On May 11, 2023, the Wisconsin Department of Revenue (the Department) issued a declaratory ruling concluding that contract manufacturing (co-packing) and alternating proprietorship arrangements between properly permitted parties are legal in the State of Wisconsin.

Foley & Lardner LLP filed a joint petition for declaratory ruling on behalf of its clients, City Brewing Company, LLC and Wisconsin Brewing Company, LLC, on November 16, 2022, seeking a ruling that permitted rectifiers may enter into intoxicating liquor co-packing and alternating proprietorship arrangements after the Department had taken the position that these types of agreements in any form were prohibited by state law. This petition for declaratory judgment was the first ever filed on an issue arising under Chapter 125, which governs alcohol permitting and licensing in Wisconsin.

Following a public hearing on the matter on February 2, 2023, where Foley and petitioners presented evidence and testimony to the hearing examiner, the Department concluded that “after reviewing the request for declaratory ruling, as well as the new information, evidence, and legal arguments provided…the Department finds that § 125.52(3), Wis. Stats. does not prohibit two separately permitted entities from entering into valid production agreements, such as co-packing or alternating proprietorship agreements, provided that all other laws and regulations are met.”

This ruling enables the contract manufacturing industry to continue to thrive in the State of Wisconsin, protecting a large volume of revenue and good Wisconsin jobs.

The Foley team was led by Partners Maureen Easton and Matt Lee and Public Affairs Director Jason Childress.

The full decision is available from the Department here.