I’m very pleased to have contributed a piece about unfair trade practice laws to the Summer 2026 edition of Artisan Spirit magazine. Thank you to the Artisan Spirit team for inviting me to share some insight! While you’ll find the complete text of below, I encourage you to click on the image above (or here) and take a few minutes out of your day to enjoy more than two dozen timely and engaging articles geared toward craft distillers in the U.S. and beyond. (My article starts on p. 59.)
What Craft Distillers Need to Know About Unfair Trade Practice Laws
As an alcohol regulatory attorney, the first thing I routinely hear when answering a call from an unknown number is the sound of anxiety. After a quick intake of breath comes a rushed monologue from a panicked business owner staring at a notice from a regulatory agency. Apparently, the company has violated a law, must immediately cease and desist the law-breaking activity, and must reply in writing within a matter of days. Often, the caller doesn’t understand where a legal line was crossed. Was it not okay to provide glassware featuring their cool new logo to new on-premise accounts? How did giving away samples of an experimental small batch trigger legal action? What the heck is going on?
Ah. Yet another beverage alcohol business caught in the sticky web of unfair trade practice laws – and not because they were unaware that such regulations existed. They just didn’t understand how the complex laws, written in the foreign language of legalese, applied in real-world, day-to-day operations. And, perhaps, they didn’t have the time or budget to run every marketing and sales decision by an attorney. Which brings me to the purpose of this article: to demystify unfair trade practice laws for craft distillers and those doing business with them. While the focus here is on the set of federal laws, I’ll touch on the interplay with state laws as well.
What kind of activities do unfair trade practice laws encompass?
At their core, these regulations are designed to prevent alcohol producers from exerting too much influence over retailers and to ensure a fair and competitive marketplace. In other words, to keep the playing field even. The laws do this by prohibiting four categories of business practices: exclusive retail outlet, tied house, commercial bribery, and consignment sales. If those terms are unfamiliar, here’s a quick primer:
Exclusive outlet rules mean a supplier can’t require a retailer to carry its products instead of its competitors. They also forbid agreements requiring retailers to make future alcohol purchases.
Tied house restrictions are broader (and often trickier for businesses to navigate). They make it illegal to give “things of value” to retailers to influence purchasing decisions. This could include providing signage, bar equipment, or branded items, sponsoring events, extending credit, and numerous other practices that are often par for the course in other industries.
Commercial bribery covers more explicit inducements that essentially amount to paying for services or placement (whether through cash payments, sales incentives, or other benefits).
Consignment sales rules require that wholesalers and retailers take ownership of the product (and the associated risk) and they limit circumstances under which producers can accept alcohol returns. A distillery can’t say, “you can just pay us post-sale” or “we’ll take back whatever doesn’t sell.”Bottom of Form
Taken together, the reach of these laws is long and deep, extending beyond obvious sales practices. They affect everything from who can own alcohol businesses to how those businesses sell their products — and even how they communicate with trade partners.
When and why were the laws enacted?
Unfair trade practice laws reflect the historical circumstances that existed when they were drafted, which is why peculiar terminology like “tied house” is still in use. Before prohibition, a few large breweries controlled networks of saloons—the original “tied houses.” These bars were “tied to” an alcohol maker by varying degrees of financial obligation. Producers frequently owned them or provided incentives to them in exchange for a commitment to selling the producers’ alcohol exclusively. Incentives included money, bar fixtures, and even construction of the bars themselves.
Tied house saloons were excellent and aggressive marketers. Some offered free lunches or glassware, stayed open all around the clock, and dropped alcohol prices below cost in price wars with competitors. Independent—that is, “untied”—bars often struggled to stay afloat without the benefit of the producer-funded promotions consumers found so appealing. Not surprisingly, such promotions also increased alcohol consumption.
Hoping to appease a public increasingly worried about alcoholism, poverty, and crime, politicians blamed tied houses for the growing societal malaise. They characterized producers as absentee owners who didn’t know or care about the community and were solely motivated by profit. Congress passed the Federal Alcohol Administration Act in 1935, only two years after the end of Prohibition, when the focus was still on preventing the reemergence of tied houses. That foundational law primarily addresses unfair trade practices—and remains substantially unchanged today.
Who do unfair trade practice laws apply to?
Nearly every business in the alcohol industry, even for transactions that occur entirely within a single state. All federal permittees and bondholders must comply, including distillers, brewers, wine producers, rectifiers, blenders, importers, wholesalers, bottlers, and warehousers. Federal unfair trade practice laws regulate industry members’ communications with retailers, whether they interact “directly, indirectly, or through an affiliate.” Retail alcohol businesses need to understand the limitations the laws put on their suppliers. Of the four categories outlined above, however, only consignment and bribery laws directly apply to retailers.
Are the laws actively enforced?
Absolutely, at both the federal and state levels. For smaller operations like craft distilleries, however, enforcement activity is far more likely to come from reactive, complaint-driven investigations.
What are the potential consequences of violating the laws?
The first thing to know is that receiving an agency’s request for documents or violation notice is the first step in what is often a lengthy resolution process. In other words, the doors to your business will not close tomorrow! Under federal law, penalties may include monetary payments (similar to fines), permit suspensions, and permit revocations. The Alcohol and Tobacco Tax and Trade Bureau (TTB) enforces rules against retailers by cooperating with the Department of Justice to file enforcement actions in federal district court, seeking fines of up to $1,000 per offense, and ordering alcohol businesses to refrain from engaging in certain activity. Additional state law penalties vary from state to state.
In commercial bribery cases, penalties for individuals involved include fines and jail time.
The TTB also cooperates with state alcohol agencies. Many states’ unfair trade practice laws—including their exclusive retail outlet and tied house laws — apply directly to retailers in addition to other categories of alcohol businesses.
How hard is it to “win” when accused of a violation? What’s the adjudication process like?
Industry members’ ability to “win” and defend themselves from agencies’ enforcement actions varies depending on their individual situations — the availability of viable defenses and the severity of the alleged misconduct. To minimize risk, industry members should consult an alcohol attorney right away if they receive either a request for information or a notice of violation from an alcohol agency.
How do state laws come into play? Do they mostly align with federal regulations, or are they a separate beast?
All 50 states also have unfair trade practice laws. While many mirror the federal laws, there are also crucial differences. In many instances of overlap, for instance, state laws are stricter, such as California’s stricter rules for retailers’ returns of spirits.
State alcohol laws can evolve quickly in response to trends and public sentiment; it isn’t uncommon for California to introduce a dozen or more new regulations in a single year. (When a producer-client tells me their dream is to see their bottle on bar shelves nationwide, I gently inform them that operating in 50 states is akin to operating in 50 of the most heavily alcohol-regulated countries in the world. Not undoable, but not likely for all but the most successful brands.) Navigating state and federal laws can be tedious and frustrating.
What specific unfair trade practices are regulators most focused on in 2026?
The TTB has warned businesses that it’s cracking down on the following:
- Paying money or other things of value to retailers in exchange for display or shelf space — commonly called slotting fees
- Furnishing promotional items in exchange for preferential display space, even where the specific promotional items are allowed by regulatory exceptions
- Using third party marketing companies to provide legally prohibited things of value to retailers indirectly that (1) are not allowed by the regulatory exceptions, or (2) result in a violation of one of the other tied house practices
- Providing unlawful marketing support in the forms of items or services
- Paying retailers for events — including tastings — that never took place, sometimes called swiping because they appear as credit card charges for sales representatives
- Paying for entertainment at retail venues
- Offering sponsorship agreements tied to product placement or exclusivity
- Altering invoices to conceal inducement payments
- Engaging in consignment sales under the pretense of brokerage agreements
How does the March indictment of former employees of Southern Glazer’s fit in?
On March 3, 2026, a grand jury indicted five former senior employees of Southern Glazer’s Wine & Spirits. The TTB has accused them of conspiracy to commit bribery, falsification of records, and related charges. Notably, all the indicted individuals were responsible for selling spirits in addition to wine, particularly to chain store retailers.
That case involves claims for violations of federal commercial bribery laws. One former Albertsons wine buyer and two former employees of a wine supplier have already pled guilty to receiving and giving bribes. Recent developments show the scope of the TTB’s allegations is growing, however, and may soon impact spirits producers and additional retailers.
So far, the TTB’s public statements about claims stemming from that case have related to claims against former employees only, not the alcohol businesses themselves. We also have not seen any action from California’s Alcoholic Beverage Control (ABC), even though the alleged misconduct was illegal under California’s tied house laws. Industry observers are still waiting for those other shoes to drop.
Gillian Garrett is an alcohol regulatory attorney based in the San Francisco Bay Area who advises and represents clients across all three tiers of the industry. She is the author of Distilling Alcohol Law: Federal & California Unfair Trade Practices (2026), the first legal reference guide designed to help businesses more easily understand and navigate the complex array of unfair trade practice laws. You can reach her at [email protected].
