Monthly Archives: February 2014

Can Licensees in Oregon and Washington “Comp” Drinks?

Compliance, OLCC, WSLCB

Can Licensees in Oregon and Washington “Comp” Drinks?  The answer is yes, but …

“Comp” drinks can be a useful tool for licensees in some situations.

120px-Classic_martini_by_Ken30684

While comping drinks is okay under limited circumstances in both Oregon and Washington, advertising “free” drinks or having business practices or promotions involving “free” drinks is generally prohibited.  The OLCC and WSLCB will scrutinize any such program and licensees should take to stay within the rules.

In Washington, comping alcoholic beverages to guests is permitted under limited circumstances, such as:

  1. For special occasions, such as birthdays or anniversaries;
  2. To compensate a guest for a bad meal or poor service; or
  3. To allow the guest to taste the product before purchasing it.

Importantly, free alcohol cannot be used or advertised as a business promotion.

In Oregon, comping alcoholic beverages to guests is permitted under similar circumstances.  That being said, businesses should be careful about establishing sound policies and practices around “comping” drinks to avoid abuse.  For an interesting take on this, read a blog post from Jeffrey Morgenthaler here.

However, advertising free alcoholic beverages is generally prohibited.  Also, alcoholic beverages cannot be offered for free as a “prize” or similar.  Generally speaking, licensees should be mindful of promotions or advertising that involve any reference to “free” and should confirm that they are permitted before moving forward with the program.

 

OLCC Case Profile: The OLCC Dismissed Two “Permitting” Violations in Bradley’s Bar & Grill

Case Studies, OLCC,

The OLCC dismissed two “permitting” violations in Bradley’s Bar & Grill.  In doing so, the case provides some useful guidance to existing licensees.

The Law.  “Permitting” violations requires that the OLCC show two elements.  The first element is a showing that the licensee had knowledge of the proscribed activity.  The second element is a showing that the licensee failed to take reasonable steps to prevent or control the proscribed activity.

The proscribed activity may be unlawful activity, disorderly conduct, or having a minor in an area in which minors are prohibited.  Knowledge may be shown in a number of ways: actual, constructive, or imputed.  Constructive knowledge is where the nature of the proscribed activity was such that it would have been evident to persons working in the establishment.  The knowledge can also be imputed to the licensee from one of the licensee’s agents or employees.

First Alleged Violation.  The first alleged violation was that the licensee permitted unlawful activity when a patron sold drugs to a confidential reliable informant (a “CRI”).  It was undisputed that the employee on duty had no actual knowledge that a CRI was attempting to buy drugs in the bar.  In addition, it was not evident to persons working at the bar that the two patrons talking privately near the bar were negotiating a drug sale.

OLCC staff contended that licensee’s employees should have monitored the private conversation between the patrons and thus should have been aware of the drug sale.  The Commission determined that that was not a reasonable expectation.  Even if the employee in question had stopped performing their duties and focused entirely on drug transaction, the Commission determined that it would have not been evident to a reasonable person that a drug transaction was occurring.

Take Away Point.  Licensees are responsible for taking reasonable steps to prevent drug activity at or adjacent to the licensed premises.  If their employees become aware that such drug transactions are occurring or such activity becomes conspicuous, a licensee is responsible to taking reasonable steps to prevent such drug activity.  That being said, if the drug activity is “surreptitious and subtle” and the licensee does not have actual or constructive knowledge of it, a licensee will not be sanctioned by the OLCC.  The take away is that licensees should take care to train their staff to be observant of their surroundings and to report any criminal or suspicious activity to the manager or owner.  Communication between staff and management is essential and there are a number of tools that licensees can put into place to mitigate risk here.

Second Alleged Violation.  The second alleged violation was that the licensee permitted a minor to be on the licensed premises where minors were prohibited.  For this type of violation, the knowledge element can be met either by showing that the licensee had (1) actual knowledge that the minor was on the licensed premises or (2) sufficient time and opportunity to detect and determine the minor’s presence at the premises.

In this case, it was undisputed that the licensee’s employee was unaware of the minor’s presence at the bar.  As a result, the case turned on whether the licensee’s employee had “sufficient time or opportunity” to discover the minor.

The Commission has determined that 10 or 15 minutes is “sufficient time and opportunity” exists when a premises is busy.  Here, the minor was in the bar for a little over 9 minutes and the bar was busy.  The unique fact presented was that two other patrons that were sitting at the table where the minor was seated caused a disturbance for much of the 9 minutes.   Accordingly, the server’s attention was rightfully focused on resolving the immediate situation.  In this case, the Commission found that the server did not have sufficient opportunity to detect the minor’s presence because of the disruptive behavior of the other patrons.  The disruptive behavior constituted an immediate public safety concern and required the immediate attention of the server.

 

Washington Distillers May Have Reason to Celebrate this Legislative Session.

Laws & Rules, WSLCB, ,

Washington distillers may have reason to celebrate this legislative session. House Bill 2364 and its companion Senate Bill 6226 are making their way through the legislative process with much support and little opposition.  To follow the bill, click here.

The bills would achieve the following:

  • Increases the annual spirits production limit for craft distillers from 60,000 gallons to 150,000 gallons.
  • Eliminates the three liter per day per person limit on the sale of spirits by a craft distiller for off-premises consumption.
  • Authorizes a craft distillery to charge customers a fee for spirits samples of 1/2 ounce or less served to them on premises.
  • Authorizes any licensed distillery to: sell spirits of its own production for consumption off the premises; contract with, and sell spirits to other licensed distillers and manufacturers; and provide for free, or for a charge, spirits samples of 1/2 ounce or less to customers on the premises, subject to a daily maximum of two ounces per person per day.  Samples will likely be restricted to unaltered samples by rule–no mixed samples.
  • Authorizes special occasion licensees to pay for spirits immediately following a special occasion event.
  • Authorizes a special occasion licensee to charge reasonable booth fees to a distillery participating in the event.

These changes are good news for both distillers and craft distillers.  Craft distillers would be able to produce more spirits before being required to become distillers and will be able to (but not required to) charge for samples for guests at the distillery premises.  Distillers would be able to offer samples to guests at the distillery premises–a privilege that they currently do not have and that hampers their ability to market their product.

Can an OLCC Licensee Accept a Canadian Driver’s License?

Compliance, OLCC,

Can an OLCC Licensee Accept a Canadian Driver’s License?

Acceptable Forms of ID. Under Oregon law, licensees may accept only the following forms of identification alone as proof of age:

1. A valid state driver’s license with a photo;
2. A valid ID card issued by a state with photo, name, date of birth, & physical description;
3. A valid passport; or
4. A valid U.S. military ID card.
ORS 471.130

Foreign Driver Licensees. The OLCC interprets the word “state” in ORS 471.130(1)(b) to include driver’s licenses issued by US territories and states/provinces of foreign countries including Canada and Mexico. However, if a licensee cannot determine from the license the person’s age or whether the ID is a valid/authentic license from another country, the OLCC recommends that the licensee require another form of ID such as a passport.

The Licensee Assumes the Risk. In short, a licensee takes on the risk when it accepts a foreign driver’s license as the only evidence of age. If it turns out the identification is not authentic, the licensee is at risk of receiving a violation from the OLCC. For this reason, some establishments will not accept foreign driver’s licenses as a matter of policy, but they will accept passports. Generally speaking, most out-of-country visitors to the United States should have a valid passport that they used to gain entry to the US and that can be used as proof of age.

Take Away and Best Practices. In summary, a licensee can accept foreign driver’s licenses as proof of age, but it likely involves more risk because it is more difficult to determine if a foreign driver’s license is authentic or not. If a licensee decides to accept foreign driver’s licenses as acceptable identification, a best practice is to require a manager sign off to ensure that there are at least two sets of eyes on the identification. In addition, or alternatively, a licensee may decide to accept only foreign driver’s licenses for a limited number of countries, such as Canada and Mexico, and obtain resources that describe these forms of identification. The ID book that you currently use may include a section on some foreign forms of identification.

Age Verification Equipment: Should You Agree to Use It to Resolve an OLCC Violation?

Compliance, Laws & Rules, OLCC, , , ,

Age Verification Equipment (“AVE”): Should You Agree to Use It to Resolve an OLCC Violation?

The AVE Option. ORS 471.392 allows the OLCC to use AVE as a tool to reduce underage drinking and helps licensees demonstrate that they are responsible business owners. OAR 845-009-0140 allows a licensee to purchase and use AVE in lieu of a civil penalty or suspension for a first sale to a minor or failure to verify age violation. If a licensee did not select the AVE option for a first violation of this type, the OLCC may give a licensee the option to buy and use AVE to partially offset a civil penalty or suspension for a second violation. A licensee can only use this option one time at a particular licensed location.

Process for Selecting the AVE Option. The licensee must notify the OLCC within 15 days of receiving a Notice of Violation of their intention to get and use the AVE. Licensees must be using the AVE within 30 days of receiving the Notice of Violation. Licensees should carefully review the Notice of Violation and diligently follow the instructions listed in the Notice.

AVE Is For Life. Going forward, the licensee must use AVE at every point of sale used to sell alcohol, and the equipment must be used at each point of sale as long as the licensee owns the business. Failure to use the AVE equipment can result in an aggravated penalty for future violations of this type and possible removal from the Responsible Vendor Program. There is no process for eliminating this requirement from a liquor license other than a change of ownership at the location. In other words, a licensee is agreeing to use the AVE at the location as long as the licensee operates at the location and is subject to aggravated penalties for any subsequent violations if the AVE is not appropriately used. In addition, the licensee will need to pay for upgrades or otherwise insure that the AVE meets the OLCC’s standards for the same time period.

AVE Equipment. The AVE must meet all of the following standards:

(a) The equipment must trigger an age verification process or the equipment itself must verify the age. In either case, the equipment must indicate to the licensee or employee if the customer is of legal age to purchase alcoholic beverages;

(b) The equipment must have a memory function and must be capable of producing a hard copy printout of the results of any verification transaction within the last seven days, either directly from the equipment or through a computer;

(c) The equipment must be able to perform the age verification function for identification from all states in the United States, via either the equipment reading the identification automatically or manual entry of the information; and

(d) The equipment must have the capacity to be updated or upgraded.

Final Verdict. Licensees should carefully consider whether or not AVE is right for them and their business. And, even if using AVE at the business makes sense, licensees should determine whether it makes sense to be permanently bound to using AVE going forward. The short term benefit of an elimination or reduction of a sanction may not outweigh the potential long term burdens of complying with the AVE requirement. Determining how to respond to an OLCC violation requires careful deliberation. Even if settlement is the right option, the details of the settlement matter. In addition, when determining how to respond to an OLCC violation, it is essential to consider the longer view. AVE may not be the best option for all licensees. Understanding your options, what to expect going forward, and how best to ensure future compliance is essential to your business’s continued success when operating in the heavily regulated alcohol regulatory environment.