August 2026 alcohol industry update: State regulatory changes, FDA actions, and hemp beverage developments

Alcohol beverage companies continue to navigate a rapidly evolving regulatory landscape as states advance new legislation, federal agencies propose changes affecting ingredients and formulations, and hemp-derived tetrahydrocannabinol (THC) products remain the focus of ongoing legal and legislative activity. Below are notable developments from the past month.

Federal developments

Recent federal actions may have implications for alcohol beverage companies, particularly those involved in product development, formula approvals, intellectual property protection, and regulatory compliance.

FDA proposes mandatory GRAS notifications. On August 11, the US Food and Drug Administration (FDA) proposed a rule that would require companies to notify the agency when they determine that a food ingredient is generally recognized as safe (GRAS). Although notification would become mandatory, FDA approval would not be required before a product enters the market. For alcohol beverage companies, the proposal could provide a more transparent mechanism for demonstrating a valid GRAS basis during the Alcohol and Tobacco Tax and Trade Bureau (TTB) formula approval process.

FDA acts on color additives. FDA issued a final order revoking the authorized use of Orange B as a food color additive and proposed revoking the authorized use of Citrus Red No. 2. Companies using color additives should assess whether these developments could affect current or future product formulations.

Appeals court vacates injunction in Jack Daniel’s parody dispute. The US Court of Appeals for the Ninth Circuit overturned a permanent injunction previously obtained by Jack Daniel’s in its dispute with VIP Products over the “Bad Spaniels” dog toy, finding that Jack Daniel’s failed to demonstrate likely reputational harm. The decision is another notable development in the evolving intersection of trademark protection and parody products.

US Senate advances continuing resolution. The continuing resolution would fund the federal government through December 11, 2026. The measure must still be approved by the US House of Representatives before it can become law.

State regulatory developments

Several states have recently taken actions affecting the sale, distribution, and regulation of alcohol beverages.

In Missouri, a judge granted a preliminary injunction allowing retailers in certain areas of Kansas City to continue selling single-shot alcohol products and beer while litigation over the city’s proposed ban proceeds. The decision preserves the status quo pending a final ruling on the measure.

Michigan’s SB 604, enacted as Public Act 72 of 2026 and effective July 29, limits the fees that may be paid by spirits suppliers to Authorized Distribution Agents (ADAs). While the Michigan Liquor Control Commission and the state treasurer may not alter the statutory fee, the legislation permits ADAs and suppliers to independently negotiate compensation arrangements that exceed the capped amount.

Colorado also adopted a new law expanding opportunities for certain manufacturers. Spirituous liquor manufacturers that operate sales rooms may now obtain permits allowing them to sell and serve alcoholic beverages they do not produce for on-premises consumption, provided such products are acquired from a licensed wholesaler. The permitting process requires both state and local approval.

Meanwhile, North Carolina lawmakers have postponed consideration of a proposal that would increase liquor prices, leaving the measure’s future uncertain.

Conclusion

Alcohol beverage companies should continue monitoring developments at both the state and federal levels, particularly those affecting product formulations, distribution arrangements, hemp-derived beverages, and emerging compliance obligations. The proposed FDA GRAS notification rule, evolving state regulations, and ongoing litigation involving hemp-derived products are likely to remain areas of focus in the coming months.

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