When a Virginia brewery fills a refillable beer growler with beer, is that growler 'factory sealed' so it's exempt from local meals tax?

Plain-English summary

A "growler" is a refillable beer container, typically a glass jug, with a resealable closure. The City of Manassas Commissioner of the Revenue, Douglas Waldron, asked the Attorney General whether growlers filled and sealed at a brewery (or somewhere else) count as "factory sealed" alcoholic beverages, which are exempt from local meals tax under Va. Code § 58.1-3840(B).

Attorney General Herring's answer: a growler is "factory sealed" only if it's both sealed and sold by a brewery. Three steps got him there:

1. The exemption in § 58.1-3840(B) applies to "alcoholic beverages sold in factory sealed containers and purchased for off-premises consumption."

2. The Virginia ABC Board's regulations define a "growler" but don't define "factory sealed." So the term gets its ordinary meaning. Dictionary definitions converge on "factory" as a building where products are manufactured. For beer, that's the brewery.

3. So a growler sealed at a brewery and sold for off-premises consumption qualifies for the meals tax exemption. A growler sealed at a bar, restaurant, or specialty beer shop is "sealed" but not "factory sealed," and therefore taxable.

Herring deferred the actual application to specific sales to the Commissioner. He also cited a Virginia tax-law principle that any doubt about a tax exemption must be resolved against the party claiming the exemption.

Currency note

This opinion was issued in 2016. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. The Virginia ABC regulations have been amended, and local meals tax ordinances may have changed. Verify current law before relying on any specific rule mentioned here.

Common questions

So can a brewery fill a growler at the brewery and the customer not pay meals tax on it?

If the brewery seals it and the customer takes it for off-premises consumption, yes (under state law; local ordinances may still impose the alcoholic beverage component of state ABC tax). The meals tax exemption applies because the growler is then "factory sealed."

What if I bring my growler to a brewpub and they fill it at the bar?

Under this opinion, that's still "factory sealed" if the brewpub is operating as a brewery and the seal is applied there before the customer takes it for off-premises consumption.

What about a beer specialty shop that fills growlers from kegs of beer from various breweries?

That's not "factory sealed" under the opinion. The shop isn't a brewery. The growler would be subject to local meals tax.

What if the brewery doesn't seal the growler, just hands it over with a cap?

The plain meaning of "factory sealed" requires a seal applied at the brewery. A loose cap might be sufficient if it's a permanent seal applied at the brewery, but a temporary closure applied by a customer or retailer isn't.

Why does the AG defer to the Commissioner on specific sales?

Because the AG doesn't issue opinions on specific factual matters. Whether a particular growler sale qualifies is a fact-based determination for the local tax official.

Background and statutory framework

Virginia localities have authority under Va. Code § 58.1-3840 to impose an excise tax on meals. The statute carves out exemptions, including alcoholic beverages "sold in factory sealed containers and purchased for off-premises consumption."

The Virginia ABC Board's regulations at 3 VAC 5-40-30(B) define a "growler" as "a reusable glass, ceramic, or metal container having a capacity of not more than 64 fluid ounces (or two liters if a metric-sized container) that has a resealable closure." Neither the statute nor the regulation defines "factory sealed."

Herring relied on the standard interpretive rule: when a word isn't defined in a statute, it gets its ordinary meaning. Multiple dictionaries (Dictionary.com, Merriam-Webster, Cambridge) define "factory" as a building where products are manufactured. The Standard Industrial Classification calls manufacturing establishments "plants, factories, or mills." And the Virginia Supreme Court has characterized a brewery as a manufacturer (Virginia Brewing Co. v. Commonwealth, 1912).

So a growler is "factory sealed" only if sealed at a brewery. A growler sealed elsewhere is "sealed" but not "factory sealed."

The opinion's tax-law backstop is the well-established Virginia rule that "if there is any doubt concerning the exemption, [such] doubt must be resolved against the party claiming the exemption" (2014 Op. Va. Att'y Gen. 166, 168). So at the margins, the Commissioner should presume the sale is taxable unless the exemption clearly applies.

Citations

• Va. Code Ann. § 2.2-505 (AG advisory opinions)
• Va. Code Ann. § 58.1-3840 (local excise/meals tax, with exemption for factory-sealed alcoholic beverages for off-premises consumption)
• 3 Va. Admin. Code § 5-40-30(B) (Virginia ABC Board definition of "growler")
• Moyer v. Commonwealth, 33 Va. App. 8 (2000)
• McKeon v. Commonwealth, 211 Va. 24 (1970)
• Virginia Brewing Co. v. Commonwealth, 113 Va. 145 (1912)
• 2009 Op. Va. Att'y Gen. 80
• 2010 Op. Va. Att'y Gen. 56
• 2014 Op. Va. Att'y Gen. 166
• 2002 Op. Va. Att'y Gen. 331

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2016/15-035-Waldron-issued.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Mark R. Herring
Attorney General

September 1, 2016

202 North Ninth Street
Richmond, Virginia 23219
804-786-2071

The Honorable Douglas S. Waldron
City of Manassas Commissioner of the Revenue
9027 Center Street
Post Office Box 125
Manassas, Virginia 20110

Dear Commissioner Waldron:

I am responding to your request for an official advisory Opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether growlers, reusable beer containers with hand-closed ceramic stoppers, are considered factory sealed containers and thus exempt from the excise tax imposed by the City of Manassas Code of Ordinances § 110-282(B)(3). Respecting the longstanding practice of Attorneys General, I decline to address the interpretation of a local ordinance or the fact-specific application of such an ordinance. I address only the question of the circumstances under which growlers are exempt as a matter of state law from local taxation.

Applicable Law and Discussion

Section 58.1-3840 of the Code of Virginia authorizes a locality to impose an excise tax on various items, including meals. However, the meals tax may not be imposed on "alcoholic beverages sold in factory sealed containers and purchased for off-premises consumption."[1] Virginia Alcoholic Beverage Control Board (the "ABC Board") regulations define a "growler" as "a reusable glass, ceramic, or metal container having a capacity of not more than 64 fluid ounces (or two liters if a metric-sized container) that has a resealable closure."[2] For application of the excise tax exemption at § 58.1-3840(B), the question of whether the resealing of a growler is "factory sealed" is determinative. However, "factory sealed" is not defined in the Virginia Code or in regulations of the ABC Board.

"Ordinarily, when a particular word in a statute is not defined therein, a court must give it its ordinary meaning."[3] The ordinary meaning of "factory-sealed container" is simply a container sealed in a factory. "Factory" has been defined as "a building or group of buildings with facilities for the manufacture of goods,"[4] "a building or group of buildings where products are made,"[5] and "a building or buildings where people use machines to produce goods."[6] The Standard Industrial Classification of the United States Department of Labor describes "manufacturing" as "establishments engaged in the mechanical or chemical transformation of materials or substances into new products. These establishments are usually described as plants, factories, or mills . . . ."[7] A malt liquor brewing company has been characterized without question as being a manufacturer by the Supreme Court of Appeals of Virginia.[8]

For beer manufacturing, the manufacturing establishment or "factory" is the brewery. Thus, a growler is "factory sealed," and its contents thereby exempt from local excise taxes, only if it is sealed and sold by a brewery. If it is sealed and sold by any other business, it may be "sealed," but it is not "factory sealed," and therefore, not exempt from local taxation.

Whether a growler sold at a particular location for off-premises consumption is "factory sealed" and tax-exempt is thus a factual determination. Attorneys General historically have declined to render official opinions on specific factual matters.[9] I do note that, in making this determination, Virginia law requires that "[i]f there is any doubt concerning the exemption, [such] doubt must be resolved against the party claiming the exemption."[10]

Conclusion

Accordingly, it is my opinion that if a growler is factory sealed, meaning in this context that it is sealed and sold by a brewery, and if it is sold for off-premises consumption, then state law makes it exempt from local excise or meals taxes. Whether any particular sale of a growler satisfies these conditions is a factual determination to be made by the Commissioner of the Revenue or other appropriate tax official. In making this determination, any doubt must be resolved against the exemption and in favor of taxation.

With kindest regards, I am

Mark R. Herring
Attorney General

[1] VA. CODE ANN. § 58.1-3840(B) (2013).

[2] See 3 VA. ADMIN. CODE § 5-40-30(B).

[3] Moyer v. Commonwealth, 33 Va. App. 8, 35 (2000) (citing McKeon v. Commonwealth, 211 Va. 24, 27 (1970)).

[4] DICTIONARY.COM UNABRIDGED, www.dictionary.com/browse/factory (Random House, Inc.) (last visited Sept. 1, 2016).

[5] MERRIAM-WEBSTER (online dictionary), www.merriam-webster.com/dictionary/factory (last visited Sept. 1, 2016).

[6] CAMBRIDGE DICTIONARY, http://dictionary.cambridge.org/us/dictionary/english/factory (last visited Sept. 1, 2016).

[7] U.S. DEPARTMENT OF LABOR, OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION, "Standard Industrial Classification," Division D: Manufacturing, at www.osha.gov/pls/imis/sic_manual.dispplay?id=4&tab=division (emphasis added).

[8] Virginia Brewing Co. v. Commonwealth, 113 Va. 145, 146 (1912).

[9] See 2009 Op. Va. Att'y Gen. 80, 81 & n.17 ("Attorneys General consistently have declined to render official opinions on specific factual matters . . . ."); 2010 Op. Va. Att'y Gen. 56, 59 n.5 ("The authority of the Attorney General to issue advisory opinions is limited to questions that are legal in nature.").

[10] See 2014 Op. Va. Att'y Gen 166, 168 (citing 2002 Op. Va. Att'y Gen. 331, 335).