Alcohol industry update: Bribery charges, new state laws, and THC uncertainty

Federal enforcement developments

On March 4, 2026, the US government filed a 10-count indictment tied to a premier beverage distributor, a grocery chain, and multiple suppliers, marking the most significant charging action to date involving alleged commercial bribery. Key points include the following:

• The indictment charges six individuals, five of whom are current or former employees of the beverage distributor in the California Chain Division, with the sixth being an employee of a supplier. This is the first case to name the employees of a premier beverage distributor as defendants.
• The government alleges that the beverage distributor’s employees, working with supplier representatives, paid bribes to employees of the grocery chain in exchange for favorable product placement and purchasing decisions.
• The alleged bribes included prepaid gift cards, cash, luxury watches, suits, consumer electronics, sports equipment, golf outings, flights, hotel stays, and resort travel
• According to the indictment, the defendants funded and concealed the bribes through third-party vendors that generated falsified invoices characterizing the payments as “marketing,” “merchandising,” “education,” and other legitimate expenses typically charging an additional fee of approximately 10%.
• The indictment further alleges that the beverage distributor’s employees forged hotel folios to disguise bribe-related travel as legitimate business expenses and submitted them through the company’s finance office for reimbursement and bill-backs to suppliers.
• The government alleges that the supplier employee provided $1,500 in gift cards and an all-expenses-paid trip to Las Vegas, including flights, hotel accommodations, cash, and entertainment
• Following the indictments, California Alcoholic Beverage Control (ABC) Assistant General Counsel Robert de Ruyter publicly emphasized that criminal charges against individuals do not preclude future administrative actions by California ABC against the license holders that employ them

Companies should review their promotional practices, third-party vendor agreements, and expense reimbursement procedures to minimize exposure. Key focus areas include strengthening internal controls, conducting thorough due diligence on intermediaries, ensuring transparent documentation of supplier bill-backs, and providing regular compliance training on permissible trade practices.

State legislative and regulatory developments

Several states are considering legislation that would significantly modify alcohol regulation, distribution frameworks, and beverage-related fees.

• The Iowa House State Government Committee advanced HF2403, which would repeal Iowa Code § 123.22 and eliminate the state government’s monopoly over the importation and distribution of alcoholic liquor to retailers.
• Iowa proposed HF809, which would repeal the state’s current bottle bill program, including the requirement that beverage containers sold in the state carry a five-cent refund value.
• Colorado introduced Senate Bill 26-094, which would modify the state’s alternating proprietorship framework by allowing one licensee to manufacture, blend, bottle, and store alcohol on behalf of an adjacent licensee and by permitting distillers to participate in alternating proprietorships.
• Colorado also introduced HB26-1271, which would have imposed a new impact and recovery fee on alcoholic beverages applicable to manufacturers and distributors, although the bill was postponed indefinitely in committee.
• Michigan’s attorney general has filed a complaint in Michigan federal court against a brewing supply store for selling and shipping alcoholic products directly to consumers outside the state without a license, noting that the supplier misleads customers even though it has adequate licensing to sell and/or ship its products.

Industry participants should monitor these legislative proposals closely and assess potential impacts on distribution strategies, operational costs, and market access. Iowa’s consideration of eliminating its state monopoly could fundamentally alter competitive dynamics and create new opportunities, while Colorado’s proposed alternating proprietorship reforms may enable craft producers to share facilities more efficiently. The Michigan enforcement action underscores the importance of maintaining proper licenses in every state where products are sold or shipped to consumers.

Hemp THC beverage update

At the National Alcohol Beverage Control Association’s Annual Legal Symposium, McDermott Will & Schulte Counsel Christine Dower led a panel on the legal and enforcement trends surrounding hemp THC beverages. Overall takeaways from the discussion include the following:

• Regulatory uncertainty remains following President Trump’s signing in November 2025 of the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act. Absent congressional action by November 12, 2026, hemp-derived THC beverages containing more than 0.4mg of hemp THC per container will be redefined as marijuana, currently a Schedule I controlled substance.
• Multiple federal proposals have been introduced that would create oversight of hemp-derived cannabinoid products, including manufacturing standards, testing requirements, labeling rules, dosage limits, and age-gating provisions, though no unified federal framework has yet emerged.
• At the state level, approaches continue to diverge, with some states advancing regulatory schemes, others moving to prohibit these products entirely, and several – , including Utah, Indiana, Oregon, New Mexico, and Wyoming – ending their legislative sessions without changes.
• Panelists noted that consumers trust established alcohol regulatory systems, and hemp beverage advocates continue to push for a regulatory structure modeled on alcohol oversight.

The November federal deadline and divergent state approaches create immediate compliance challenges and longer-term strategic uncertainty for the alcoholic beverage industry. Companies need to navigate potential conflicts between state permissibility and federal prohibition, manage exposure to rapidly shifting enforcement priorities, and prepare for multiple regulatory outcomes.