A few different trends have emerged over the past year or so in the field of craft beer, and in related industries. Indeed, the alcoholic beverage landscape looks much different as we enter 2020 than it did at the beginning of last decade. Hazy IPAs have surged in popularity, as have hard seltzers. Breweries have begun adding hemp and cannabis to beverages, as these substances have increased their footholds on legality. Aside from adding things to beer, market demand for more health-conscious beverages has led to a separate trend, in breweries taking things—namely, alcohol and calories—out of beer.

As alcoholic—and nonalcoholic—beverage makers strive to keep up with customer demand, they must also make sure to stay within the bounds of the law. The new decade should offer both opportunities and challenges for the craft beverage industry.

Haze Bombs

The now-ubiquitous New England-style IPA, known for its opacity, creamy mouthfeel and fruity aromas, has taken on many forms. Breweries across the country have pushed culinary boundaries by adding generous amounts of fruit, lactose, herbs or spices, and other ingredients to their beer recipes, and selling liquid, alcoholic desserts to an enthusiastic following. Part of these beers' appeal is their uniqueness, but loading beer with fermentable sugar (e.g., fruit and lactose) just before bottling or canning can create unwanted uncertainty and push literal boundaries. First, it may be difficult to calculate the final alcohol content (ABV) of a beer that continues to ferment after canning. Therefore, breweries may have to undergo expensive testing to ensure that the ABV published on their label is accurate.

For beers distributed across state lines, the Alcohol and Tobacco Tax and Trade Bureau (TTB) requires ABV to be included on beer labels, and to be accurate within 0.3%. States have differing requirements for ABV publication, but even when strict accuracy is not required, breweries should be careful not to make false claims in their labeling or advertising. Selling a beer that is much weaker—or stronger—than advertised, or than consumers have come to expect from a particular brewery, may give rise to civil claims.

Another, more serious, concern can result from too much fermentation post-canning. Fermentation creates carbon dioxide, and results in carbonation of the can's contents. If too much carbonation occurs after canning, however, the buildup of pressure can cause the aluminum to rupture. This can result in leaking, or, worse, exploding cans of beer. Breweries can face liability for personal injury or property damage arising out of these can explosions, particularly if the brewery knew its beer might explode, or reasonably should have known, based on the amount of fermentable sugar added before canning. To try to minimize explosions and limit legal exposure, some breweries release their fermentable-packed offerings with explicit instructions, written or verbal, to customers to keep the beers cold, which slows the fermentation process. Whether these consumer warnings are effective, in preventing accidents or in limiting liability, remains to be seen.

A Different Kind of Haze

The legal landscape around cannabis and hemp has shifted greatly over the past decade, and is still not entirely settled. One thing that's clear, though, is that CBD has become an everyday phrase, and is likely to remain so. The 2018 Farm Bill legalized cultivation and sale of hemp at the federal level, and declassified hemp under the Controlled Substances Act. Thus, it is no longer illegal to grow hemp or possess CBD, or cannabidiol, a hemp-derived compound not considered to be psychoactive. Sales of CBD as a wellness product have surged—it can be found in tinctures, pills, teas, infused gummies and chocolates, and sometimes even in beer. However, the Food and Drug Administration (FDA) has not approved the use of CBD as a dietary supplement, or as an additive to food sold in interstate commerce. In other words, it is illegal at the federal level to sell a CBD-infused beer. Following the FDA's lead, the TTB currently does not approve any labels or ingredient formulas for alcoholic beverages containing hemp, aside from hemp seeds and hemp seed oil that do not contain CBD or THC, the psychoactive compound in marijuana. And because marijuana remains a controlled substance, the TTB will not approve labels or formulas for THC-infused beer.

While not permitted at the federal level, certain states have legalized the addition of CBD, and THC, to food and beverages. In California, breweries have begun selling nonalcoholic "beers" infused with CBD and THC. These are generally made from sparkling water, with hops added for flavor and THC or CBD added for their desired effects. New Jersey permits the addition of CBD to food and beverages, and some restaurants in the state offer CBD-infused cocktails. While some states allow for this sort of entrepreneurial experimentation, THC remains a federally controlled substance, and the sale of CBD in food or drink is federally prohibited. Therefore, these state laws provide no guarantee against federal enforcement.

But Can Beer Be Healthy?

As we enter a new decade, many beer consumers have begun clamoring for healthier, less intoxicating beverages. There's a new market for nonalcoholic cocktails, and breweries have begun expanding their lower-calorie, lower-ABV (or nonalcoholic) offerings. Nonalcoholic craft beers, long considered an oxymoron, have found their way to the shelf. Generally, the regulatory landscape for low-alcohol or nonalcoholic beverages is not known to be particularly treacherous. But breweries hoping to capitalize on this particular health and wellness trend must still be careful to apply with the TTB's—and the FDA's—regulations. One key to compliance, again, is knowing your product's ABV. This is particularly important for beers with ABVs on the lower end of the spectrum. The TTB's 0.3% tolerance for accuracy applies to beer of any alcohol content. In addition, to be marketed as "low alcohol," a beer must contain less than 2.5% ABV; to be labeled "nonalcoholic," a beer must contain less than 0.5%. These limits do not have accompanying tolerances, so proper classification and lawful marketing of a lower ABV beer requires precise calculation. For a beer to be advertised as "low-carb," it must contain seven grams of carbohydrates or less per serving.

In addition, federal regulations prohibit beer labels from making any health-related claim that is untrue or misleading, and specific health claims must be adequately substantiated through research. Health-related statements are subject to evaluation by the TTB and the FDA.

Whether by addition or subtraction, craft beer makers surely will continue to tinker with their products in their effort to gain and retain market viability and dominance. An important consideration to balance against innovation is the continued shifting in the regulatory landscape, even when the shifts are subtle.

Kathleen M. Kline is a litigator based in the Philadelphia office of Greenberg Traurig and legal adviser to the Philadelphia Homebrew Club. Justin J. Prochnow is a shareholder who focuses on the regulatory, business, and legal needs in the beverage, food, dietary supplement, cosmetic, medical device, and OTC industries based in the Denver office of the firm.