Retail Sales

[JohninWV]

I want to get the laws changed here in WV to allow for on site "liquor by the drink".

We feel fortunate that WV allows for on-site retail sales by the bottle and tastings (1.5 ounces per person per day). Currently, distillery owners are not allowed to own any interest in a private liquor establishment (bar).

We built a very nice place and we are getting lots of requests to hold private functions. We did a function last night, and served drinks, but we limited it to .75 ounces, two drink limit per person....it was a friend and so we didn't charge...and couldn't if we would have wanted to since samples have to be complimentary. I think there's a huge potential for making money that we are missing.

I'm curious as to which states allow this and the statutes if you have them.

I've never worked with my legislators before so I'm a bit unsure where to start. I'm wondering if it might be best to try to change the law to allow for dual licenses or if there's another way to work this.

Any help is appreciated.

[MarkR]

As I understand the laws as they stand, it is the federal TTB laws that prohibit anyone from owning more than one step in the distiller-distributor-retail chain. I was told that if you own, or your spouse owns, a distilled beverage distributor or retail outlet (including bar, tavern etc) license, you would not be allowed to have a distillery license. As most of the laws are, this is left over from the end of prohibition where the federal government did not want to see organized crime control the liquor business from one end to the other.

[daveflintstone]

As I understand the laws as they stand, it is the federal TTB laws that prohibit anyone from owning more than one step in the distiller-distributor-retail chain. I was told that if you own, or your spouse owns, a distilled beverage distributor or retail outlet (including bar, tavern etc) license, you would not be allowed to have a distillery license. As most of the laws are, this is left over from the end of prohibition where the federal government did not want to see organized crime control the liquor business from one end to the other.

It is state and/or county regulations which dictate what a distiller can and can't do as far as retail sales, not TTB.

Maybe you could approach this as a rental space for catered functions. Your alcohol would be bought beforehand and provided during the function, same as the food, etc.

[Charles@AEppelTreow]

In the CFR chapter on Tied House, there's an exception called 'proprietary interest'. If you have whole ownership of both production and retail, Tied House at the Federal level just doesn't apply to you. What you can't do is go out and invest in other retailers. Also, the CFR definitions lump producers and wholesalers together as 'Industry Members', and has retailers separate. Two Tiers, rather than three. Your State may vary :-)

In WI, wineries (a subcategory of 'liquor manufacturers' in WI law) have long had the ability, by statute, to hold a single Class A (off-site consumption) or Class B (on-site consumption - mostly) retailer license (but not both). And the 'Class B for wineries' had special rules that got it out of the municipal quota limitations and made the off-site sales allowances workable.

For distillers (manufacturers & rectifiers in WI), getting the same wording added to the correct paragraph didn't get past the wholesale lobby, or the Legislative Research Bureau (The LRB writes draft laws at the request of legislators - they preferred a direct exception, rather than copying the winery wording - which would have required a lot more changes to the paragraph on 'Relations with Retailers' e.g. Three Tier.)

What was passed a couple years ago (eternal praises to Guy R. and company) was a pretty straightforward clause wedged into the manufacturer/rectifier permit that gave permission to permittees to sell for on-site or off-site consumption under rules like Class B licenses, but without holding an actual Class B license.

The lobbying groups that registered interest (at various times) were the Wholesalers, Tavern League, Grocers, Restaurants, DISCUS, Wine Institute and Sheriff's Deputies. The first one has the biggest influence in WI.

[JohninWV]

Charles,

I remember talking to Guy about that clause. Do you know the statute number?

Dave,

I've thought of that, but the regs are pretty clear that I can only sell for off premises consumption, with the exception being my complimentary samples.

[Charles@AEppelTreow]

WI Statutes 125.52

Here in WI, the regualtors have some wiggle room for interpretation when it comes to parties at a retail licensed facility. If it's a clearly separate area from sales / bar/ etc, then they can consider it like a leased area and let the party bring in their own alcohol. Something that a retailer norammly can't allow. that's more a policy stance, rather than something specified by law.

[JohninWV]

Thanks Charles!