A Scottish recycling scheme could create an unlawful trade barrier with the rest of the UK, a leading lawyer has warned.
The flagship SNP/Greens initiative is aimed at increasing recycling via a 20p deposit on single-use drinks bottles and cans.
Companies are required to register for the scheme by March 1 ahead of its planned launch on August 16 this year.
But Aidan O'Neill KC warned Holyrood ministers may have to delay it until the launch of a UK-wide scheme in 2025.
He made the remarks in a 25-page legal opinion, seen by the Record, which was sought by a group of distillers.
Blair Bowman, a leading whisky expert, told the Record: "This is another devastating blow to the deposit return scheme mess. It just shows you how ill-considered the whole thing has been from the start."
Under the deposit return scheme, every Scottish producer will have to add a 20p to every product before it is sold anywhere in the country. The charge is passed on to retailers and in turn to customers who can claim cash back for every returned bottle or can.
But there are fears the extra costs for businesses will have a "major negative impact" on Scotland's many independent breweries and distilleries. In his legal opinion, O'Neill said he believed there were "well-founded" concerns that the scheme would create a trade barrier between Scotland and England.
The top KC warned the scheme could contravene the UK Internal Market Act passed in the wake of Brexit. O'Neill also warned that the regulations could not be enforced for single-use packaged drinks imported into Scotland from elsewhere in the UK, which would disadvantage Scottish producers.
He said this should "not come as any surprise to the Scottish Government" as ministers were previously warned about such potential legal difficulties in 2020 by a University of Cambridge law professor. The Record has reported how there were fears some drinks producers would be forced out of business due to the costs involved in the deposit return scheme.
Jamie Delap, managing director of Argyll-based Fyne Ales, said: "The scheme will have a major negative impact on small brewers, who are still carrying extra debt from the pandemic and coping with extraordinary cost increases.
"The smallest brewers will have to find around £10,000 to be able to continue to supply the market, while larger craft brewers may face needing to find over £100,000 of additional borrowing. For some this will just not be possible, and everyone expects to see further brewery closures over the next six months as we run towards the deposit return scheme."
Lorna Slater, the circular economy minister, said: "Bold action in the face of the climate emergency cannot wait. Scotland’s deposit return scheme will recycle billions of bottles and cans, cut emissions, tackle littering and address public concerns in Scotland about the impact of plastic and other waste.
"The formal process for excluding the deposit return scheme regulations from the Internal Market Act is well underway.
"This is the same process we went through to protect Scotland’s ban on many single-use plastic products. I expect a decision from the UK Government as soon as possible given that this is what is needed to give industry absolute clarity."
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