Administrative Regulations

OPTION I

FROM THE INDUSTRY ADVISORY ISSUED BY THE ABC CONCERNING THIRD PARTY PROVIDERS ON OCTOBER 11, 2011

The Department believes that licensees and Third Party Providers can form business relationships that facilitate lawful transactions for sales of alcoholic beverages over the Internet. Accordingly, the Department now issues the following advisory guidelines to assist licensees and unlicensed Third Party Providers in complying with California law:

For the purposes of this advisory, the term “Third Party Provider” refers to unlicensed entities that are involved with the promotion, marketing, and facilitation of sales of alcoholic beverages by licensees over the Internet.

Third Party Providers are involved in one or more of the steps in the transfer of title of an alcoholic beverage from a licensee to a consumer, such as placement of advertising, making recommendations to consumers, directing consumers to licensees, receiving orders and passing them on to licensees, processing payments, and assisting with shipping arrangements.

Given that only licensees may engage in activities for which a license is required, all sales transactions involving Third Party Providers must ultimately be conducted by and under the control of a licensee. This includes decisions concerning the selection of alcoholic beverages to advertise or offer for sale, the pricing of those beverages, and the ultimate acceptance and fulfillment of the sales transaction.

A licensee working with a Third Party Provider is ultimately responsible for any activities undertaken by the Third Party Provider on the licensee’s behalf. Orders for alcoholic beverages solicited by licensees utilizing Third Party Providers must be transmitted by the Third Party Provider to the licensee involved. The licensee responsible for the sale must be clearly identified and must ultimately control the transaction, including any decisions concerning acceptance or rejection of such orders. Licensees must also be responsible for, and must control, the fulfillment of orders and the shipment of alcoholic beverages from the licensees’ licensed premises or other authorized shipping point (such as a licensed public warehouse).

The control of funds from a transaction involving the sale of alcoholic beverages constitutes a significant degree of control over a licensed business. As such, while a Third Party Provider may act as an agent for the licensee in the collection of funds (such as receiving credit card information and securing payment authorization), the full amount collected must be handled in a manner that gives the licensee control over the ultimate distribution of funds. This means that the Third Party Provider cannot independently collect the funds, retain its fee, and pass the balance on to the licensee. The Third Party Provider should pass all funds collected from the consumer to the licensee conducting the sale, and that licensee should thereafter pay the Third Party Provider for October 2011 services rendered.

Alternatively, the parties may utilize an escrow account, or similar instrument, that disburses the funds upon the instructions of the licensee. So, for example, a Third Party Provider may accept consumer credit card information, debit the card, deposit the funds in an account under the licensee’s ultimate control, and, upon the licensee’s acceptance of the order and direction to the account holder, receive a fee from the account. Given the nature of Internet transactions, the Department recognizes that such collection, acceptance, and disbursement of funds will often times be accomplished solely through computer-generated means.

OPTION II

The California Alcoholic Beverage Control Code sections affecting sale of wines for off site consumption:

24045.6. (a) The department may issue a special temporary

on sale or off-sale wine license to any nonprofit corporation that is exempt from payment of income taxes under Section 23701d or 23701e of the Revenue and Taxation Code and Section 501(c)(3) or 501(c)(6) of the Internal Revenue Code of 1986. An applicant for this license shall accompany the application with a fee of one hundred dollars ($100).

(b) This special license shall only entitle the licensee to sell

wine bought by, or donated to, the licensee to a consumer and to any

person holding a license authorizing the sale of wine.

Notwithstanding any other provision of this division, a licensee may

donate or sell wine to a nonprofit corporation that obtains a special

temporary on-sale or off-sale license under this section....

days. In the event the license under this section is issued for a

period exceeding two days, it shall be used solely for retail sales

in conjunction with an identifiable fundraising event sponsored or

conducted by the licensee and all bottles of wine sold under this

license shall bear a label prominently identifying the event. Only

three special licenses authorized by this section shall be issued to

any corporation in a calendar year.

25503.9. (a) Nothing in this division prohibits a winegrower or a

beer and wine wholesaler that also holds an off-sale beer and wine

retail license and only sells wine from giving or selling wine, a

beer manufacturer from giving or selling beer, a distilled spirits

manufacturer or a distilled spirits manufacturer's agent from giving

or selling distilled spirits, or an importer general licensee from

giving or selling beer, wine, or distilled spirits at prices other

than those contained in schedules filed with the department, to any

of the following:

(1) A nonprofit charitable corporation or association exempt from

payment of income taxes under the provisions of the Internal Revenue

Code of the United States and Chapter 4 (commencing with Section

23701) of Part 11 of Division 2 of the Revenue and Taxation Code

The cost of the permit for temporary sales of wine by a non profit is $100 and is valid for 15 days

Winetasting rules are set by the California Code of Regulations~Business

DIVISION 1. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL

ARTICLE 9. SAMPLES

§ 53. Samples Used in Winetastings.

A winetasting is a presentation of samples of one or more wines, representing one or more wineries or industry labels, to a group of consumers for the purpose of acquainting the tasters with the characteristics of the wine or wines tasted.

(g)(2) A [non profit] organization holding a temporary wine license may accept donations, charge admissions, and otherwise make charges for wine to be served at a winetasting, and may advertise such events, which may be open to the public. A winegrower or California winegrower's agent may give wine to such a temporary licensee only if such temporary licensee is a nonprofit corporation or association exempt from the payment of income taxes under the provisions of the Internal Revenue Code of 1954 of the United States.

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