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We’ve been getting lots of inquiries about the privileges and limitations of the new limited off-sale license offered by the ABC.  Though we’ve already commented on the basics of the permit here, we’re following up with answers to the clarification questions we’ve been getting:

Where can I find the privileges for the new off-sale wine license?

Read the ABC Advisory and the enabling statute CAL. BUS. & PROF. CODE §23393.5.

Can I sell tequila and beer with the Type 85?

No, the privilege is limited to wine.

Can I get the Type 85 license if I have an upper-tier California license?

No.  The Type 85 is a retail-tier license, and there are no special exceptions permitting it to be held with an upper-tier license.  On the flip side, you can get it if you are an employee of an on-sale retailer.  This is a key distinction between the Type 85 and the Type 17/20 combination that remains popular in California.

Can I deliver product stored out-of-state directly to consumers in California with the Type 85?

No.  You must have possession and title to the wine in California. It must be delivered to the consumer from your licensed premises in California or the premises of a licensed public warehouse (Type 14 License).

Can I deliver wine to consumers outside of California with the Type 85?

Yes, but only to about 13 states.  2/3 of those states require additional licensing. You can’t reach New York, Texas, Illinois or Florida.

Do I have to have a location to obtain the Type 85?

Yes.  You have to choose an address where the license will be active and your records will be kept.  It may not be open to the public. You will have to post notice at the premises and mail notice to nearby neighbors.

Who can I buy wine from with the Type 85?

Licensed California wholesalers and wineries.  Not retailers.

How do I apply for the Type 85?

If you are interested in obtaining the license, you need to fill out the forms for an original retail license (e.g.  ABC 211-SIG, 217, 208-A/B, 253, 257, 255, 247, 251, 140, entity forms).  You can obtain them from the ABC website, or can hire an attorney or licensing specialist to complete them and assist you with the process.  The filing fee is $342 ($100 application fee plus $242 annual fee).

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

California Business and Professions Code Section 23393.5 went into effect on January 1, 2012, authorizing the state’s new limited off-sale wine license.   The new “Type 85” license, which we first discussed here, will allow licensees to make direct sales of wine to consumers over the internet and via direct mail and telephone, without requiring the licensee to maintain a brick and mortar retail location or to hold a beer and wine wholesaler license.  Up until now, businesses looking to focus on internet wine sales have been required to obtain both an off-sale beer and wine retail license and a beer and wine wholesaler license, commonly referred to as a 17/20 license combination.  With a 17/20 combination, licensees are able to sell wine via the internet, but also must meet the requirements of a wholesaler licensee, including selling wine to other retailers.

The California ABC recently posted an Industry Advisory on the new off-sale wine license.  The advisory makes clear that Type 85 license holders may not maintain a brick and mortar store that is open to the public, and all sales must be made via direct mail, telephone or the internet.  Additionally, the ABC confirmed that the new license alleviates the need for a beer and wine wholesaler license for retailers focused on selling wine via the internet, but the ABC will continue to process applications for 17/20 license combinations.  If you would like more information about the license, please feel free to contact any of the attorneys at Strike & Techel.

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

The San Francisco ABC office will be moving to Oakland this month to allow for remodeling efforts at the San Francisco office.  The current San Francisco office, located at 71 Stevenson St. will be closed beginning at 5 p.m. on Friday, January 20, 2012.  They will re-open at their temporary Oakland location on Monday, January 23, 2012.  The temporary office contact information is:

Department of Alcoholic Beverage Control

1515 Clay Street, Suite 2208

Oakland, CA 94612

(510) 622-4970

Be sure to update your records and plan accordingly if you need to contact the San Francisco ABC office.  It is anticipated that the office will move back into San Francisco in March 2012, but construction delays may extend the moving date.  We will keep you posted as new information arises.

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 ·

The California ABC released an Advisory earlier this month that outlines a compliant path for California alcoholic beverage licensees to engage unlicensed service providers. In our practice, this issue comes up often in reference to websites that look like wine shops, but hold no alcoholic beverage licenses of their own. The Advisory is available here.

We were active on the working group that made suggestions on this issue to the ABC, and were pleased that the ABC was willing to listen to industry feedback before deciding on a course of action. We’ve been getting lots of questions on the provision regarding control of funds, which (is long!) and states:

“The control of funds from a transaction involving the sale of alcoholic beverages constitutes a significant degree of control over a licensed business. As such, while a Third Party provider may act as an agent for the collection of funds (such as receiving credit card information and securing payment authorization), the full amount collected must be handled in a manner that gives the licensee control over the ultimate distribution of funds. This means that the Third Party Provider cannot independently collect the funds, retain its fee, and pass the balance on to the licensee. The Third Party Provider should pass all funds collected from the consumer to the licensee conducting the sale, and that licensee should thereafter pay the Third Party Provider for services rendered. Alternatively, the parties may utilize an escrow account, or similar instrument, that disburses the funds upon the instructions of the licensee. So, for example, a Third Party Provider may accept consumer credit card information, debit the card, deposit the funds in an account under the licensee’s ultimate control, and, upon the licensee’s acceptance of the order and direction to the account holder, receive a fee from the account. Given the nature of Internet transactions, the Department recognizes that such collection, acceptance, and disbursement of funds will often times be accomplished solely through computer-generated means.”

We’re looking forward to seeing how the industry adapts to this provision, which seems to require that all funds for an alcoholic beverage sale settle to the account of a licensee before they are disbursed. Will new “alcohol escrow” businesses pop-up to service the need? Will each unlicensed website create its own special accounting to comply? Will fee collection be adversely affected for the unlicensed websites, such that the business model becomes less viable? We’re watching this issue unfold with great anticipation.

The California Department of Alcoholic Beverage has clarified in a recent industry advisory that alcoholic beverages do not have to be bagged prior to handing the beverages to consumers, unless a local ordinance requiring bagging exists. Thus, Californians can opt to “save a bag” and use their own tote bag or other carrying device when shopping for alcoholic beverages in most jurisdictions.

Beginning January 1, 2012, a new license will be available for direct-to-consumer wine sales. The new license is the result of approval of Assembly Bill No. 623, which revises California’s Business and Professions code to add Section 23393.5 authorizing the license. Sales may only be made to consumers. All sales must occur through direct mail, telephone or Internet; they may not be conducted from a location that is open to the public. The licensee must take possession and title to all wine sold. All wine must be delivered to the consumer from the licensee’s premises or a licensed public warehouse. The application and annual fee are the same as those applicable to a Type 20 off-sale beer and wine license. The key differences between the new limited off-sale retail license and a type 20 license are that the type 20 requires a brick and mortar store that is open to the public and a type 20 license also allows the sale of beer for consumption away from the licensed premises. If you would like more information about the license, please feel free to contact any of the attorneys at Strike & Techel.

** Unless you live in California

Alcoholic beverage companies often sponsor sweepstakes and contests with prizes ranging from elaborate vacations to concert tickets to spa days.  Do you know who can enter these contests and sweepstakes?  Anyone in the U.S except a Californian.

California is the only state to specifically prohibit alcoholic beverage companies from sponsoring sweepstakes and contests with exciting prizes.  Seriously, the only one.  Adding insult to injury, companies that do not sell alcoholic beverages are welcome to offer contests and sweepstakes to Californians.

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

Priority application season is upon us, beginning September 12^th.  ABC Headquarters recently announced the authorization for the issuance of new on-sale general and off-sale general licenses in certain counties.

What this means:

General licenses authorize the sale of beer, wine and distilled spirits. They are restricted based upon county population. If your county is already at its maximum, you can’t get a new general license from the ABC and instead must buy one from an existing licensee in your county, typically at a significant premium. However, in counties where growth has occurred, the ABC permits new general licenses within the county once per year during a ‘priority’ application period by allowing both new issuances of licenses in the county and intercounty transfers of licenses. An intercounty transfer means a business owner in the priority county can buy a general license on the open market anywhere in the state and transfer it in to the priority county. A person can apply for one of the priority general license spots in the county, or for one of the priority intercounty general license transfer spots, or for both.

Anyone that anticipates the need for an Off-Sale General Package Store License (Type 21), an On-Sale General Eating Place Restaurant License (Type 47), or a Special On-Sale General Club License (Type 57) within the next year in a county with licenses available should apply.

Licenses Available by County:

For a complete listing of licenses available by county, click here.

2011 Filing Period:

ABC District Offices will accept in-person or mail-in priority applications from September 12-23, 2011. Mail-in applications must be postmarked September 23 or earlier in order to be accepted. If the Department receives more applications than licenses available (which it will), a public drawing is held. Applicants are typically notified two weeks later of their priority status. Once approved for priority, the applicant has 90 days to complete the full formal license application for the identified premises.

Fees:

Priority application fees are $13,800 for new general licenses and $6,000 for intercounty transfers. Only a certified check, cashier’s check or money order will be accepted, and it must be submitted with the priority application. Unsuccessful applicants’ fees will be refunded, less a $100 service charge, within 45 days of the drawing.

Residency requirements:

Every applicant must be a resident of California for at least 90 days prior to the drawing. The 90 day clock starts ticking upon registration with the CA Secretary of State for corporations, limited partnerships, and limited liability companies. Individuals and partners must submit proof of California residency.

If you are interested in applying for a new on or off-sale general priority license, please feel free to contact the attorneys at Strike & Techel.

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