Estate and Succession Planning
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The Background
In August 2021, Tipsy Scoop LLC, a New York based purveyor of “boozy ice cream”, filed a petition for declaratory statement with the Florida Division of Alcoholic Beverages and Tobacco (DABT). The petition requested that DABT opine on whether their alcohol infused ice creams and sorbets were legal to sell within Florida at retailers authorized to sell alcoholic beverages. Tipsy Scoop’s position was that the Florida Beverage Law did not apply to their products as the products are considered “non-beverage” items by the federal Alcohol and Tobacco Tax and Trade Bureau, and are sold in a solid form. Therefore, because section 561.02, Florida Statutes, only gives DABT the authority to regulate “alcoholic beverages”, Tipsy Scoop believed their products are outside of the Division’s regulatory sphere.
Interestingly, Tipsy Scoop also cited chapter 500, Florida Statutes, which is known as “Florida’s Food Safety Act.” Tipsy Scoop positioned the Act considers food products that contain one half of one percent or more alcohol by volume; the same alcohol content that triggers DABT’s regulation of beverages, adulterated foods that are unfit for sale, and that an exception to the adulterated products provision exists for candies containing at least .5% but less than 5% ABV. Recognizing that no similar exception does exist for ice cream or sorbet products, Tipsy Scoop asked DABT whether their products could be sold in Florida retail locations licensed by DABT if they met the same requirements subject to alcohol-infused candies.
DABT responded on October 17, 2022 denying the declaratory statement request on the basis that an agency is unable to render a declaratory statement on statutes it does not administer or enforce. Essentially, because Tipsy Scoop’s question was phrased in a manner to implicate chapter 500, Florida Statutes, rather than the Beverage Law, DABT was unable to give an opinion on the applicability of those statutes to Tipsy Scoop’s position.
The Current Status
As a result, this gray area of Florida’s alcoholic beverage regulatory scheme remains. Tipsy Scoop’s question highlights one of the issues with the failure of Florida’s antiquated alcohol regulations to evolve with an ever changing and innovative marketplace. By maintaining the Prohibition Era statutory definition of the term “alcoholic beverage”, each new alcohol infused product that hits the market raises a similar question.
The Impact on Ice Cream Manufacturing Companies
By declining to update the Beverage Law as the alcohol industry has grown, companies like Tipsy Scoop and retailers looking to sell alcohol infused products are put in a difficult position.
- By maintaining the position advocated by Tipsy Scoop, that their ice creams and sorbets are not “alcoholic beverages” subject to regulation, they presumably gain an easier access to the consumer market by being able to avoid both the three-tier regulatory system and the high levels of taxation placed on liquor products both at the state levels.
- By failing to be either an alcoholic beverage or an exempt confectionary, their products would likely meet the definition of an adulterated food product, and thus unable to be sold in Florida.
- By falling outside the Beverage Law, these alcohol infused desserts would not be subject to section 562.11, Florida Statutes, which prevents the sale or service of “alcoholic beverages” to individuals under the age of 21.
What’s next?
If Tipsy Scoop’s products were subject to the Beverage Law, then Tipsy Scoop would be required to be licensed as a manufacturer, their products would be required to be sold through a distributor authorized to sell alcoholic beverages to licensed retail locations, and the products would subject to the state’s excise tax on alcohol, likely disrupting both Tipsy Scoop’s current supply chain and pricing strategies. Once offered for sale in a store, the products would be age-restricted. However, while this interpretation is consistent with prior declaratory statements DABT released discussing alcohol infused gelatin products, it would be inconsistent with TTB’s classification of the product as a non-beverage.
Currently, Tipsy Scoop also offers its products through an online retailer to be shipped across the country. While direct-to-consumer shipping restrictions of alcoholic beverages are being challenged at all levels of courts around the country, so long as these laws are upheld then the classification of these products determines whether Tipsy Scoop and/or its common carriers are violating a multitude of state laws.
When to Contact Dean Mead
Operating in the gray area of a regulated industry can raise several business and compliance concerns, and while this post covers some general concerns, the specific details of any one particular product or practice are vital to determining how to navigate the regulated landscape. For more information on the alcoholic beverages, alcohol infused items, and other regulated products, please contact our Regulated Industries Team.
