Tasting Room vs. A place where "liquors are sold at retail"

[indyspirits]

If we sell drinks in our tasting room does that constitute a place where liquors are sold at retail?  Asking for a friend.  

 

 

[captnKB]

This is likely going to be determined by your state. In AZ we hold a specific craft distillers license that allows On Premise sales (drinks) and off Premise sales (bottles to go) Nowhere in our state laws is the word retail used to define what our tasting room business is.

My two cents: When I hear the word retail it is commonly associated with off premise sales. Typically a place serving on premise drinks, would be classified, as a tasting room, tavern, pub or bar.

[indyspirits]

1 hour ago, captnKB said:

My two cents: When I hear the word retail it is commonly associated with off premise sales. Typically a place serving on premise drinks, would be classified, as a tasting room, tavern, pub or bar.

That how we, errrrr, my friend, is interpreting the regs, that "retails sales" would be for off premise consumption.

 

 

[dhdunbar]

Big red letter warning here - TTB is specific about this.  You may not located a distilled spirits plant anywhere liquors of any kind (defined to be beer, wine or distilled spirits) are sold at retail.  That is the law. 

Next, TTB makes no distinction between off premises and on premises sales. Both are retail sales.  See  the dealer regulations, part 31, for the details.  §31.1 defines a dealer to be "Any person who sells, or offers for sale, any distilled spirits, wines, or beer. A retailer sale is a "sale of liquors to a person other than a dealer."  That is, it is a sale, whether for on premises or off premises consumption, to the guy who wanders into your tasting room and pays you for a tasting or a bottle to go. 

But worse than that,  TTB even holds that charging for parking is engaging in retail sales if the persons parking are offered tastes.  That is well established in case law.  The interpretation of what constitutes a sale for the purpose of the IRC goes back to - oh jeez - the early 20th century if not before.  Case law has even affirmed that a car dealer who puts a bottle of wine in the glove box of a car it sells, or the beauty parlor that serves wine to its customers, is a retailer for the purposes of the IRC.  Bed an breakfast offering wine with evening snacks?  Yup, They are selling liquors at retail.  As is the hotel that has a manager's time each night from 5:00 to 7:00. 

Case law has made it impossible to find clever solutions, but there is an obvious one.

The solution, and it is the only solution  is to move any area where ou make what TTB determines to be sales off of DSP premises (either bonded or general, neither is a permissible place for retail sales) and separate the retail area from the DSP by a floor to ceiling partition.  Don't worry that a state says that you can only sell at your licensed premises.  The state licensed premises does not have to be conterminous with the federal DSP.  They are different laws.  

I know that some of you are going to tell me I'm nuts, because there are so many examples of operations that do not follow those rules.  I understand that. 

But look at what TTB now requires that you certify when you make an original or AMENDED - I've got to stress that for those who think they are home free because they qualified in 1988 - application to register the DSP premises.  TTB ask if you will have a tasting room.   If you answer yes, they require that you affirm that you understand that you can't charge for parking and offer tastings.  Now, i am not inventing the parking language.  It is in the application. 

They also ask if you will make sales at retail.  If you answer yes, they require that you affirm that you understand that you can't do that on DSP premises and that the retail area must be separated from the DSP - both the bonded and general premises, if any - by a floor to ceiling partition.  No knee walls.  No lines on the floor.  The mantra is floor to ceiling.  

You then sign the application in which you make those affirmations under penalties of perjury.

I'm not sure what TTB is up to with that.  I know the legal consequences.  When you certify that you know that charging for parking is a sale if any liquors offered, even at no additonal charge, as tasting to the persons who pay the parking fee, etc., then if you do that and TTB takes finds that you are doing it, you not only have a violation, but you have a violation that is knowing and willful, which gives them a bigger hammer.  And if there is no floor to ceiling partition?  Same deal.

I THINK that TTB is trying to find shelter  in a storm of its own making.  They have been so lax in enforcement that they have allowed, by their lack of enforcement, all of the tasting room sales on DSP premises, which are taking place, and to which they think they must object, under the provisions of the law that they are suppose to enforce.  But they don't want to send people out into the field canvassing for violations and suffer the embarrassment of their own lack of enforcement.  So they take what I think is a low road and require certification.  They can then say that you have been warned and have acknowledged that you were warned and so its your fault, not theirs.

I know this is going to create some heartburn for those of you who have a tasting room located in the same room as your DSP.  If you need to amend your registration, what do you do about those damned questions.  Like I said, Big Red Letter Warning.    Someone among you is going to be the person who can answer the question, "What is TTB going to do when they find retail sales?"