tax exemption for medical use? Just an example of an area that might need to be addressed. As with the early days of post-prohibition regarding alcohol, the early days of post-prohibition for marijuana will certainly see a number of regulatory issues requiring agency action to interpret and explain in policy and ruling statements. It should be an interesting ride, as it was for the industry and regulators from the 1930s to today in respect to alcohol. Further, as with alcohol, the post-prohibition era will generate conflicts between on-going criminal activity reliant on untaxed production and distribution and the new legalized industry. Governments already expend law enforcement and regulatory resources on the illegal trade, so creation of a legitimized industry will define a line between legal and illegal. Just as with alcohol, an ongoing effort to skirt the laws and manufacture “outside the lines” will continue, as permit and tax violations by those making and trafficking in unlawfully made product will replace drug enforcement laws as the focus of enforcement efforts.

Jim McCoy operates J. McCoy Alcohol & Tobacco Compliance Consultants LLC, and since 2010 has assisted alcohol and tobacco businesses in their efforts to meet Federal regulatory and tax requirements. For more information email Jim at jmccoy@jmccoyconsultants.com. 100 

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Profile for Artisan Spirit Magazine

Artisan Spirit: Winter 2020  

The magazine for craft distillers and their fans.

Artisan Spirit: Winter 2020  

The magazine for craft distillers and their fans.