CSA - Producer Tied House
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Since the repeal of Prohibition, alcoholic beverages in America have been distributed through a mandatory three-tier system. Our state and federal laws require that wine, beer, and spirits made by licensed producers must first be sold to licensed wholesalers (distributors), who then sell it to licensed retailers before being sold to consumers. Moreover, in order to keep the three tiers of the industry entirely separate and independent, legislatures across the nation have strictly regulated the relationships between players at different levels.

Tied house laws restrict the other alcohol business interests that a winery, brewery, or distillery owner can have. For example, a person with an ownership or management role in a retail establishment, such as a restaurant, hotel, or package store, may be prohibited from buying into a winery. In transactions capitalized by investment funds with typically numerous investors, tied house conflicts pop up with surprising frequency. Unless solved, these conflicts can literally break a deal. Compliance Service of America has significant experience with tied house laws and finding creative ways to structure transactions for compliance with their requirements.

Not only do tied house laws restrict ownership interests between the tiers, but they also prohibit suppliers from giving "things of value" to retailers. The catch-all phrase "things of value" covers a multitude of "sins" -- from giving away obvious valuables such as free goods or supplies, to offering more subtle benefits such as consumer referrals.

Trade practice rules dictate what you can legally do to promote your product and support your trading partners in selling your products. Creative marketers constantly look for new avenues to place your products before the buying public, and new ways to capture consumers' attention and dollars. Private label programs, special branding, cross-promotion, and other aggressive marketing methods have now become crucial to selling wine. All of these methods, since they involve incentives to retailers and consumers, can easily run afoul of tied house limitations if they are not carefully designed. Here's where CSA's compliance know-how can work with your marketing genius for higher profits -- and lower compliance risks. Let us evaluate your latest marketing plan to determine if it is within regulatory bounds, and help you tune it to better harmonize with applicable laws.

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