Alcohol industry update: Enforcement activity, advertising policy changes, food labeling litigation, and hemp beverage developments

Alcohol-beverage companies continue to face an active and evolving compliance landscape as regulators, courts, and policymakers address trade practices, ownership structures, advertising, food labeling, delivery operations, winery wastewater, and hemp-derived tetrahydrocannabinol (THC) products.

Recent developments underscore the importance of reviewing commercial practices, corporate ownership structures, product labeling, advertising strategies, and distribution models for compliance with federal and state requirements. Below are notable litigation, enforcement, regulatory, and hemp-beverage developments for industry stakeholders to monitor.

Litigation and enforcement updates

Recent litigation and enforcement activity highlights continued scrutiny of alcohol-industry trade practices and three-tier system compliance.

Southern Glazer’s enters non-prosecution agreement

Southern Glazer’s entered into a non-prosecution agreement with federal prosecutors to resolve a multiyear commercial-bribery investigation involving alleged improper payments and benefits provided to employees of Southern Glazer’s and certain retail customers.

Under the agreement, Southern Glazer’s will pay a $12.5 million penalty, cooperate with ongoing investigations, and enhance its compliance program. The company admitted that employees and executives were involved in providing improper benefits, including cash, gift cards, travel, entertainment, and luxury goods. The company also admitted that third-party vendors and falsified invoices were used to facilitate and conceal certain payments.

Criminal proceedings against former Southern Glazer’s employees and other individuals remain pending and are expected to continue. The matter is the latest development in longstanding government scrutiny of alcohol-industry trade practices.

Massachusetts court addresses ABCC enforcement discretion

In Monsieur Touton Selection of Massachusetts, Ltd. v. Alcoholic Beverages Control Commission (ABCC), the Massachusetts Appeals Court held that the ABCC is not required to revoke a license for every violation of the state’s common-ownership restrictions and may impose lesser sanctions.

The case involved a Massachusetts wholesaler whose parent company also owned an out-of-state supplier holding a Massachusetts certificate of compliance, creating a prohibited cross-tier ownership structure under state law. Although the ABCC initially concluded that revocation was mandatory, the court vacated the decision and remanded the matter, finding that the statute authorizes, but does not require, revocation.

The decision is a reminder that regulators continue to scrutinize ownership structures across the three-tier system and may pursue enforcement even when corrective action is taken after a violation is identified.

Federal updates

Federal regulatory and litigation developments continue to create compliance considerations for alcohol, food, and beverage companies.

Google updates alcohol advertising policy

Effective September 30, 2026, Google will update its alcohol advertising policy to address permitted alcoholic beverage products, cannabis and cannabidiol (CBD) beverages, and permissible activities related to nonalcoholic beverages.

Companies advertising alcohol, nonalcoholic beverage alternatives, cannabis beverages, CBD beverages, or adjacent products should review campaign structures, product claims, targeting practices, and platform-specific requirements.

Allulose litigation raises labeling risk

Companies using allulose in food products continue to face litigation risk related to “no added sugar” and similar claims.

The trend follows the US Court of Appeals for the Seventh Circuit’s decision in Franco v. Chobani, LLC, which held that although the US Food and Drug Administration has exercised enforcement discretion regarding the declaration of allulose in Total Sugars and Added Sugars labeling, that discretion does not preclude state-law claims alleging violations of identical state food-labeling requirements.

Manufacturers should review sugar-related claims on products containing allulose, particularly where front-of-pack claims, nutrition labeling, and state-law requirements intersect.

State regulatory developments

Recent developments in California and Delaware highlight evolving compliance obligations and enforcement priorities for alcohol-industry stakeholders.

California winery wastewater deadlines

Most wineries that discharge winery waste to land were required to enroll under the current General Waste Discharge Requirements (WDRs) for Winery Process Water. Certain Napa County wineries covered under the county’s program must enroll under the WDRs by January 2027, when the county program sunsets.

Wineries should confirm whether they are subject to the WDRs and assess enrollment, reporting, and operational compliance obligations.

Delaware increases inspections

Delaware has recently increased enforcement inspections of alcohol-delivery vehicles and is expected to increase audit inspections of licensed premises.

Alcohol licensees operating in Delaware should review delivery-vehicle documentation, licensed-premises records, inventory controls, and inspection procedures.

Hemp THC beverage updates

Federal and state developments continue to shape the market for hemp-derived THC beverages and related products.

Federal hemp definition delayed

The US Congress passed, and President Donald Trump signed, a continuing resolution delaying key portions of the revised federal hemp definition until December 11, 2026.

The new definition would replace the 0.3% delta-9 THC threshold with a 0.3% total THC threshold and prohibit products exceeding 0.4 mg of total THC per container. Industry participants should assess how the potential changes could affect formulation, testing, packaging, distribution, and retail strategies.

Ohio court blocks portions of SB 56

In Ohio, a federal judge blocked enforcement of portions of SB 56 that would classify products containing more than 0.3% THC as cannabis and require them to be sourced from in-state operations and sold through cannabis licensees.

The court found that the law’s sales restrictions likely disadvantaged out-of-state businesses, as well as certain Ohio companies with interstate operations. The decision adds to ongoing state-level uncertainty for hemp-derived THC products, particularly where state cannabis frameworks, hemp laws, and interstate commerce concerns overlap.

Conclusion

Alcohol, hemp-derived THC beverage, and food and beverage companies should continue monitoring enforcement, litigation, and regulatory developments at the federal and state levels.

Key areas to watch include trade-practice compliance, cross-tier ownership structures, advertising policies, sugar-related labeling claims, winery-wastewater obligations, alcohol-delivery inspections, and evolving rules for hemp-derived THC products.

Ashley Braun, a compliance specialist in the New York office, contributed to this client alert.