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I’m Exempt from COLA Registration and Only Sell My Product in My State - Am I Exempt from Formula Approval?

New Jersey Division of Alcoholic Beverage Control Issues Guidance Concerning COVID-19 Emergency Operations

In prior posts, we discussed whether federal Certificate of Label Approval (“COLA”) approval was necessary to obtain state label approval in New Jersey and Pennsylvania, even if the product is sold exclusively in your state.  We also discussed when the use of certain ingredients in beer triggers the need for formula approval.  In a recent TTB Newsletter, the TTB notified the industry that it had added two questions related to these topics to its FAQs for malt beverages, namely: 1) Am I exempt from formula requirements if I sell my malt beverage only at my brewpub or only within my state? and 2) Am I exempt from formula requirements if I do not need a COLA for my domestic malt beverage?  The answer to both questions is “no.”

If a brewer is required to obtain formula approval under the federal regulations for its malt beverages, the fact that the beverage is only sold in your facility, or only within your state, does not alleviate the need for formula approval (subject to the formula approval exceptions discussed in our prior post).  And the fact that the beverage is only sold on tap, as opposed to bottles or cans, still does not relieve you from obtaining formula approval.

Likewise, even if the beverage is not being sold in interstate commerce, and therefore does not require TTB COLA approval, formula approval is nevertheless required (unless a formula approval exception applies).

What is the basis for the distinction that COLA approval is not required for intrastate sales, but formula approval is still required?  The COLA regulations are administered under the Federal Alcohol Administration Act, which specifically states that they are applicable to sales in interstate or foreign commerce.  Meanwhile, the formula approval regulations are administered under the authority of the Internal Revenue Code, 26 U.S.C. 5415, 5555, and 7805, which is not limited to interstate or foreign commerce.

Whether it is formulas or COLAs, understanding the applicable regulations is critical to maintaining TTB compliance.

For information regarding national and state liquor law matters or general manufacturing and distribution advice, please contact our Liquor Law, Licensing, Manufacturing, and Distribution Practice Group: Liquor Law Department Chair Theodore J. Zeller III, Esquire (tzeller@norris-law.com); David C. Berger, Esquire (dberger@norris-law.com) for Pennsylvania and New Jersey retail and manufacturing licensing; or contact our offices at 610-391-1800.

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