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On March 11^th, Senator Mark Leno introduced Senate Bill 635 which would allow California businesses to serve alcohol between the hours of 2 and 4 am. These extended hours would apply solely to on-sale premises such as restaurants, entertainment venues and nightclubs, and not to off-sale premises such as liquor stores or gas stations. SB 635 would allow California cities to join the ranks of other major U.S. cities such as New York City, Las Vegas, Chicago, Miami and Washington D.C., as well as numerous international cities and countries which permit late or continuous beverage service. At least nine other states have similar legislation in place.

Supporters of the bill argue the extended hours will increase tourism, tax revenue and jobs, and provide relief to law enforcement agencies and public transportation systems currently burdened by uniform closing times. Critics cite noise and various other public safety concerns that may arise from an additional two hours of boozing.

If SB 635 passes, cities and counties that want to extend their hours will be required to apply to the California Department of Alcoholic Beverage Control (“ABC”) for approval.  Under the bill, the ABC is required to conduct a “thorough investigation into whether the additional hours would serve the public convenience or necessity.” Similar to the process of obtaining an alcoholic beverage license, the city or county would be required to notify residents, law enforcement agencies and other interested parties of their application. Interested parties would then have a 30-day period from the date of notice to file protests. The ABC would reject protests it deems unreasonable.  For those with protests deemed acceptable, the ABC would provide an opportunity to address their concerns in a hearing.

Even if the bill becomes law, our experience with “public convenience or necessity” determinations and neighbor protests tends to suggest an uphill battle for many licensees who would like to obtain a 4 a.m. closing time. We will see how the bill fairs in policy committee hearings this spring.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Assembly Bill 45 became law January 1, 2013, and closes a loophole that held limousine operators, but not charter buses, responsible for underage drinking. The law requires chaperones and ID checks on party buses that carry both alcohol and underage passengers.

The law is also known as “the Studebaker Law,” named after Brett Studebaker, of Burlingame, who died in 2010 when he was 19 years old. Studebaker died in a collision on Highway 101 near San Mateo on his way home from San Francisco, when  his car crashed into a barrier and then into another car. He had been drinking for several hours on a party bus, after which he was attempting to drive himself and another man home when the crash occurred. The passenger sustained serious injuries, but survived. Studebaker’s blood alcohol level was reportedly more than three times the legal limit for drivers over the age of 21.

Another incident which may have played a part in getting the bill signed occurred last summer and involved a party bus and a physical altercation between two young women, one of whom was underage. The bus was traveling from a concert at the Shoreline Amphitheatre in Mountain View to Santa Cruz on Highway 17. During the fight, the women fell out of the bus, which was traveling at 45 mph, and one of the women was run over and died.

The new law will require party bus companies to ask customers during booking whether there will be any passengers under 21 years of age and if there will be alcohol served. If so, the customer must designate a chaperone who is at least 25 years old to be present throughout the trip. The chaperone is responsible for making sure the underage passengers aren’t drinking. If at any time a minor is found drinking alcohol, the chaperone must inform the bus driver, and the trip must be terminated. The chaperone is then responsible for making sure the minors that were drinking alcohol get home or safely into the care of their parents.

The law also holds drivers accountable for verifying the age of passengers they suspect to be under 21. If there are underage passengers and there isn’t supposed to be alcohol onboard, the driver must check for alcohol if it is suspected. If the driver finds alcohol, then the trip must be terminated unless the alcohol is locked under the bus.

If party bus companies do not comply with the new law, they could face up to $2,000 in fines and their permits may be suspended for up to 30 days or revoked. Bus drivers and chaperones could face misdemeanor charges for noncompliance.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2013 · All Rights Reserved ·

Revisions to the North Carolina malt beverages franchise act became effective yesterday when the Governor signed Senate Bill 745. Last year’s similar bill was stalled after brewers took issues with some of the terms. Senate Bill 745 is a compromise bill that passed the legislature with wide margins. Among the changes, the new law explicitly states that the meaning of “good cause” for termination purposes cannot be modified from the definition set forth in North Carolina law; however, there is a provision in the law that allows brewers that obtain self-distribution approval from the North Carolina Alcoholic Beverage Control Commission to terminate a wholesaler franchise relationship without good cause if “fair market value for the distribution rights for the affected brand” is paid to the wholesaler. Fair market value is determined not as an average price, but must be “highest dollar amount at which a seller would be willing to sell and a buyer willing to buy.” See Senate Bill 745, § 18B-1305(a1). The bill also revises what constitutes good cause, what factors a supplier may consider when approving an assignment, transfer or merger of a wholesaler, treatment of brand extensions, and prohibited acts by suppliers.

The new law also introduces a mandatory mediation requirement. If a dispute arises among a supplier and a wholesaler that is likely to lead to litigation, then the North Carolina Alcoholic Beverage Control Commission can require the parties to submit to mediation in an effort to resolve the dispute. This requirement may arise solely by the initiative of the Commission, or either party to the dispute may request that the Commission mandate the mediation. See Senate Bill 745, § 18B-1309. This new provision makes North Carolina one of the few states with laws on mediation for resolution of conflicts between beer suppliers and wholesalers. California and Maryland are the only other two states that discuss mediation in their beer franchise acts. See Cal. Bus & Prof. Code § 25000.2; Md. Code Ann. § 21-103.

It remains imperative for suppliers to review a state’s laws and regulations when entering into a distribution agreement and also to give oneself enough time for review and negotiation of the agreement, especially in light of the fact that states like North Carolina are further restricting the ability of suppliers and wholesalers to contract around franchise act laws. For more information about distribution agreements and franchise acts, please see our prior post available here or feel free to contact an attorney at Strike & Techel.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

At long last, as of May 1, 2012, applications for Out-of-State Winery licenses are being accepted in New Jersey, which will permit out-of-state wineries to ship wine directly to New Jersey consumers.  As discussed in earlier posts, including here, New Jersey’s law was passed early in 2012, and makes New Jersey the 39^th state to allow winery direct shipping.  The law permits wineries producing no more than 250,000 gallons of wine per year to ship wine directly to consumers in the state.  License holders may ship no more than 12 cases of wine each year per consumer for personal use.  The license also includes limited privileges for holders to sell wine directly to retailers, and for tasting room privileges within New Jersey.

No regulations were promulgated to go along with the direct shipping statute, but earlier this week, the New Jersey Division of Alcoholic Beverage Control released instructions and application forms for Out-of-State Winery licenses that provide more information about direct shipping, and which can be found here.  First, the Out-of-State Winery license will be the most expensive direct shipping license in the county, with tiered pricing depending on the amount of wine produced, but costing $938 annually for wineries producing between 50,000 and 250,000 each year.   Additionally, the instructions clarify that wine shipped must be manufactured by the Out-of-State Winery license holder.  Other details of interest to potential applicants include: a) all applicants must register with the Secretary of state; b) a bond is required; c) all applicants must register with the Division of Taxation; and d) all brands must be registered before they can be shipped into the state. Each of these requirements comes with additional fees, so wineries should make sure the anticipated sales volumes warrant the costs of getting set-up.

Please feel free to contact one of our attorneys if you are interested in more information about direct winery shipping in New Jersey.

Late Monday night, on the last day of New Jersey’s legislative session, the state Assembly voted 51-18-4 in favor of Bill A-4336, New Jersey’s wine direct shipping bill.  The companion bill, S-3172, passed the New Jersey Senate last month, and now only the governor’s approval stands in the way of New Jersey becoming the 39^th state to allow some form of direct shipping.  Under the bill, New Jersey Farm Wineries, New Jersey Plenary Wineries that produce 250,000 gallons or less of wine a year, and out-of-state wineries that produce 250,000 gallons of wine or less each year and that obtain an out-of-state shipping license will be able to ship up to 12 cases of wine per year to any New Jersey consumer.  If the bill is signed by New Jersey Governor Christie as expected, the law will go into effect in May, 2012.  To see our earlier posts on this topic, check here and here.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2012 · All Rights Reserved ·

On January 1, 2012, California Business and Professions Code Section 23394.7 goes into effect, which aims to regulate alcohol sales at self-checkout terminals.  The controversial law provides that “no privileges under an off-sale license shall be exercised by the licensee at any customer-operated checkout stand located on the licensee’s physical premises.”  The law has been opposed since its inception by grocery stores with self-checkout and has been supported by retail clerks labor unions, among other entities.

The California Alcoholic Beverage Control issued an Industry Advisory to explain the new law last week, and the California Grocers Association (“CGA”) just filed a petition contesting the terms of the Advisory.  For example, the Industry Advisory provides in part, “it is clear that ‘customer-operated checkout stand’ means a checkout stand or station that is designated for operation by the customer.”  In its petition in the California Third District Court of Appeal, the CGA argues that the ABC overstepped its regulatory authority by defining one of the law’s key provisions in the Advisory, rather than going through the formal rule-making process required by the California Administrative Procedure Act.  The CGA also argues that the definition put forth by the ABC is inconsistent with the statute.  The CGA has asked that the Advisory be set aside, or that its effect at least be delayed until the issue has been resolved.  Check back for updates!

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2011 · All Rights Reserved ·

Updating our post of late last week, the New Jersey Senate last Thursday voted 23 to 13 in favor of Bill S-3172, permitting wineries to ship directly to New Jersey consumers.  Now that it has passed the Senate, the New Jersey Assembly has to vote on the bill by January 9, 2012, the last day of the legislative session.  Under the bill, New Jersey Farm Wineries, New Jersey Plenary Wineries that produce 250,000 gallons or less of wine a year, and out-of-state wineries that produce 250,000 gallons of wine or less each year and that obtain an out-of-state shipping license would be able to ship up to 12 cases of wine per year to any New Jersey consumer.  If passed, New Jersey would become the 39^th state to allow direct shipping.  Check back in early 2012 for an update!

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2011 · All Rights Reserved ·

The New Jersey Senate will vote on a direct shipping bill this Thursday, December 15, 2011, called S-3172 in its current form.  If passed into law, New Jersey Farm Wineries, New Jersey Plenary Wineries that produce 250,000 gallons or less of wine a year, and out-of-state wineries that produce 250,000 gallons of wine or less each year and that obtain an out-of-state shipping license would be able to ship up to 12 cases of wine per year to any New Jersey consumer.   With passage of the bill, New Jersey would join the 38 states that currently allow direct wine shipping to consumers in some form, including Maryland and New Mexico as of earlier this year.  However, the “capacity cap” for out-of-state wineries of 250,000 gallons per year remains a point of contention, as that limit would preclude the majority of California wineries from shipping to New Jersey consumers.  Stay tuned to find out how the New Jersey Senate votes!

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2011 · All Rights Reserved ·

If you didn’t partake in the toast that New York wineries made at the end of July when New York Governor Andrew Cuomo signed bill S4143A into law, perhaps now is the time. The bill, known as the Fine Winery Bill, made a number of revisions to the state’s alcoholic beverage code regarding wineries and farm wineries. A number of the revisions to the law were originally suggested by the industry member group the New York State Grape Task Force in a 2008 report to the commissioner of the Department of Agriculture and Markets. Below is a brief outline of the legal changes:

Branch Offices

The licensing process for up to five branch offices of a farm winery was simplified through the elimination of separate licenses for each branch. Perhaps more importantly, the privileges of the branch offices now mirror those of the farm winery, as opposed to those of an off-premise retailer as was previously the case.

Custom Crush

Farm wineries also gained the legal authority to perform custom crush services. The individual requesting a custom crush must be present during the entire production process and purchase the final wine product.

Charitable Events

Wineries can now obtain an annual permit allowing them to participate in events sponsored by charitable organizations. Previously, participation in a maximum of five events was allowed and the licensing process was more arduous.

Other Events & Tastings

Wineries may now charge for use of their premises and for wine tastings.

Reporting

Farm wineries can now maintain interstate shipping reports on their premises and present them when requested by the State Liquor Authority as opposed to filing those reports semiannually with the State Liquor Authority, thereby reducing reporting expenses.

Elimination of Redundant Licensing

Farm wineries that produce less than 1,500 gallons of wine annually are no longer required to apply for a micro-winery license in addition to their farm winery license.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·

California beer fans are sure to toast the passage of AB1014, which Governor Jerry Brown signed into law on August 1^st. The bill, presented by Assemblymen Fletcher (R) and Chesbro (D), amends California’s Health and Safety Code to exempt beer manufacturers’ beer tasting areas from the strict health and sanitation codes applied to food service locations. Beer manufacturers include those holding a beer manufacturer’s license, an out-of-state beer manufacturer’s certificate, or a beer and wine importer’s general license. Wine tasting rooms have been exempt from such provisions for years. The health and sanitation codes are lengthy and expensive to comply with; thus, compliance costs typically outweighed the benefit of a beer tasting room for many brewers, especially small craft operations. Compliance with the new exemption requires that the only foods served on the premises are crackers and pretzels. Additionally, only beer and “prepackaged nonpotentially hazardous beverages” may be offered. A copy of the revised Section 113789 of California’s Health and Safety code is available here.

Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2010-2011 · All Rights Reserved ·