ANGELA JEFFRIES Deputy Director Regulations and Rulings Division Alcohol and Tobacco Tax and Trade Bureau TTB COLA UPDATE What is TTB doing and how will the changes impact industry and state regulators? March 11, 2014

WHAT IS TODAY’S COLA OUTLOOK? “STATE OF THE BUREAU” Alcohol and Tobacco Tax and Trade Bureau 2

Number of COLAs Received FY 2008 to FY 2013: 5% increase FY 2012 to FY 2013: 8% decrease FY 2008 to FY 2013: 5% increase FY 2012 to FY 2013: 8% decrease Alcohol and Tobacco Tax and Trade Bureau 3

Average Turnaround for COLAs Alcohol and Tobacco Tax and Trade Bureau Avg. days to receive a response from TTB 4

 Industry Growth  Industry Processes  Other Governmental Entity Requirements  TTB Internal Processes What Factors Impact Processing Times? Alcohol and Tobacco Tax and Trade Bureau 5

Number of Breweries 100% increase Alcohol and Tobacco Tax and Trade Bureau 6

Number of Wineries 52% increase Alcohol and Tobacco Tax and Trade Bureau 7

Number of Distilleries 270% increase Alcohol and Tobacco Tax and Trade Bureau 8

Number of Alcohol Importers 38% increase Alcohol and Tobacco Tax and Trade Bureau 9

Industry Processes  Multiple Label Submissions For Single Products  Industry Awareness of TTB Rules and Policy  Utilize the (28) allowable revisions that require no label re- submission for existing approved COLAs  Avoid the “Needs Correction” Labels Alcohol and Tobacco Tax and Trade Bureau 10

Other Governmental Requirements Many State Law Requirements Sometimes Impact Label Submissions Example: California State Law Sonoma County Conjunctive Labeling Law Alcohol and Tobacco Tax and Trade Bureau 11

TTB Internal Streamlining  Implemented changes in our expectations for image related issues  Eliminated the Expedite and Informal Label Review Process  Expanded the list of qualifications in order to reduce numbers of “needs correction” and rejected labels.  Updated COLA form to allow additional changes that may be made to labels without TTB approval  Established a virtual file room to process paper applications electronically Alcohol and Tobacco Tax and Trade Bureau 12

 IMPROVED GUIDANCE, EDUCATION AND TARGETED OUTREACH  AUTOMATION  MARKETPLACE REVIEWS How May TTB Address COLAs For the Future? Alcohol and Tobacco Tax and Trade Bureau 13

Provide Current and Clear Guidance Review beverage alcohol labeling regulations. What needs to be added, deleted, changed? Modernize and clarify existing regulations Alcohol and Tobacco Tax and Trade Bureau 14

Provide Current and Clear Guidance Newsletters, Announcements, Rulings, Industry Circulars and FAQs. Evaluate and consolidate all previously- issued guidance Alcohol and Tobacco Tax and Trade Bureau 15

Create an Automated Label Approval System Simplified COLA Approval vs. Traditional COLA Approval  Labels with lowest risk for noncompliance could be automatically approved  products that have a standard of identity  No claims  Higher risk labels would receive traditional review Alcohol and Tobacco Tax and Trade Bureau 16

Robust Marketplace Sampling Program  The Alcohol Beverage Sampling Program = Targeted Enforcement  Many approved labels never end up in the marketplace  TTB resources would be better spent on labels and products that are actually in the marketplace.  The ABSP takes a statistical sample of products that are in the marketplace, for compliance Alcohol and Tobacco Tax and Trade Bureau 17

More Change Is Coming  Further Expand List of Allowable Revisions  Continued COLAs Online Enhancements  Continued Coordination Between States and Other Federal Agencies through our Industry Liaison and others.  Consider joint efforts to analyze Federal and State requirements to determine if they are necessary; still serve a valid purpose, and how we can align, simplify, and make for a seamless process with governmental partners.  Continue to study ABSP trends to address recurrent non-compliances Alcohol and Tobacco Tax and Trade Bureau 18

What’s Next? Continue The Dialogue Toward Solutions! Alcohol and Tobacco Tax and Trade Bureau

ANGELA JEFFRIES DEPUTY DIRECTOR REGULATIONS AND RULINGS DIVISION (202) Thank you Alcohol and Tobacco Tax and Trade Bureau 20