By: The Hinman & Carmichael Team
On Friday May 22, 2020 John sat down with Kim Badenfort of the Wine Industry Advisor to discuss the firehose of information coming from the ABC over the last few weeks. John first observed there was so much coming at the industry from the ABC it was difficult for even the most attentive industry member to absorb the information; much less the implications of the proposals.
In summary, John observed:
The ABC regulatory relief initiatives are "welcomed" and "positive changes”
John applauded the ABC for the responsiveness they have shown in proposing relaxation of historic restrictions on the type and nature of the business practices open to licensees with different licenses. However, the question will be how many will remain after the COVID emergency is over? Drinks to go and the robust use of delivery services should be considered for permanent adoption.
The Proposed “Emergency Rules” are unnecessary and counterproductive
John discussed the due process implications of the ABC due process rule changes to do away with discovery and full administrative hearing procedures before violations are adjudicated and sanctions imposed. All the violations identified as “emergencies” are general violations already being handled and not emergencies. He observed that the ABC proposal does not meet the standard of necessity and specificity required tor file for emergency regulations, and replacing the ABC Appeals Board (a body with special expertise in ABC law) with the Superior Court for the county in which the licensee is located will create chaos in interpreting responsibilities for licensees doing business in multiple counties. There is a reason that the California Constitution created the ABC Appeals Board with state-wide jurisdiction. John urges members of the industry to file Comments with the OAL (Office of Administrative Law) opposing the proposals. The address is in the May 22nd Booze Rules Blog, and in the Hinman & Carmichael LLP comment letter.
The Latest Emergency Proposal – Delivery Driver Stings – is not well though through.
John explained how serious liability for delivery drivers could be if “emergency rules” adopting the in-store sting standards (modified to remove the overall Rule 141 requirement that the program be fair) are adopted for at-home delivery. This “emergency” proposal surfaced on the ABC website on Thursday May 21, 2020 and has not yet gone to OAL. Inadvertent delivery to minors by “agents” of the licensee (which is what a delivery driver is) puts the license of the seller (even if ID was demanded and shown virtually at the point of sale) at risk of revocation. This proposal should be addressed by the legislature and not done by an “emergency rule” not well thought through.
Track the Success of Regulatory Relief so post-COVID Evidence exists that the regulation was not needed.
John urged industry members to keep records of how the regulatory relief worked in practice so that data can be collected for permanent post-COVID regulatory relief. Good and safe experiences will support permanent relief.
John concluded by advising the industry that the regulatory relief measures could be repealed on 10 days notice – so pay close attention to ABC Press Releases.
John stressed this is a very serious issue and cautioned that building regulatory relief profits (for instance, for cocktails to go) into a business plan could have unintended consequences because the ABC could rescind the regulations on 10 days’ notice. There have been 5 rounds of regulatory relief now and all licensees and industry members need to stay up to date. This is a very dangerous time and it is important to operate completely within the guidelines.
This blog is dedicated to occasional (and hopefully interesting) reports of state and national alcoholic beverage regulatory developments that we encounter in our practice. Booze Rules (and any comments below) are intended for informational use only and are not to be construed as legal advice. If you need legal advice please consult with your counsel.