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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 ·

On Monday Governor Jerry Brown signed Senate Bill 39 banning the production, importation, and sale of beer to which caffeine as a separate ingredient has been directly added. Senator Alex Padilla, a Democrat from the San Fernando Valley, introduced the Bill last December. In order to enforce the prohibition, licensees may be required by the California Department of Alcoholic Beverage Control to provide product formulas. All formulas provided will be considered confidential trade secrets and not subject to disclosure under the California Public Records Act. The new law can be found in Section 25622 of California’s Business and Professions Code. The law does not prohibit beers where caffeine is a part of the brewing process itself, such as a coffee porter. It is aimed instead at the Progressive Adult Beverages (PABs) (also commonly referred to as Ready to Drinks (RTDs) and Flavored Alcoholic Beverages (FABs)) that have been in the news since last fall. See our prior coverage here, here, here, and here. This puts California in line with states like New York, Massachusetts, Washington, Michigan, Kansas, and Utah, which have also banned such beverages.

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

It is called everything from the bombastic “corkage” to the everyperson “BYOB,” but it means the same across all fifty states and beyond: bringing ones own bottle of alcohol to a restaurant for consumption with ones meal. Not every state allows the practice, but Virginia is on the brink of joining the list of states where brown-bagging is permissible. On February 8^th, the Virginia Senate passed SB 1292 (27-Y, 13-N) and the bill passed the House on February 22^nd (78-Y, 18-N), leaving only Governor Robert McDonnell’s signature to make it official. The bill was introduced by Republican state Senator Jeffrey McWaters, who argued passage of SB 1292 would help boost Virginia’s restaurant and wine industries. SB 1292 will add Section 16 to § 4.1-201(A) of the Code of Virginia, thereby allowing licensed restaurants to permit customers to consume legally acquired wine on a restaurant premises and allowing the restaurant to charge a corkage fee if desired.

Each state that allows BYOB has its own unique set of regulations. Virginia’s neighbor to the South, North Carolina, has a “brown-bagging” permit, which allows customers in permitted establishments to bring and consume on the premises “up to eight liters of fortified wine or spirituous liquor, or eight liters of the two combined.” Restaurants, hotels and community theaters are only allowed such permits if they are located in a county where the sale of mixed beverages has not been approved. Eight liters of fortified wine, which in North Carolina is defined as 16-24% alcohol by volume, or distilled spirits, may seem like an exorbitant amount of alcohol. However, unlike Virginia’s SB 1292, North Carolina’s law is not about enjoying a glass of ones own wine with dinner, but rather about consuming a gin and tonic at ones local haunt when such establishment is not allowed by law to sell gin. Attending “liquor locker” provisions in North Carolina allow patrons to store their brown-bagged alcohol in individual lockers at licensed facilities, so that they can drain their provisions over time. Traditional bottle opening fees do not apply in such situations, rather the restaurant makes money selling the mixer used by the patron, commonly referred to as a “set-up.”

The North Carolina arrangement would be defined as an illegal “bottle club” in California. California only allows people to bring their own alcohol to a licensed premises, and one can only bring alcohol that could have been sold by the licensee at the establishment. So if a restaurant only sells beer and wine, one cannot bring in vodka.  Also, in California any unfinished portion of the BYOB must be left at the restaurant, so if you bring a bottle of expensive wine to a restaurant, bring enough friends to drink it all!

As we head into the weekend, we’ll leave you to ponder these burning questions: Is it counterintuitive for California to forbid people from bringing wine to restaurants that do not serve it, but permit patrons to bring wine to restaurants with the exact same bottle available for sale on their wine list? Also, who pays more in BYOB alcohol costs—North Carolina patrons bringing in eight liters of distilled spirits or New York patrons (blind item) dining at a well known restaurant with a $90 corkage fee? 

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

The California ABC actively enforces the alcoholic beverage laws of the state.  We’ve been posting a series of “ABC Violation Round-Up” items discussing some of the violations we have seen in recent enforcement actions.

This week….. failure to observe license conditions.

The Violation: It is common for the ABC to issue a conditional license, particularly when issuing a retail license in an over-concentrated or high-crime area.  A conditional license contains restrictions in excess of the rules typically applicable to a license of that type.  For example, a conditional license might restrict operating hours, prohibit loitering, or restrict the sale of single cans of beer or malt liquor. If a conditional license is issued,  the printed conditions must be available for review upon request by any ABC investigator and  all listed conditions must be followed. Failure to comply with any condition is grounds for ABC discipline, which can include license revocation.

How to Avoid It:  If you have a conditional license, make sure the printed conditions are kept in a secure place at the licensed premises and are available upon request by the ABC or other law enforcement personnel.  Make sure the limitations are reviewed with all of your employees and that they understand the importance of compliance.  Take particular time to review the conditions with employees who have worked at an alcoholic beverage licensee in the past.   Since conditions are license-specific, they may have worked under different restrictions in their prior employment.

Petition to Remove Condition: If a conditional license has been in place for a year or more, and the grounds that led to imposition of a condition no longer exist, it may be possible to petition the ABC to have the condition removed from the license. Our firm routinely files Petitions to Remove Conditions and any of our attorneys can discuss the process with you.

Statute: California Business and Professions Code § 23804

Standard Penalty: 15 day suspension with 5 days stayed for one year.  Penalties vary depending on the specific condition violated.

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

A few weeks ago, we wrote about the new permit available to California off-premise consumption retailers that will allow suppliers to come to their premises and conduct instructional consumer tastings.  The ABC just released an industry advisory with additional helpful information.  The industry advisory is available here. 

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

Effective January 1, 2011, California off-sale retailers will be eligible for a $300 instructional tasting license that will allow wine, beer and spirits suppliers to conduct free consumer tastings on the retail premises.

The instructional tasting license will be available to most off-sale retailers.  Off-sale retailers with a gas station are not eligible unless the retail store is over 10,000 sq. ft.  Premises under 5,000 sq. ft. are not eligible unless 75% of gross sales on the premises are alcohol. This will tend to exclude convenience stores and small markets but will enable small wine and liquor stores to obtain the license.  Permits may also be denied to retailers in “overconcentrated” areas, i.e., locations with more than the statutorily authorized number of ABC licenses.

Retailers obtaining the permit must separate the tasting area with a barrier and post signage prohibiting minors from entering the tasting area. The retailer is responsible for making sure no minors are in the tasting area and no open containers leave the tasting area. Tastings may only be conducted between the hours of 10:00 a.m. and 9:00 p.m., provided the retail license allows sale of alcohol within that time period.

The tastings must be free, and sample size is limited as follows:

Each tasting event can only involve one class of product and one “authorized licensee” tasting per retailer per day, so a single tasting event may not combine beer and wine tastings or multiple suppliers. “Authorized licensees” who may conduct the tastings are California licensed: winegrowers, winegrower’s agents, beer and wine importer generals, beer and wine wholesalers, wine rectifiers, distilled spirits manufacturers, distilled spirits manufacturer’s agents, distilled spirits importer generals, distilled spirits rectifiers, distilled spirits general rectifiers, rectifiers, out-of-state distilled spirits shipper’s certificate holders, distilled spirits wholesalers, brandy manufacturers, brandy importers, California brandy wholesalers, beer manufacturers, or an out –of-state beer manufacturer certificate holders.  

The alcohol tastes are to be served by the “authorized licensee” or her/his agent. The exception is that beer and wine wholesalers, though “authorized licensees”, may not serve tastes unless they hold additional licenses. Wine and spirits for the tasting may be supplied by the “authorized licensee” or bought from the retailer at the original invoiced cost.  Beer cannot be provided by an “authorized licensee”, but may be purchased from the retailer at invoice cost. Unused product must be removed at the conclusion of the tasting.

An “authorized licensee” must be present for the tasting, unless the event has been previously advertised and the “authorized licensee” can’t attend. On that note, the “authorized licensee” can advertise the retailer event in advance, subject to restrictions.  Retailers are also allowed to advertise the events on their own initiative. Special rules apply if the off-sale retailer already has a Type 42 on-sale license for a tasting bar.

For the complete rules, see Cal. Bus. & Prof. Code §23396.6 and §25503.56.

If you would like assistance in applying for the instructional tasting license, please contact licensing paralegal Lindsay McCarthy at lindsay@strikeandtechel.com.

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

Food and drink often go hand in hand, but when they become one, problems related to California’s rectification laws can arise.  In early 2010, several bars in San Francisco were hit with a rude awakening when agents from California’s Alcoholic Beverage Control Department informed them that serving house-made infused alcoholic beverages could be considered illegal under section 23355.1 of California’s Business & Professions Code.  The code section deals with distilled spirits manufacturers and their agents.  Part (b) of the code reads:

“A distilled spirits manufacturer, distilled spirits manufacturer’s agent, distilled spirits rectifier general, or rectifier may store, bottle, cut, blend, mix, flavor, color, label, and package distilled spirits owned by another distilled spirits manufacturer, distilled spirits manufacturer’s agent, distilled spirits rectifier general, rectifier, or a distilled spirits wholesaler, and may deliver those distilled spirits from the premises where stored, bottled, cut, blended, mixed, flavored, colored, labeled, or packaged, or from a warehouse located in the same county as that premises for the account of the owner of those distilled spirits to any licensee that owner would be authorized to deliver to under his or her own license, except to a retail licensee.”

Essentially, the code requires a license to be a distilled spirits rectifier, however, such a license cannot be granted to establishments that hold on-sale or off-sale licenses.  The law, which seems to have originated in order to ensure that patrons received the actual beverage they ordered, as opposed to a watered down version of such beverage, can be read broadly to ban infused alcohol items that sit for longer than an ordinary cocktail mixing period of a few minutes.  The house-made bitters and infused alcohols that can be found on many Bay Area menus can be seen as falling into this category. 

In 2008, the ABC issued this advisory warning against engaging in rectification without a permit.  Business owners met with Senator Mark Leno and ABC officials in March of 2010 to discuss the wording of the law and enforcement issues.  It appears that as a result of the meeting ABC will back away from enforcing the provision; however, until the law is changed to clear up the wording, it remains an issue.  Given the Bay Area’s adventurous food and drink scene, it is important to remember that when food and alcohol combine, even in ways that may seem minor, new and often unheard of regulations can be triggered.  Make sure you’re thinking about these issues when developing a drink menu, after all if ABC is thinking about it, you should be too.

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