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Mexican laws state that tequila can be produced only in the state of Jalisco and limited regions in the states of Guanajuato, Michoacán, Nayarit, and Tamaulipas. Mexico has claimed the exclusive international right to the word "tequila", threatening legal actions against manufacturers in other countries.
Tequila is most often made at a 38–40% alcohol content (76–80 proof), but can be produced between 35–55% alcohol content (70–110 proof). Though most tequilas are 80 proof, many distillers will distill to 100 proof and then dilute it with water to reduce its harshness. Some of the more well respected brands distill the alcohol to 80 proof without using additional water as a diluent.
In Mexico, the most traditional way to drink tequila is with salt and lime. It is popular in some regions to drink fine tequila with a side of sangrita—-a sweet, sour and spicy drink typically made from orange juice, grenadine (or tomato juice), and hot chillies. Equal-sized shots of tequila and sangrita are sipped alternately, without salt or lime. Another popular drink in Mexico is the "bandera" (or Flag, in Spanish), named after the Flag of Mexico, it consists of three shot glasses, filled with lime juice (for the green), white tequila, and sangrita (for the red). They can be sipped or drunk straight.