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Craft Brewery and Craft Distillery

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With the demand for craft beer and craft spirits increasing, consumers are becoming more knowledgeable, demanding locally brewed beers and locally distilled spirits that are manufactured using locally sourced and organic ingredients.

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Branding, Positioning and Protecting Your Craft Brewery or Distillery June 9, 2016
From Startup to Expansion; Preparing Your Brewery or Distillery to Raise Capital March 10, 2016

Industry Overview

Overview

With the demand for craft beer and craft spirits increasing, consumers are becoming more knowledgeable, demanding locally brewed beers and locally distilled spirits that are manufactured using locally sourced and organic ingredients. As a result, the craft beer and craft spirit industries are expanding at a rapid pace, as the breweries and distilleries innovate and bring new and unique products and brands to the market. These artisans are redefining cottage manufacturing in communities throughout the United States.

With the demand for craft beer and craft spirits increasing, consumers are becoming more knowledgeable, demanding locally brewed beers and locally distilled spirits that are manufactured using locally sourced and organic ingredients. As a result, the craft beer and craft spirit industries are expanding at a rapid pace, as the breweries and distilleries innovate and bring new and unique products and brands to the market. These artisans are redefining cottage manufacturing in communities throughout the United States.

The market for craft beer and craft spirits continues to evolve in a highly regulated environment, and craft breweries and craft distilleries realize they not only need to create quality products, but also have to be efficient and effective businesses. Baker Donelson attorneys and public policy advisors are well-positioned and well-equipped to advise these specialty companies on a wide range of legal and public policy issues specific to their businesses. Whether choice of entity, applying for and obtaining permits, real estate acquisition or leasing and land use issues, protecting trademarks and trade secrets, or labor and employment law issues, our attorneys and advisors have the experience and knowledge to advise craft breweries and craft distilleries on virtually all of their legal and public policy needs.

Corporate and Transactional

Entity formation is a crucial stage for companies in the craft brewery and craft distillery space, as it sets the foundation for a business's future. Baker Donelson lawyers advise on business strategy and planning, assembling the founding management team, selecting and forming the appropriate business entity, and can assist with raising necessary capital from investors to support and accelerate the growth of a brewery or distillery.

Our attorneys have significant experience advising on both debt and equity financing, including convertible notes, crowdfunding, angel investments and venture capital. We advise clients on which options may be best for each company’s particular situation, and we assist with planning and conducting negotiations to ensure that our clients obtain the best terms.

Boards of directors, board committees and executive management in public and private companies must navigate complex and evolving laws and regulations regarding corporate governance. Baker Donelson lawyers provide sophisticated, practical advice on corporate governance best practices to help clients comply while still operating efficiently in a world of increased regulation.

Regulatory Compliance

Craft beer and craft spirits are highly regulated products. At the federal level, the Federal Alcohol Administration Act of 1935 and associated regulations impose a series of licensing, labeling, formulation and advertising requirements on craft breweries and craft distilleries.

At the state level, each state individually regulates the distribution and sale of beer and spirits as well as associated trade practices, through a combination of licensing, direct control, excise taxes and "tied house" prohibitions and limitations. Baker Donelson attorneys understand all these issues, and have developed working relationships with many of the regulators at the federal and state level.

Intellectual Property

There is a tremendous amount of value in a craft brewery or craft distillery’s story, identity, formulas, logos and overall brand, and we know how to protect that value. Baker Donelson attorneys have extensive experience working with businesses to evaluate new brand and product names for non-infringement, protectability and compliance with specific state and federal alcohol regulatory restrictions.

Baker Donelson provides traditional trademark registration and portfolio management services as well as advice on trade secret protection. Our attorneys advise craft breweries and craft distilleries on state brand name registrations and Certificate of Label Approval (COLA) procurement. We also regularly defend trademarks and brand name recognition, as well as protecting corporate reputation.

Manufacturing and Distribution

A craft brewery or a craft distillery may have the greatest formula in the world, but if it cannot get the product manufactured and to market, it is worthless. Baker Donelson attorneys and public policy advisors advise craft breweries and craft distilleries on manufacturing and distribution strategy and the regulatory framework that governs both processes.

For those craft breweries and craft distilleries that are going to self-manufacture, Baker Donelson advises clients on issues associated with the purchase or lease of equipment. Our attorneys also regularly draft, review and negotiate brewing and distilling service agreements and alternating proprietorship arrangements.

Most states still mandate a three-tier distribution system requiring producers to sell to wholesalers, and wholesalers in turn to sell to retailers. Baker Donelson lawyers have drafted, reviewed and negotiated numerous distribution contracts, and we routinely advise clients on establishing and managing distribution networks.

Breweries and distilleries contract with third party vendors for packaging material and merchandise, both of which are key components to the success of the business and necessary to get the product to market. Craft breweries and craft distilleries also need to ensure the steady and continuous supply of the necessary raw materials for the manufacturing facility. Baker Donelson attorneys regularly negotiate these types of vendor and purchase agreements on behalf of our clients.

Real Estate/Land Use/Zoning/Environmental

Knowledge of and compliance with state and municipal land use and zoning regulations is critical when establishing a brewery, brew pub or distillery. Baker Donelson attorneys regularly appear before planning and zoning boards throughout the United States and are well prepared to advise and advocate for our craft brewery and craft distillery clients on issues related to any land use, zoning and environmental matters.

Whether a craft brewery or craft distillery is undertaking a ground-up new construction project for a manufacturing plant, adaptively reusing a legacy asset or leasing either of these, Baker Donelson attorneys regularly work with clients through all aspects of the real estate acquisition or leasing process. In addition to drafting and negotiating the underlying purchase agreement or lease, we work with our clients on due diligence review in order to help mitigate and control real estate acquisition, development or leasing risk. We also understand non-traditional finance options that are available for rehabilitating historically significant buildings for reuse as a craft brewery or craft distillery.

Energy and water consumption, wastewater, solid waste and air emissions are some of the many environmental challenges faced by craft breweries and craft distilleries. Baker Donelson has a dedicated environmental law practice that assists clients in complying with the complexity of federal and state environmental regulations.

Employment Counseling and Litigation

From hiring and managing brewmasters, master distillers and other levels of employees, to litigating on behalf of employers in workplace disputes, our clients rely on us to ensure their breweries or distilleries are productive, safe and successful working environments. Baker Donelson works with employers to craft, review and update employment handbooks to ensure compliance with federal and state requirements, and we help to secure and protect the core assets of your business through work-for-hire and employment and confidentiality agreements.

Our labor and employment attorneys offer craft breweries and craft distilleries:

  • Litigation defense services for administrative and court proceedings at the federal and state level
  • Advice on pre-litigation strategies to reduce legal risks
  • Policy analysis and drafting
  • Compliance audits
  • Management training
  • Labor negotiation

Baker Donelson attorneys stay on top of the latest changes in labor and employment laws and regulations. We provide counseling and strategic advice on all employment-related laws and regulations, and when necessary, we defend our clients in district and federal courts across the country. Our attorneys regularly appear before the EEOC, DOL and Occupational Health and Safety boards.

Baker Donelson can customize in-house management training programs so that clients' management teams will feel comfortable interacting with us and getting answers to their questions. We offer mock trials, case studies, role-playing, quizzes and video vignettes for human resources managers, mid-level managers and front line supervisors.

Growth and Expansion Strategy

Baker Donelson is well-qualified to represent craft breweries and craft distilleries on expansion projects. The firm's public law, public finance, business and real estate practices have converged during the past decade to produce one of the most evolved and comprehensive economic development practices of any firm in the southeastern United States. Each of these practice areas makes Baker Donelson uniquely qualified to represent craft breweries and craft distilleries in partnership with state and local governments throughout the Southeast.

Baker Donelson's relevant experience in economic development includes:

  • Drafting state and federal incentive legislation
  • Structuring public-private partnerships and securing incentive packages from local and state governments
  • Negotiation of agreements for payments in lieu of taxes for businesses in various industries and locations
  • Implementing local, state and federal incentive packages
  • Developing and implementing tax-exempt financing vehicles
  • Assisting in the negotiation of traditional and non-traditional financing alternatives
  • Accessing grant funds available for construction of public and quasi-public infrastructure
  • Negotiating with local governmental authorities to obtain special zoning ordinances

This broad background provides Baker Donelson with unmatched experience in understanding and resolving the issues facing craft breweries and craft distilleries when locating a new facility or expanding an existing one. Our experience has enabled us to build permanent, positive relationships with the individual state and local officials who will be responsible for implementing state law and policy with respect to the granting of incentives and regulating businesses locating anywhere in the southeastern United States.

Public Policy

Sometimes a solution to a craft brewery or craft distillery issue necessitates legislative or administrative action. Baker Donelson maintains an active and successful public policy practice at the local, state and federal levels, representing clients who seek specific and strategic administrative and policy action by local, state and federal government agencies and authorities. Our team is also extremely effective in achieving state and federal legislative solutions for our clients, including drafting, monitoring, testifying and lobbying for and against specific appropriations and legislation.

The Baker Donelson public policy team has specific experience in the following areas:

  • Regulated industries
  • Economic development projects and programs
  • Energy
  • Environmental regulation
  • Intellectual property
  • Labor and employment
  • Local, state and federal government budgets, appropriations, financing and grants
  • Public finance
  • Public infrastructure
  • Tourism and recreational facilities
  • Wastewater systems and water resources

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