By: Gillian Garrett and John Hinman, Hinman & Carmichael LLP
Late last week, the California Department of Alcoholic Beverage Control (the “ABC”) issued two significant “Industry Advisories” (one on April 30th and one on May 1st) admonishing the industry for failing to heed current legal requirements. The ABC warns these failures would lead to license suspensions and potential license revocation.
The advisories reprimand delivery companies for not properly checking customer identification (which is the legal responsibility of the selling licensee if a sale occurs to a minor, and a criminal violation for the delivery person); admonish restaurants for failure to properly seal mixed drinks sold “to go” (exceeding permitted temporary regulatory relief); caution sellers using delivery companies that upcharges (percentage commissions) are unlawful, but pre-set fees are OK; and announce a policy of enforcing state and local closure orders.
Taken together, the Industry Advisories are a shot across the bow and an announcement that ABC enforcement is alive and well, even during the pandemic.
April 30, 2020 ABC Industry Advisory:
Delivery of Alcoholic Beverages
Recent ABC undercover operations targeting alcohol deliveries have revealed widespread violations. ABC penalties for these violations range from fines to license suspensions and license revocations, depending on the severity of the conduct and the record of the licensee. There are also criminal violation implications for the person making the actual delivery.
Three categories of violations feature prominently on the enforcement list.
Check ID at Delivery & Observe Customers for Signs of Intoxication
First, the ABC is concerned “third-party delivery services are routinely delivering alcoholic beverages to minors.” Delivery personnel must make sure they are making enough physical contact with delivery recipients to verify recipients’ age and identity. After making sure the birthdate on an ID shows the person is 21 or over, delivery personnel also must compare purchasers’ mask-free appearance with their ID pictures to verify they match.
To address the obvious health and safety concerns for delivery personnel and customers about mask removal, we recommend delivery personnel request to view customers’ faces through windows so they can safely verify identification.
The ABC also reminds delivery personnel to refuse to deliver alcohol to anyone who is obviously intoxicated. We presume this additional warning (which is the law for all sales of alcohol) is included due to the increasing number of people ordering cocktails for home consumption (like us). Deciphering signs of intoxication will be part of the mandatory Responsible Beverage Service training the ABC will require of all sellers and servers of alcohol next year (see our last blog on the RBS requirements here).
Sell Only in Sealed Containers & Transport Only in Trunks
Second, the ABC claims licensees are not following the conditions on drinks “to go” required by the ABC’s recent Notice of Regulatory Relief, including selling alcohol “with meals” and “sealed in the manner specified.” The Industry Advisory provides two examples of alcohol not properly sealed for delivery:
(1) a soft drink cup with a lid with masking tape over the straw hole; and
(2) a coffee cup with the sipping-hole stoppered.
In addition, delivery personnel must transport alcohol in their trunks, not the passenger area of their vehicles. Licensees can review all the conditions of the ABC’s temporary relaxation in rules on drinks “to go” here, here and here.
Verify Third-Party Ordering & Delivery Platforms Are Compliant
Third, the ABC reminds licensees that if they choose to sell alcoholic beverages through a third-party application, ordering platform or delivery service, then they must completely control the transaction, collect the funds and not share them with the unlicensed delivery service except as permitted by the ABC. This long-standing ABC policy (see the TPP policy from 2011 here) means licensees must directly receive all funds for the alcohol from the consumer, process the transaction at the licensed premises and not share profits with unlicensed third parties. Third-party delivery services cannot sell alcohol to consumers or “upcharge” for the alcohol because they are not licensed, but they may charge a delivery or service fee that is separate and independent from the price paid to the licensee for the alcohol.
The full text of the April 30, 2020 Industry Advisory is available here.
May 1, 2020 ABC Industry Advisory:
Reopening Licensed Premises in Violation of Stay-At-Home Orders
Although most on-sale licensees in the state remain closed, the ABC has investigated numerous complaints about licensees re-opening in violation of current “Stay-At-Home” orders. California still is not permitting any on-sale consumption of alcohol inside licensed restaurants, bars, winery, brewery or distillery tasting rooms or other licensed venues, unless a specific waiver has been granted by the ABC.
The ABC enforces “Stay -At-Home” orders by filing administrative lawsuits against licensees seeking suspension or revocation of their licenses. Restaurant licensees must continue to:
(1) Keep their premises closed to dine-in customers and on-site consumption of alcoholic beverages;
(2) Permit only take-out or curb-side pickup;
(3) Post signage indicating limited service; and
(4) Prohibit patrons from gathering or congregating in or about their premises.
Other licensees (such as wineries, breweries and distillery tasting rooms) may permit no form of public tasting event at the facility until the “Stay-At-Home” orders are lifted. We presume that in-house tasting by the licensee itself for production purposes (as essential businesses) will continue to be permitted.
Licensees can review the full text of the May 1, 2020 Industry Advisory here.
Conclusion – Be Careful, It’s Dangerous Out There!
As if licensees don’t have enough to worry about during a pandemic, everyone must continue to be vigilant about regulatory compliance. ABC investigators are active in the community, enforcing ABC laws and “Stay-At-Home” orders.
Tell your delivery personnel – your next customer could be an undercover ABC agent; be careful!
If you have questions or concerns about any of these policies we encourage you to contact your legal advisors for guidance going forward.