Taking Advantage of the New Law Allowing Service of Beer and Wine by Salons & Barbershops
As of January 1, 2017, California beauty salons and barber shops in good standing with the State Board of Barbering and Cosmetology are permitted to serve their customers, where local zoning permits, no more than 12 ounces of beer or 6 ounces of wine by the glass for no charge.
Many of our winery, brewery and retail clients have asked whether they are permitted to sell wines and beer directly to salons and barber shops under this new rule. Because salons and barber shops do not hold alcohol beverage licenses, they are treated like consumers under the California ABC Act and are only permitted to purchase wine and beer directly from persons who can legally sell to consumers, such as licensed retailers or licensees with retail privileges.
Licensed wineries and breweries in California luckily do have retail privileges, and thus they have the right to sell their products directly to consumers in California. As such, they can sell wine and beer directly to salons and barbershops in the state, just as they would to a consumer. Similarly, retail licensees with off-sale privileges may sell wine and beer to qualified salons or barbershops. Note, however, that licensees holding a type 17/20 license combination may only sell wine (and not beer) to consumers, including salons and barbershops.
For all such sales to salons and barbershops, licensees must ensure that they charge and collect sales tax and report such sales and taxes to the California State Board of Equalization.
For any questions, please contact Bahaneh Hobel.
ABC Provides Guidance on Passport Events
On March 4, 2016, the California Department of Alcoholic Beverage Control (“ABC”) published an Industry Advisory providing guidance to licensees, marketing companies and winegrower associations participating in “passport” marketing events.
Most passport events have the same format – consumers purchase an identifiable event glass, wrist band, passport or punch card from a marketing company or winegrower association organizing the event, which provides the consumers access to various experiences and tastings at the premises of participating manufacturer licensees (beer, wine or spirits). The experiences and tastings are then provided to the consumers by the participating manufacturer licensees at their licensed premises to the extent such experiences and tastings are permitted under their existing licenses. So, for example, tastings by wineries, breweries and distilleries as part of such passport events are permissible, since such licensees have the right to conduct such tastings under their licenses (subject to restrictions set forth in the ABC Act). However, Type 17/20 licensees would not be able to provide tastings as part of any such passport event, since such licensees are not permitted to conduct consumer tastings.
While these events have been occurring for many years throughout California, ABC district offices throughout the state were dealing with licensing for these events in different and inconsistent ways (i.e., if a license was required at all, if one license could cover the whole event at all locations, if a separate license was required at each location, etc.). As such, ABC provided the Passport Event Guidelines which set forth the conditions under which these events can be held without a license.
In order for a marketing agency or a winegrower association to organize a Passport Event without obtaining its own ABC license(s) for the event, the Passport Event has to satisfy all of the following requirements:
- The marketing organization or winegrower association is only marketing the event which is actually put on by the participating manufacturers.
- The organization sells only access to the experiences or activities that the manufacturer licensee may lawfully provide free of charge to consumers (such as tastings).
- The manufacturer licensees involved are doing no more than providing tastes of wine, beer, or distilled spirits to participating consumers under the authority of their license (which allows such manufacturer licensee to give or sell such tastes).
- There is no commingling of funds or sharing of revenue between the marketing organization and manufacturer licensee (i.e., all proceeds for the sale of the passport go to the organization, and revenue from sales of alcoholic beverages to consumers separate and apart from the tastes given during the marketing event are not shared with the marketing organization).
Events that fall outside of these parameters will require a license for the marketing company (if a license is even possible under the ABC Act), or the nonprofit winegrower association. Thus, for example, Passport Events that include a gala dinner or tasting event where wines from multiple wineries are being poured at one location will require a temporary daily license held by the event organizer. Or, where the tickets being sold by the organization include alcohol (in excess of the “tastings” permitted at a licensed manufacturer’s premises under the ABC Act), a temporary daily license will be required. Note that because not all organizations are eligible for temporary daily licenses under the ABC Act (as such licenses are typically limited to nonprofit or other charitable organizations), event organizers should contact counsel or the ABC while organizing their event to determine if a license, if required, is even available to the event organizer.
For more information on licensing and other questions related to passport or other events at licensed premises, please contact Bahaneh Hobel, Partner in DP&F’s alcohol beverage law group, or Katy Barfield, Associate in DP&F’s alcohol beverage law group.