July 22, 2019

July 22, 2019

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Alcohol Advertising in Digital Media, Part 3: State Regulation

In Part 2 of this series, we highlighted recent developments in federal regulation and oversight of alcohol beverage advertising with implications for digital media.  State alcohol and consumer protection laws also apply and can make regional or national ad campaigns challenging.

An overarching concern to state officials is the potential appeal of alcohol beverage advertising to persons below the legal drinking age.  In the digital space state attorneys general and regulators quickly responded to the advent of social media and asserted authority to prevent dissemination of inappropriate advertising content to children.  Attorneys general signed consent agreements on alcohol and tobacco advertising with Facebook, MySpace and several other social networks in 2008.  As a result, the networks developed technology to limit access to alcohol advertising content to registered users over the age of 21.  Advertisers must ensure that they set up their social network pages properly so that the technology limiting access to alcohol ads is functioning.

The 21st Amendment to the U.S. Constitution grants states a degree of unique authority over alcohol beverages that does not apply to most other consumer products.  In advertising, that authority has been somewhat eroded by the First Amendment’s commercial speech doctrine and other case law, but most states continue to actively regulate the source of funds used to pay for advertising based on older legal concepts designed to protect the independence of retailers from domination by manufacturers.  In the post-Prohibition period, officials feared that large brewers and distillers would dominate local grocery stores, bars and other retailers, most of which were then “mom and pop” operations.

While the retail sector has changed dramatically, many state laws still contain restrictions on advertising or promotional activities by manufacturers that benefit specific retailers.  Recent examples of these trends are found in changes in Texas law effective September 1, 2013 that have significant implications for regional and local advertising via digital media in a large and diverse state.

In response to a 2011 court decision (Authentic Beverages Company, Inc. v. Texas Alcoholic Beverage Commission), the Texas Legislature repealed longstanding advertising restrictions and authorized prearrangement and preannouncement of promotional activities to be held on a retailer’s premises.  Texas law now permits manufacturers and wholesalers to utilize digital media to inform consumers of the identity and location of retailers where their products are available.  Restrictions apply to payments or reimbursements to retailers for the cost of an alcohol beverage ad.  Finally the Texas Legislature repealed a prohibition on advertisements that refer to the alcohol content of beer as well as a requirement to label malt beverages as “beer” or “ale” based on the alcohol content even where that designation (from an industry understanding) was inaccurate.  Those types of archaic restrictions made it difficult to run national or regional digital advertising campaigns without technical violations of Texas law.

While you can now use factual statements about product availability and attributes in digital and other media in Texas, many analogous state restrictions remain on the books.

Alcohol Advertising in Digital Media, Part 2: Federal Regulation

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About this Author

Arthur J. DeCelle, alcohol beverage regulation attorney, McDermott Will law firm
Counsel

Arthur J. DeCelle is counsel in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Washington, D.C., office.  He focuses his practice on alcohol beverage regulation at all levels of government and on legal and public policy challenges facing heavily regulated industries.

Prior to joining McDermott, Art was the general counsel of the Beer Institute for 16 years.  From 1981 to 1984, Art held senior staff positions in the U.S. House of Representatives and worked on several federal political campaigns....

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