Consignment Sales – Don’t Do Them!
As a friendly reminder to all alcoholic beverage industry members, consignment sales of alcoholic beverages are illegal under both California and Federal law. Consignment sales are transactions where title to the alcoholic beverages in question is retained by the seller or where the licensee receiving the alcoholic beverages has the right at any time to return them to the original seller if they don’t sell. However, Section 25503 of the California Business and Professions Code (the “ABC Act”) specifically prohibits consignment sales by manufacturer, winegrowers, manufacturer’s agents, California winegrower’s agents, rectifiers, distillers, bottlers, importers, or wholesalers. Federal law similarly prohibits consignment sales in interstate or foreign commerce. While returns of products are allowed under very specific and enumerated circumstances under the ABC Act, the general rule continues to be that products must be sold in a bona fide sales transaction by the supplier to an authorized licensee and title to the product must pass before that licensee makes a subsequent sale of the product. While consignment sales may still be occurring in the industry, all licensees should remember that the excuse of “other people are doing it” is not a valid defense in the event of an ABC or TTB enforcement action!