The California ABC recently issued its 6th Notice of Regulatory Relief, which (1) embraces supplier and retailer virtual events and (2) removes the deadline to conduct Covid-related cause marketing / commercial co-ventures (“CCVs”). CCVs are promotions where a portion of the bottle sale goes to charity and ABC’s relief allows CCVs to support charitable organizations that provide relief to retailers without it being a tied-house violation, which we previously covered here. ABC’s notice both responds to calls from the industry to permit suppliers to partner with retailers in the virtual environment, and reflects the increased trend of CCVs supporting not just Covid relief, but more specifically, hard-hit bars and restaurants trying to survive the pandemic.
Additionally, and perhaps more importantly, ABC advises in this Notice that all its temporary relief remains in place and “shall be extended until further notice” rather than expiring on a set date. ABC is acknowledging that nobody seems to know when things will go back to “normal” for on-premises establishments and the larger hospitality industry.
What kinds of virtual events are now permitted?
This regulatory relief permits an on-sale retailer (bar, restaurant, brewpub, club, hotel and other special on-sale licenses) to sell beer or wine (food not specifically required, but contemplated) for pickup or delivery, with online instruction with the supplier producer or importer. This is the retailer’s event, they sell the event and any products to the consumer, and pay for all costs, but both the retailer and the supplier can provide instruction, education and advertising (no samples – the logistics are too hard).
- This could be an event where the consumer purchases a meal kit and wine from a restaurant, the restaurant’s chef shows you how to make the dish, and then a winery sommelier or brand ambassador tunes in from the vineyard to talk about how the wine was made and why it tastes so good with that roast chicken you just made.
- It could also be a beer tasting, where the brewpub sells a mixed pack of beers to showcase a series of fall releases, and the brewmaster meets attendees on zoom to talk about the beers, how they were made, and how that pumpkin flavor matches the chosen malt.
- And it might be an international hotel focusing on imports, featuring a presentation from an importer with their favorite producers joining virtually from Europe to allow us to vicariously travel while our American passports collect dust on a shelf. Nobody has any wanderlust here…
The ABC has only extended their guidance to two statutory event exceptions:
- Business & Professions Code Section (“BPC”) 25503.4: Normally permits “winemaker dinners” (where neither a winemaker nor dinner are required). A winegrower (type 02), winegrower’s agent (type 27), wine importer (type 09 or 10) or representatives of these types, may provide instruction and advertising to retailers and their consumers, and under non-pandemic conditions, they can also bring wine samples to sample on retail premises.
- BPC 25503.45: Normally permits beer manufacturers (type 01 and type 23), general importers (type 10) and their representatives (but not wholesalers or importers that represent the brands) to instruct, serve and educate consumers on retail premises. This event type never permits these beer suppliers to bring beer to the premises to taste consumers directly – it all has to be purchased through the retailers.
What are the requirements of these events?
1. There must be an on-sale retailer (many different types, must permit on-premises consumption)
o This relief is targeted to help hit-hard bars, restaurants, clubs and hotels.
2. The event must be permitted by the retailer, be under their control (they are the host), and they must pay all costs for the event.
o The supplier can only provide education and advertise the event as provided in the original statute (see our previous post on what changed recently for advertising these events here).
o The supplier can’t offset, discount or reimburse or give consumers other free goods to participate in the retailer’s event.
3. The retailer must sell all food and alcohol to consumers for delivery / pick-up.
o No shipments straight from the producer to the consumer or split payments
4. Meals may be prepared by the on-sale retailer or include ingredients for the consumer to prepare at home.
o Food is not explicitly required
o No explicit permission to outsource prepared food to a food service provider
5. The supplier and retailer may jointly host “on-line instruction in connection with this event” –
o This is the biggest permission, as it’s a broad, vague description that could include pre-recorded content, live content, Instagram live content… you get the idea.
6. No supplier samples
o No 3 1oz pours – it’s too hard to enforce under the current conditions
What kinds of virtual events are still unlawful?
So far, at least, this relief has not been extended to distilled spirits, cocktails to go, or to samples from the beer and wine suppliers themselves – everything still has to be sold by the retailer to consumers and there can be no supplier freebies. That means:
- No mixologist events where a distilled spirits brand sponsors a bartender’s cocktail 101 in combination with a make-your-own-cocktail kit;
- No RTD spirits seltzer battle where millennials try to convince boomers to drink the cough-drop flavored bubbly things.
But why not these events? Perhaps ABC wants to encourage temperance or togetherness during what is turning out to be the most contentious election in American history. Choose your own exclamation: “Even your [Socialist / MAGA], busybody neighbor [who wears / doesn’t wear] a mask agrees that Americans deserve beer and wine tastings [if not guns / healthcare]!”
Notably missing are virtual extensions of statutory event exceptions that would authorize other license types and product categories to participate in these joint retailer-supplier events, including:
- BPC 25503.51 (craft distiller and distilled spirits wholesaler instructional events);
- BPC 25503.55 (beer wholesaler instructional events);
- BPC 25503.56 (beer and wine wholesaler, wine rectifier, craft distiller, distilled spirits manufacturer, distilled spirits manufacturer’s agent, distilled spirits importer, rectifiers, brandy manufacturers, importers and wholesalers, and out-of-state beer manufacturers on type 86 licensed premises); and
- BPC 25503.57 (beer and wine wholesaler, wine rectifier, craft distiller, distilled spirits manufacturer, distilled spirits manufacturer’s agent, distilled spirits importer, rectifiers, brandy manufacturers, importers and wholesalers).
Sorry, marketers, this is a narrow exception – it’s mostly going to be mostly wine/beer food pairings, and the retailer’s got to pay for it, which seems counter-intuitive in the current environment where retailers are strapped for cash. Presumably, the regulators are trying to balance the economic uncertainty against public health priorities and inadvertently upending the carefully and purposefully regulated alcohol marketplace. This is the compromise, and it’s actually a pretty big one, so I hope to start hearing from creative marketers with fun virtual events to get us through the election and school year!
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.